Author: Paul Singh

What ‘power’ means today.

A thousand years ago, power belonged to those people that owned the dirt. So, if you owned the dirt, you could say, “Hey, you can use this dirt and I have the power.”

Then, a hundred years ago, power belonged to the people that had all the money. If you wanted to build a business, you borrowed money someone and they had power over you.

Ten years ago, power belonged to people who knew how to use technology. If you knew how to use email (seriously), you could easily get a job in some IT field and have power over others.

Today, power belongs to people that understand that we live in an attention economy.

When you get a 30-minute meeting with somebody today, you don’t get 30 minutes of attention. You have to earn all of your attention every 30 seconds. And then you have to re-earn it every 30 seconds.

It’s the unfortunate truth of the reality we all live in today.

We’re all busy. Even the investors you’re trying to pitch. Even the employees you want to hire. Even the customers you want to sell. (As a reminder, that’s exactly why investors outside your hometown don’t take your calls.)

Never forget that.

When you decide to pitch anyone, make sure that every word coming out of your mouth is something that grabs their attention.

Early stage investing is emotional.

I’m a big believer that the soft skills of fundraising are far trickier than the hard skills of fundraising.

If you’ve ever worked in a sales job, you now that FOMO and greed are great drivers to get any sale done. It’s the same with fundraising for your company: you want to create FOMO and, especially for investors, understand that greed is important.

Don’t get me wrong: your product, your market, your team and everything else in between matter… but only to the extent that you talk about them and move on.

OK, let’s quickly talk about definitions:

  • FOMO: Fear Of Missing Out. It’s exactly what it sounds like.
  • Greed. Again, exactly what it sounds like.

When you’re talking to any investor, it’s ultra important to keep the conversation focused on business growth because it’s FOMO and greed that will get your deal done.

In order to do that authentically, you need to do a couple of things:

  • Have a business. We’ve talked about this already but you need to have some sort of traction to justify a fundraise these days.
  • Fundraise full time. You can’t half-ass this. Building a company is hard. Getting people to invest in that company is harder. If you’re serious about fundraising, you need to keep the company growing and then carve out a month of your own time to setup meetings. If you want to raise $500K, plan on setting up 500 meetings.
  • Keep the meetings tight. The goal of the meeting is to focus on business growth, try to avoid spending too much time on pleasantries and other unrelated things. Don’t let the meeting go long — in fact, try to end the meeting early and casually mention that you need to get back to work. Better yet, casually mention that you have another investor meeting scheduled and you want to respect everyone’s time.

If you find yourself talking about anything other than business growth with an investor for more than 50% of the allotted time in your meeting, your deal isn’t going to happen.

If you’re raising money from someone else, your goal is to build the biggest / best company within your vertical. If you agree with that, then you have to agree that business growth is the only thing that matters.

If you find yourself trying to rationalize your investment opportunity in your investor’s mind, it’s just not going to happen.

Investing in early stage startup companies is emotional, not rational.

Why investors outside your hometown don’t take your calls.

I’ve spent the last few years on planes, trains and my Airstream. The conversation with entrepreneurs in every city goes a little like this:

Entrepreneur: “My local investors just don’t get what I’m doing.”

Me: “OK, so why don’t you start reaching out to investors in other cities?”

Entrepreneur: “Well, I have been. Every time I get on a call, it seems to end pretty quickly and the conversation dies off after that.”

Me: “SO STOP USING DINNER PARTY ETIQUETTE IN A BUSINESS MEETING.”

Entrepreneur: “…”

Let’s say you’re calling an investor in New York City who wants to invest in companies, right? You know they’re active because you’ve been tracking them on AngelList. There’s no doubt this investor is active.

That New York investor is probably taking 10 pitches on the same day you call. And, while you’re on the phone with them, they’re thinking about 60 other things simultaneously. They’re thinking about their kids. They’re thinking about their next meeting. They’re thinking about the awful coffee they had this morning. They’re thinking about everything but you.

And then you call. And you start saying stuff like this: “Hey, how’s it going? Hey, so, where are you from originally? Hey, so, what do you like to see?”

You’re using dinner-party etiquette in a business meeting, and then you’re surprised when the business people are like, ‘I don’t have time for this.’”

DON’T DO THIS.

Traction is credibility.

If you have any traction at all, lead with it. If you find yourself talking about the product more than the traction, you’re done. The deal’s never going to happen.

 

Friday roundup: the ultimate growth hack, trusting your gut and emphasizing distribution.

Happy Friday.

DC’s been an interesting (read: weird) place this week: Trump’s motorcade rolled into the White House yesterday. I’m still processing.

If you’re new this week, these are the top 10 clicks across my tweets this week. You can always get the full firehose here.

  1. “the ultimate growth hack is a love for your craft, and a willingness to immerse yourself in the details” [Link] [Tweet]

When you’re starting something new, you’ll know if you’re going to fail within a few weeks (even if you don’t admit it to yourself) but you won’t know if you’re going to succeed for years.

If you meet anyone that’s successful, you’ll quickly notice that they’re always in it for the long haul and they care about the details. It’s the why of the thing that drives them, even if they can’t articulate it themselves.

2. “The people who live in these places aren’t stupid.” [Link] [Tweet]

There’s a lot about this election that doesn’t sit well with me (more on that in a later blog post) but this piece sums it up: each side never took the time to listen to the other. It was far too easy to just assume that the other side was dumb, disconnected and just plain wrong.

If you can spare a couple days in 2017, join us on the tech tour. You’ll quickly notice that the vast majority of Trump voters aren’t racist, misogynists and homