19 - Sales And Marketing, How To Talk To Investors

Speaker 1 Okay, great. So other great. Thanks for having me. So, my name is Tyler. I'm the CEO of clever. And what I want to talk today is about sales and I have a little bit of insight into this. I graduated college. I actually studied math and statistics probably like some of you here in this room and thought I was destined for this world of Finance. I was about to go start at a hedge fund and at the last second, a friend of mine, roped me into in to join his startup and asked me to do sales there, which was something that I knew nothing about. And so had to figure out on the Fly and spent a couple of years. They're figuring out sales for this very early stage company. And then when it came time to start clever, you know, it started clever. And I did it with two co-founders who are very technical and one very product oriented. And we wanted to build this product for schools. And I thought that experience would have no relevancy whatsoever, but it turns out that Some of the things that I picked up at that this previous job, whereas figuring out sales have been huge. Parts of what's made clever grow. So quickly. Today, quick background on Clever, we build software for schools. We are an app platform used by developers and it's used today by about one in five schools in America and we started it about two years ago. And so sales have been a big key piece of that. And I want to use this time to just share some of the things that have worked for me along the way of course. Has a million ways to do this, so you'll find what works for you. So first, I want to start about how most how I used to perceive sales, and a lot of people see sales as having this, you know, a lot of Mystique around it, you know, it's people who are, you know, really articulate and impossibly charming and they have these, you know, killer closing lines that they use. And I think this how I saw sales, and I think there's a lot of Founders. I talked to see sales because they say things to me, like, you know, we're just going to work on the product and build a great product. And then, when it's finally finished, A higher, the salespeople. And what I've learned is that higher the salespeople as a Founder. The reality is that's you. And so, you know, Paul Graham likes to talk about how there's two things. You should be doing at any point in time, when you're starting your company, you're either talking to your users or you're building your product and that talking to your users part that's selling. And so, you know, this is intimidating some people because they're like, I've never done sales and I wouldn't even know where to begin. In I'll but it turns out that as a Founder. You have some unique advantages that make it possible for you to be really, really good at sales. And one of those is your passion for the product and what you're building. And the second is your industry knowledge of what your of the industry and the problem that you're solving and those two things actually totally Trump sales experience from what I've seen. So this is actually my co-founder doing sales is what sales looks like, you know in the very earliest days are starting. It's not Don Draper. It's it's a lot of calls like these, but this is something that even as a Founders, never done it before, it's very easy to do. But you have to commit yourself. And what we did a clever was we dedicated one founder, which was me to peel off and say, Okay, Tyler, you're going to go figure this out and, and work on this full-time because it's so important to our business. So a couple things that I've picked up about sales along the way and in trying to figure this out, you know, the first thing that everybody knows about sales is they say, okay, it's a funnel and you have these different stages of funnels and of the funnel and you move your customers through it. Pretty common categories. There's this prospecting category. We are trying to figure out who's even interested, then you're having a lot of conversations, which is a second level of the funnel. Then you're finding out who's really serious and you want to close them and sign the deal. And then of course, you're in the promised land of Revenue. And what I thought would be interesting would be to talk about each each of the stage a couple of strategies that we've used a clever that have worked really well, so that these aren't abstract things but things that you know, you can hopefully use it your startup. So prospecting. So, prospecting is the process of figuring out who will even take your call and, you know, one of the things that I realized early on. So there's this guy Everett Rogers, who's created this technology lifecycle adoption curve and he describes it as a bell curve where you've got, you know, your innovators in the who will try new things. And you've got your early adopters, your mid-stage adopters, you're late, adopters your laggards, and one of the things that Was really helpful for me and understanding sales at an early startup is he's Quantified, the tail of this bell curve. And this part over here, the innovators. Those are your potential customers and it might seem discouraging that only 2.5 percent of companies are your potential customers or would even consider buying from a startup that has no users and no Revenue, but actually I found just the opposite. I found it to be extremely helpful to have this frame of mind because you realize when only two Twenty-five percent of companies will even take your call or consider using your product. You realize what a numbers game this becomes. So if you want to reach that 2.5% and you want to get some early sales you if you're starting to do the math, your hopefully, starting to realize you have to do a lot of calling. If to do a talk to a lot of people. So early on, in the early days, the clever. This was my job, you know, in the, in the two months and the first two months of YC. I reached out to over 400 companies, trying to get them to take a call and, and talk to us about what we were building. There's that, there's three ways that I have found most successful in. In in prospecting and getting these people. One is your personal Network. That's obvious. I'm not going to spend any time there. Another one is conferences, which is surprising to a lot of people and then the one that people are most familiar with is cold email and when I say conferences, this is what people think they think I'm talking about CEs or you know III or something and actually the kind of conferences were sales happen. Look more like this and we've got we would in the early days would go to a lot of these because you've got to go to where your Users are and if they're if you're selling to cios and there happens to be a gathering of them at a hotel and Milwaukee. Guess what? That's probably where you should be. So we go to conferences like these, we get the attendee list in advance weed, email every single person in advance and try and set up meeting. So that when you get there, every single minute of that trip was was, well, spent. And this was huge, and clever, as early, as they these, this is where we met all of our earliest customers. The second thing I mentioned is cold email. A lot of people don't know how to write cold emails. It's actually really easy in the key is not to write a lot, should be really concise. This is an email template that I used early on and you're welcome to copy it, but it's really short. Here's who I am. Here's what I'm building and I'd love to talk to you about this. Can we find time tomorrow? It's really easy. And you can customize this and find out for every business you want to sell to, who's the right person, to send it to, and you can send out quite a few of these. So, all right, that's prospecting. And the reason this is so important is because you've got to build that first layer of the funnel. Then you get them to take your call. And this is another place where a lot of Founders. I think just have a lot of questions about what to actually do. And the biggest thing to take away. In fact, if you only take away, one thing from this presentation today, the number one thing you should remember, is when you get them on the phone, remember to shut up. And that's really surprising to people so many Founders, when I help them with their first sales pitch, they finally get somebody on the phone. Who wants to talk to them about their product. And they're so proud of this thing. They've been building for the last three months, that all they want to do is get on the phone and talk about every feature and talk about all the different things that can do and talk about why it's the greatest thing in the world. And I have that temptation to it's just part of being really proud of something, but it turns out that if you watch the best sales people like the best sales people in the world, the top 1%, and you have a chance to listen in on a call with some of those people. Like I have the most. Surprising thing is how little talk. They do. In fact, I've seen calls where the where the salesperson told me. Their goal was to only spend 30% of the call talking and have 70% of the call the other person. And they would ask a lot of questions. They say things like, why did you even agree to take my call today? This problem that we're talking about solving for you? How do you solve it today? You know, what would your ideal solution look like? And they're not, they're not doing the talking. They're finding, they're doing everything they can to find out. Out what this person needs and hopefully understand their problem even better than they do. That's what really great sales is. And in fact, this is something I drill into everybody at clever. It's really important part of sales. And there's actually. Now, if any of you use Uber conference, they have this amazing feature where, when you hang up a call. It sends you an email automatically and tells you how much you talked versus, how much the other person talk. And looking at one of those emails, you know, some doing sales that clever, I get one of those emails, I can tell immediately, How likely the sale is based on how much talking we were doing. So you got all these people. Now you got on the phone to a lot of listening, really understand their problem. And then the other part of this stage that surprises, a lot of people is follow-up. So here's a lot of different steps that you can imagine going through, you know, emailing somebody not getting a response and emailing them back calling them, leaving a voicemail, having a pricing call, you know, there's probably like, you know, 60 things up here on this slide that could be steps for closing a deal. These actually aren't just random things. This is one deal that this was the second deal clever ever signed these All the different steps that we had in order to get this done. And you can see there's a lot of really embarrassing things up there. Like, I emailed somebody and they didn't respond. And I emailed them again and they didn't respond. And then, I emailed him again. And this is from somebody who wanted to buy our product, isn't that crazy? And that surprises? A lot of people, I see so many Founders who they have a great call with someone. They send an email, they don't hear back and they say, oh that person might not be interested. Well, guess what? This is what it looks like in the best case. And, and they really have To have kind of this unhuman unreasonable, willingness to follow up and drive things to closure. now qualify with that with one thing which is to say when you're starting a company your time is extremely valuable because it's your only resource and if you couldn't possibly do this for every single person who might buy your product so your goal should be to get people to a yes or no as quickly as you can where you die is if you have 1,000 maybes and sometimes I talk to Founders who say oh yeah I have this great pipeline of you know 100 people who have expressed interest in our product and the may be zero kill you if you can get to a yes or no and some ways and no is even better than a maybe because it allows you to move on and focus on somebody who might be a yes so have this superhuman level of follow-up and ambition but make sure you're focusing it on the right pieces All right. So you've talked to someone you've talked to a ton of people you've had all these phone calls, you followed up with them, ridiculously to the point where they just know you're not going away. And they've got to sign an agreement. This final step is something that if you haven't done, before might seem opaque, but it's actually really simple. It's called redlining. So you'll send over an agreement, their lawyers will mark it up. Your lawyers will mark it up and you kind of go back and forth. If you're part of why I see this is really easy because y c has standard template agreements that Give you so you don't have to find these and you can just you know, use those, how about they've never been available. You know, if you weren't part of why I see you kind of had to figure this out on your own. One of the things that I'm really excited about is as part of this presentation YC has agreed to open source, they are deal documents. So these documents out, why see? Founders used to get are now going to be available to everybody. So this should never hopefully never be a barrier to anyone who wants to do sales for their startup. You've got some great documents. And then the other thing I'll say about this. This place. I see so many smart, smart people, go wrong, is you got to remember what your goal is. Your goal is to sign some deals and get some reference customers and get some validation and get some Revenue that if you don't do that, your startup is you know toast. So, in light of that, it's really surprising how many smart people will want to do 10 rounds of document review quibbling over the most minor points, because of Pride, because of intelligence, whatever you do, make sure the agreement is the way you want it, but then sign it and move on. I've seen Founders, spend months quibbling over some indemnification Clauses and their business would have been way better off if they'd, you know, just sign the deal and moved on to the next one. So that's one closing trap. You can fall into I have two more one other closing trap that I see Founders struggle with. And a lot is they took their talking to a company. Who says, I will use your product, but I just need one more feature, you know, are or they say, you know, I'd love to use your product, but it doesn't have this one feature. So, we're just not ready. And to most people especially if you're ambitious. When somebody says that to you, what you want to hear is, oh, I can build that feature. Great, you know, build that feature and Going to use my product. But the problem is it almost never works that way. In fact, somebody telling you that they would use your, they want to use your product, but it's just missing. This one feature. I would almost map that to a pass in your mind because nine times out of ten. If you actually built that feature, you go back to them and then there'd be one more feature or there'd be some other reason that they're not using the product. So if somebody says to you, hey, I want to, you know, there's this one thing that's preventing us from using your product. I would do. One of two things, one say well, that's great. Let's sign an agreement and we'll put in the We're going to build this feature in which case, you know, you know that if you build it, you're Off to the Races or more commonly. What we did a clever was we would say, that's great. We're going to wait to see if we hear that demand for more customers. And then once you have a lot of customers requesting it, then you should build it regardless and then and then you're not you don't have to worry about doing something that's customer went off, which is what you really want to avoid. So don't fall into this trap. It happens all the time and the other trap I would highly highly recommend you try to Avoid is the free trial trap, because this happens all the time people, you know, they go down this path with a customer. It seems really exciting. And then the customer says, oh well, can I get a free trial? You can't blame him. That's a totally reasonable thing to ask for. But the problem is when you're starting a start-up, you need Revenue, you need validation. You need users, you need commitment and free trials. Get you, none of those things. So you go, you do all this work. And if you end up with a free trial, unfortunately, haven't made as much progress as you. It's actually terrible. You've think you've made progress but really, at the end of the free trial, you're gonna have to sell them all over again. So, the way I handle this at is, worked really well, is when somebody says, can I get a free trial? I'll you say well, we don't we don't do free trials. But what we can do is we're going to we do annual agreements here. And what we'll do is for the first 30 or 60 days. If for any reason, you're not happy, you can opt out and that's a way to get you the things that you need, while giving them the comfort that they might need to take a chance on a start-up. So that minor change is actually makes a night and day difference when you're when you're thinking about these things. Alright, so you've prospected, you've had a lot of conversations. Now, you've closed, people, you've gone through the red line process. You worked out the free trials and you're on your way. Hopefully, to your first sales. Now early on, you can think of sales is just like, any other thing of a start-up, your goal is to you don't have to do things at scale. In fact, you can purposely do unscalable things to try and get early customers. That's, that's the fun of it. But the other thing that I think is really important to keep in mind, is once you've done this enough, what you should start Thinking about as well, what aspects of this are repeatable and, and what aspects of this, you know, are we going to scale further? And there's this Christoph, chances is really great blog post online about the five ways to build 100 million dollar company, and he talks about, he can have a thousand customers, buy a product that costs a hundred thousand dollars or you can have 10,000 customers buy a product that costs 10,000 dollars or you can have a hundred thousand customers buy a product that cost a thousand dollars and even though you don't need to know on day one, which bucket you're going to fall. Into most companies do fall into one of these buckets. And so you start thinking about that as you're doing this. If if you want to be in the elephant category of 100,000 dollar product. That's great. And you're going to have a really high touch sales cycle and that's fine. You know, that's Salesforce. That's workday. That's great. But if you think you're going to be a rabbit and sell products for a thousand dollars a year to businesses and your sales process involves flying out to see them three times and eight demos. And and you know three months of red line. Then you probably have to rethink something. And so I see a lot of startups most commonly in that who want to be the rabbits and sell for a low price product to businesses. Not thinking about how to do it in a scalable way. And that's one area where you can get underwater or just forces you to increase your prices. So, this is how I think about different businesses and it'll be helpful for you. And so you get started. And once you've done enough for the sales to say, okay, you know, where am I and the corollary to that is It is, how do I have to price my product to be a viable business? So that is, those are some of the things that I figured out along the way building building sales, now at a few different companies and specifically on this very narrow stage of 0 to 1 million. After you get 21 million. I'll find there's a million blog posts, you know, about how to get from 5 million to 50 million or 10 million to 100 million. But this zero to one step, I wanted to dedicate focus, a presentation on that today, because there's not as much written about it. And it is something that I think Is very opaque to a lot of Founders. I figured this out just by doing it, and I'm confident that if you're starting a company, you can too. If for whatever reason you would like to do what I did, and join a start-up is figured it out and, and, and hone your skills, and hone your craft. We are hiring a clever. So that's an option. But even if, and if that doesn't, if you do want to start your own company, and you have questions about sales, I put my email address up here and feel free to reach out anytime. I'm happy to help. So, thank you. Yeah, we're going to talk about a little bit more detail. How to raise money. Michael cycle is first one to talk about how to pack the pitch and then don't it will do investor role-playing. Yeah, you know new it really is basic blocking and tackling but one point wanted to make before we get started as we actually don't spend a lot of time at YC focusing on. The main reason is the best way you can make your pitch better is to improve your company. If you're, if you have traction and your product is doing well. These conversations are like the investors want to see you succeed. And so, if you remember anything, it's make your company better and the pitch will be easier. We're going to spend the time in the three kind of sections before the meeting with Michael will kind of focus on will do a kind of a role-play of what meetings actually look like. And then we'll just wrap it up. We are going to do Q&A at the end. We'll kind of say five minutes. So if there's something we don't cover, please, write down your question that we'll go through them now, without further Ado. Speaker 2 So my name is Michael Seibel, current YC partner. I've started to companies when was called Justin TV and ended up selling to Amazon. The other was called social can which sold totter desk. And I really wanted to do was break down and demystifying the process of creating a pitch. So I think Happens too often. When I see companies, come to talk to me is that they don't know how to Simply explain what they do. And then ask for money and that's basically what you have to do, is found her. So we're going to go over four things. The first is what your 30 second Pitch is this you need to be armed with constantly. This is basically how you talk about your company. This is Magic, whether you're talking to people who want to give you money, or don't want to give you money. You're talking to your parents. This is your go to. The second is your two-minute pitch. This This is for people who are more interested. This is people who you might want to raise money from our people who you might want to get to work for you or people, you actually kind of need to get a little bit deeper. Notice. That's where I stopped. A lot of people, practice, ten. Thirty minute, pitches our pitches. I think that's all garbage. I think you can get everything you need done in two minutes. And one thing I like to tell Founders is the more you talk, the more you opportunity to say something that people don't like, so just talk less and it'll probably better. So I want to tell you about when to fundraise because I think a lot of companies get this a little bit wrong and then quickly how to set up investor meetings. So 30 second Pitch. This is so simple. It's three sentences. You can take your time. You can breathe. When you do this, you don't have to get that much information out. The first is one sentence on what does your company do everyone? I meet for the first time screws this up, you have to be able to do it in a way that is simple. And Eight forward that requires, no pre information on my part. You have to assume I know nothing, literally nothing about anything. This is how you make it super simple. So, you know, usually what we tell people is apply the mom test. If in one sentence, you cannot tell your mom what you do. Then rework, the sentence, there is a one sentence explanation that your mom or your dad is going to understand. So really, really start there. And it's okay, if you use really basic language, it's okay. If you're saying We're Airbnb. And we allow you to rent out the extra room in your house. That's simple, right? You don't have to say where Airbnb and were a Marketplace for space. I don't know what that is. That's gonna require more time. So, use Simple language, very, very important. The second is how big is your Market? It makes sense to do a couple hours of research. Figure out what General Industry. Your product is in figure out how big it is. Investors like to hear that you're in a D billion dollar market, it's pretty simple to do this. You know, Airbnb might say, how big is the hotel Market. How big is the vacation rental market? How big is the online hotel booking Market? These are simple numbers to look up on Google and it makes an investor understand. Oh wait. If we're big, if we really blow this company up, it can be worth. Billions of dollars. Don't skip this step. Second sentence. How big is your Market? Third sentence. How much traction do you have? Ideally this sentence is saying something on the order of We launched in January and we're growing 30 percent month-over-month. We have this number of sales, this amount of Revenue, this number of users, very simple. If you can't speak to traction terms of pre-launch, you need to convince the investor that you're moving extremely quickly. So the team started working in January by March. We launched a beta by April we launched our product, right? Convince the investors that you guys are moving fast, that this is in some long slog that you guys aren't thinking about this, like a big Corporation, you're thinking about it like a start-up where you can move fast and make mistakes. That's all you have to do in 30 seconds. Three sentences from that basis. You should be able to start a conversation about your company from that basis. I understand exactly what you do. You haven't understood, you have no idea how valuable it is to be able to explain to someone what you do in 30 seconds. So really internalized that. Okay, if you take nothing else away that's going to help you. Okay, two-minute pitch. Now, you've got someone who actually have to convince of something, maybe even someone you have to ask for money. So I like to add for additional components. And these also go by very quick. The first is unique Insight. Now, if you talk to a VC, is, they'll say stuff like, what's your secret sauce? What's your competitive Advantage? What's unique Insight? It's all the same thing. When I think about unique Insight, what I think about is, here's your opportunity. Need to tell me something that I don't know. Here's your opportunity to tell me something that the biggest players in the market. You're trying to enter, don't understand or don't do. Well. This is the aha moment and you better have it down into sentences, the AHA moments. You got to crystallize all of the reasons why you guys are going to kill the competitors or the really intelligent thought that got this business started in two sentences, and I need to Aha, you can see whether it's happening. When you're saying it, that's why I like to send this as so, you get in and out fast. So if I look at you and I'm like, huh, then it's okay. You you nailed it? If I look at you and I'm like, I already knew that then you didn't nail it. If I looked at you and I just don't understand what you're talking about. You definitely didn't nail it. So practice that unique insight and your two-minute pitch. That's all you're only going to get two sentences to get that out there. So it can't be complicated. And that's basically the theme of this whole thing, right? It cannot be complicated. Next. How do you make money? You know your business model? I see. How many Founders run away from this question because they think things like if I say advertising people going to be like, oh that's stupid. Just say it. Don't run away if it's advertising say advertising Facebook, some massive advertising business. So is Google if it's direct sales, its direct sales. If it's you know a game and you're selling an app in a adults like that's fine just say it. Don't run away from this sentence. It only has to be one sentence long. We're Founders get tricked. On how will you make money? Is they say, well, we're going to run advertising maybe some virtual Goods. We're going to figure out how to do this and maybe this and maybe this will not you're saying nothing. Now, you've told me you have no idea how you want to monetize this. This was a check mark that I just wanted to write. Oh, they know how they're gonna monetize instead. I'm running a big question mark. So do the thing that everyone else in your industry does to monetize 95% of the time say it and move on. Like it's totally okay? No, Going to hold your feet to the fire and say three years later. You didn't monetize this way, but it's much better to be clear and concise than it is to start spouting out every single way. Your company can make money. The next one is team. I think that this answer is actually really clear. I think you're trying to do two things. If your team is done something particularly impressive, you need to call that out. We were the founders of PayPal probably want to say that. We were the founders of Amazon. My probably want to say that. So if you guys have done something that is made investors money, you want to say that? If not, then, please don't go on about the awards. Your team is one or the phds or the, I don't care. I don't care. What we want to hear is how many Founders hopefully between two and four. We want to hear is how many of them are technical? How many Engineers versus business people. Hopefully, it's 50/50 or more Engineers. We want to hear. Is that how long have you guys known each other? We don't want to hear you. Matt a Founders dating event three days ago. Ideally you've known each other either personally and professionally for at least six months we want to hear is that you're all working full-time. It's really helpful. We're all committed to this business. And what we want to hear is how you met. That's it. You can get it out of that. Two sentences, very easy, you're only way to build credentials is if you've accomplished something. And with an investor typically, it's if you've accomplished something that's made someone some money. So don't try to overinflate yourself. If you don't have that stat on your resume move. On the more you talk about a bad thing the worse. It looks so the last one is the big ask when it comes to this and you have to figure out whether this is a conversation involves fundraising or not. What I tell people is like this is the time where you kind of have to know what you're talking about. This is a time. We have to know. Are you raising on? Vertebral note. Are you raising on a safe? You have to know what the cap of that safe is. You have to know how much money you're raising. You have to know what the minimum check size is. These are things where, if you don't know these these things, and that's just going to be like, these guys aren't serious. Are they haven't done their homework. So, whereas in the rest of this whole thing, you shouldn't use any jargon and this part, you shouldn't just be like, oh, we're just raising some money, like now it's time to actually use a little bit of that. Jargon. If you don't know that jargon Google search it. Like it's real simple. You guys want it fast? So that's it. By the way, that's two. That's all your pitch done like, game over. Now. You let them talk. So, when to fundraise, I think this is so important, right? You've got this little growth graph here. Investors like to invest based on traction. And so literally, it's always better to raise money when you've got more traction than less often times though. You guys will be in the situation where you're just starting or maybe we just Launched. So, what you need to do is you need to think about how do you flip the equation, your entire mindset should be. Typically you are the ones asking investors for money. And therefore they are strong and you are weak. How do you create a scenario where you are strong in their week? Right? That's where you want to be fundraising. So first, how do you know that you're strong? If investors are asking me to give you money? You're strong. That might be a good time to start. Fundraising if investors aren't asking about giving you money. Are you talking to people about your startup or are you running super stealth? If you're talking to people about your startup, you're getting the word out either that see the press or just through talking to your friends or people, you know, doing startups. That's a good way to kind of start feeding that. The second thing is, have you created a plan so that you can launch and grow without needing to raise a bunch of money. 95% of the startups that I meet. And get a product to Market with a very, very little bit of money. So never put the investor in the ultimate position of power. We can't do anything until you give us money. You always want to flip it around. You always wanted to be this thing's moving. We all left our jobs while working full-time, and it's moving. If you want to jump on great. If not, they're a lot of Angel Investors. That's the attitude you want to have. That's the confidence. You want to have. If you need money early, always plan for needing less money. Any and always be able to show that you've got a fully committed team. That's working fast. That's going to be how you gain an advantage when you can't show traction. If you can show that investor that you haven't launched yet, but you've done eight months of work in one month or two months, that you've got a great team that have all quit their jobs and there's totally committed. You get some of that Advantage back, but you don't get all of the advantage unless you're launched and growing. So something to keep in mind. Finally how to set up investor meetings. This is really really simple but I'm surprised at how many companies don't get this right? The first is you want to warm introduction from another entrepreneur preferably or a previous investor of yours. That's where you want to start if someone who's passed on your company as an investor offers you to make introductions. That's Kryptonite. Don't touch that. So first warm Very simple. You don't want to cold call, these people. You don't want to bum rush. These people, the person, The credibility of the person who's introducing you to an investor is a big part on whether the investor will take that meeting s. Think in parallel. So many people that I meet will run the fundraising. This super slow process. We met with one guy this week. We're going to schedule a meeting with another guy next week. Another guy three weeks from now when you're fundraising, you're on, it's a Sprint. It's not a marathon. So you want to schedule all of your meetings during the Same week. It's extremely hard to do. But here's one trick that I love, tell, when you're emailing investors. You're getting those warm intros and Veterans email you back. You say. Hey, we'd love to set up a meeting, but we're building like crazy for the next two weeks. So can we set it up in that third week, right. So then you've emailed everyone that, right? So everyone's schedules that meeting three weeks out. It's better for them because their calendars, open. It's better for you because you've got all your meetings in one week. And also, what did you do you hinted? Hey, I'm not desperate for the money. We're building. Like, I'll give you in three weeks, but we're building. We're busy. Like it's signaling all of the right things. So that's the best way to kind of go about how you're going to do that. The last thing is one team member should be invested in fundraising full-time. It shouldn't be something takes over the whole company because it's very, very distracting. So with that, let's kick it off to the next part of this. My hand in it, too. Big Dalton. Speaker 1 Hi, so my name is Dalton Caldwell. I'm one of the camera can get us here. Okay? Yeah, I'm one of the partners at YC. And one of the things that we're going to do today real quick is a Mach pich. And first of all, I know this is a bit contrived but this is in this format of like a college class. We're going to do our best to have fun and kind of demonstrate what it's like. And I realize there's a million reasons. By this way, you can say oh this isn't realistic of what pitches really like, but you know again, there's a lot that we can show you just in terms of my background over my career. I've raised 85 million over several companies. So I've set in a lot of investor meetings and so I'm gonna be pulling as many things as I can. So again, we're just going to try to show you something to talk to and use it as a learning session and your attitude, your intro earlier Casper, right? It's yeah. I mean, I've done a couple startups. Yeah. Yeah, so we're going to do two pitches and we go Through them pretty fast. As, as Michael said, these tend to go fast. So let's go dive into the first one. Okay, so so kasser. I understand you. You're coming to pitch me to can. What can you tell me about what you do? So we're building a communication platform that will allow be, you know, businesses and consumers to collaborate on one single platform rather than the kind of fracture state that they're in right now. And I don't follow so like think about like what? Like WhatsApp. Snapchat, that's for consumers, willing to do that for businesses. And and so what I have to do to the straight face, what that, what that means is we want to enable consumers to talk to businesses. That's really what we're really the goal of our business, out of our startup eyes. Speaker 2 I still don't. So Speaker 1 who uses this? What is the product do? So, I mean, it it's for consumers and businesses and messaging product. Now, squat rumors and said why, why would a consumer want to use your product? Because they want to message the business. Okay. Well, okay. What can you tell me about the the market or what the opportunity? What's the size of? Well, I think is coming to get a messaging companies are very big. Obviously WhatsApp sold for like 19 billion dollars and a Snapchat is like really growing very quickly as well. So we I mean we think the opportunity is very big. Okay, so okay. Can you tell me a little bit about your traction? Your numbers? Like how do you have you given this to people yet? Yeah, I mean, we don't want to kind of open the kimono and kind of go into all the details here. I kind of at a high level we're live. We definitely have thousands of users in the Bay Area, hundreds of businesses, you know, of kind of, can you tell me who some of those businesses are? There's ones that you've been to we don't we don't really want to get too much into the details because, you know, we're still early. We don't want, you know where, we're trying to stay style. Okay. Well, can you tell me about what you've learned so far? What insights that you've had from? The consumers are sending messages these businesses and we think that's great. So and these businesses are responding to the messages. And and we think that's, you know, I don't think that's obvious that that would happen. So can you tell me about what your business model is and how so we charge? This is like a monthly rate. We haven't precisely figured out what that is. We've right now. We're full. We're free for the few hundred companies were in right now, but we're looking to probably do a monthly. How much do you think a business would be willing to pay a? We think certainly ten to fifteen thousand dollars a month? Okay. So anyway, can you tell me a little about your team and who you have working on this? Yeah. There's we have five Founders, technically. I'm the only one who's full time right now. The we're raising money, so we can get, you know, the rest of the team on board. Yeah, that's just our can any other Founders program are? Yeah. Yeah. I mean, we have, I mean, one of them is a bio PhD, but he's like, he's really picked up coding. The, the, I mean, I'm a python developer. I did learn Python the Hard Way, look at the time. Well, it's been really great. Meeting you. Yeah, please keep me in the loop. This sounds fantastic. I will just I will send you updates every great. I'll send you, they'll send you an update. Okay? That was all right. So let's just go through, so obviously not strong. So let's just talk about some of the mistakes. So first of all, you need to make sure the person you're talking to knows what you do. This is seems really simple. This seems simple, but it's not so many times, people get flustered, they get nervous and they start talking really fast and there's No way you're ever going to convince anyone of anything. If they don't know, even what your app actually is. You have to know your numbers. Obviously, if you're very vague or evasive, like, don't even have the meeting. If you don't feel comfortable, telling an investor, what your numbers are, don't even meet with them. It means you're not ready yet, right? For Market size. Try to give some plausible, bottom-up analysis, and don't just name-drop. Big companies that aren't even really related to what you're doing. People tend to do that a lot. Try to have insights, try to convince me that there's something that I don't already know about the market that I learned. Talking to you rather than just what everyone knows about what the market is, right? I learned nothing during that particular pitch. Also, the team just like, why are you working on this? Why are you suited for it? Is good thing to do? And finally, like, he didn't drive the conversation. He, we're like, obviously, that went poorly, and he just let the conversation just like flail around until I cut the meeting. Because we ran out of time as fast as I could. So anyway, that was that was not a good pitch. So, let's try that again. Okay. All right, let's do this. Okay. Okay, sir. Well, so I understand you have a company in. Can you just tell me a little bit of what you guys do? Yes. So we're a messaging product. We allow me to tons, kind of vague. So what we allowed you to do you to do is essentially message a location. So when you walk into a cratenbarrel, you can send the cratenbarrel manager, a message like hey, there's puke in the hallway or if you're the airport. I'm trying to find the specific because I'm not at this airport. Where is, you know, where's the terminal for Virgin, or here at Target? What aisle is? So is this a mobile app or what? Yeah. It's on the consumer side. We have iOS Android app but really getting consumers to download. Apps is obviously very difficult. I don't usually just download the app and Cinema's most businesses. We have a call to action, which says, text the owner directly. We've tested actually a bunch of copy. That works the best in small print. We have the message that are Anonymous. They also lowers the barrier to entry. I think the most counterintuitive thing we've learned in the kind of launch that we've had, were in 350 locations. In the bay. We've been doing this for about three months. We're about 11 percent weekly growth rate in terms of acquiring. Mrs. But the most counterintuitive thing that we learned because we weren't actually Shores, will people send messages when they walk into people's and they do ya, like, what what's the number one type of message that people? So you would. So originally we started this product off thinking this is going to be like in location feedback. That was the premise in location feedback. What we found is more than half. The messages are actually not about feedback at all. They ask things like we were in this location in San Jose. This Kebab stand father and son. It's just a takeout place and we saw messages that go through that went through that said like are you hiring and that's it? Very strange because you would think like why wouldn't you just ask them? But we realize that we know this is the owner and the person is walking and doesn't. And so they they do prefer to actually just text the owner because I think that's a, that's an easy. Oh, so it's like a suggestion box for. It's like a way to just like Messi initially as we thought it was, but we actually discovered is vast majority of Russians. A vast majority over half. The messages are actually just things. Like when do you open when you close because that's not on Google. Do you think you are? You catering? Can you do you have any reservations available tonight? Okay, well, look, in terms of your traction. It sounds like you said, you had some businesses. Like, tell me about what you guys have right now. So, with 350 businesses also from San Jose to San Francisco. We sold them ourselves as three. Founders. We're all technical, but we actually did all the sales because we learned a lot about how these businesses work. We actually come from a retail background. We originally built this product for large, Enterprise players like Starbucks and Walmart, but we recognize that closing those contracts, and are limited amount of runaway wouldn't really be possible. So we wanted to get the product in the hands of users. So we did smbs and that's when we discovered this like you guys. Sitting properly. This is that understanding it sounds like you have some customers mean. Yeah, so we get out. How could this be big? They're like, okay, maybe you can get yeah. So fouls in terms of like the numbers of a. We see one and a half messages on average per location per day. That might not sound a lot. But for a business that's getting 30 messages, you take like a Yelp review on Google review. In a lifetime of is that they might get five or seven. So they're getting a huge volume of messages relative to what they tend to experience and their private. So they're not public. So in terms of how do we actually make money? It's not you know, No, Frankly Speaking. We don't have a very clear answer there. The two paths are the SMB side or the LCS. I the large customer side large customers. We know from a retail experience, just regular feedback tools are three to four million per year. It's like a Sears where we came from smbs. We've tested with are willing to pay fifty dollars a month. So I you know, I certainly I think this is this carrying large business, but there's clear ways to make money, but I could see I could see that just a couple things like, can you tell me about your distribution strategy? And also, just a little bit about the team. Yeah, so distribution. So the thing that we learned in selling these smbs is it's really freaking hard. They're the formula LT V, minus CP a lifetime value must cost per acquisition, and SMB is never going to work out. And so, we have two solutions, one is to go up market, like, originally planned to Starbucks and Walmart or two is actually essentially pair with consumer facing companies Yelp, Google Fit. Even talk to them. They're actually yeah. So we've talked to Google and Facebook. We're meeting with the output. We basically what I do is every time you search for a business. It should be a message button. We want to consumers in the habit of knowing they can send essentially a text message to any business that can help us get broad distribution are real vision is to become kind of that infrastructure. That messaging infrastructure between consumers and businesses. If that doesn't work, let's say Google Facebook and Yelp. Don't want to give up that valuable property. It's really an ad unit. We do want to just sell this as a feedback tool to large large players. All right. Can you tell me about the team were running on on time? Yeah, there's three of us. I'll technical we'd micronized. Company before Sonny's ax Google engineer. We come from retail. So an effort Stark was a failure. So I don't know if that's good or bad but we've worked together and yeah, World technical build, everything ourselves and we sold everything ourselves. Okay. So we've already had a couple of conversations with your firm. We're raising five hundred thousand and eight point five million convertible note of that. 500, 250 S committed by Mike, Maples elide Gil and a dancing cat. And Mike would flood gate is willing to fill the round. We think you're, you know, you particularly you and your firm can bring a lot to the team with your retail experience. Is this something that's interesting to you? Yeah, you know, I think this is really interesting. I mean, I would need to talk to a couple more folks on my side, but I do think this this this could be prepared. Yes, since we've had a couple conversations before and and we're certainly willing to meet again. We are closing around this Friday and so certainly take time and let you know let your The partners know, I'll be available between now and Friday. I'll give you another call before frightened, for her clothes around, but we'd love to actually see you see in there. Okay? Well, sounds good. I gotta go, but thanks for great. And I want to thanks. Okay. All right. So, very different class time for conversation. Yeah. So if you have a clue, so in terms of that one, you know, some key points here is try to actually tell a narrative that makes sense to people. You notice there was narratives there was talking about people, they really use it. We're able to Tie it down to the real world, which is good. He was able to demonstrate insights, and actually, tell me something. I didn't already know about the market like there. Were, there were some some tidbits there. It was more. It was more of a collaborative medium where it felt more like a conversation than just like a. Like. I was interviewing him about something in my opinion. He actually asked for money and this is the other key thing is that the end you saw I could have easily just been like, okay, I gotta go but he did talk about fundraising as Michael mentioned and he was able to provide all the context and all the Oceans, I would need to actually have a serious conversation with them if he was cagey about it or shy about it, and not clear on the numbers that there's a very good chance that, you know, I probably would just enter the conversation due to time pressure. Yeah. It's interesting in a, we sit on the other side a lot. Oh you really you can tell when people are very passionate and know their business very, very well. And that's what you have to become. Okay. So closing thoughts are before, we what you want to do after the meeting. Before we get into Q&A. We're running a little short on time after the meeting. The first thing just like to Tyler said, in the sales things follow up. This is, this is important and anything other than a check or wired funds is a no. So they say we got to keep talking to Partners. I assume that's a no. And so you do want to put some pressure. The way that you can do that is get deal, heat. Ideal heat is just a term which means there's a demand for you to be in your round. This is the easiest way and an important way to actually drive a price Etc, due diligence on the investor. So let's say you have that five hundred. Raise for your seed round on the 8.5 million. Like we use this example. Do you deal with some investors? If you do find that I do D, an adult, an adult in and I find out he's actually not a great investor. I can get be loud or Mike. Maples or whoever to actually fill the rest of the round. It's surprising to us. How many entrepreneurs don't do this. You would. It's like you would actually spend a lot of time hiring somebody, you're selling a part of your company. Somebody you should know who you're selling it to to make sure they, you know, they're the type of people you think they are. And then last know when to stop Top. So some Founders get so good at fundraising. They just want to do it all the time because it's much easier to do than actually building. The company think you could fundraising does not equal success and just because you fundraise does not mean you succeeded and nobody realizes that and I'm we say this will say this now, but I'm sure everyone will still equate fundraising access and read about someone's fundraising and assume that means we're successful. My guess is my intuition is why this is the case is because a lot of smart people, their whole life. They have like applied to good schools, and applied to good jobs, and they just think, And raising is another like application that can just kind of check off and building a company is much more ambiguous. But anyways, that's that's the session. I don't know if we have time for oh the edges under underlining that build your company fundraising is not the goal. We can do that. All right. Thank you.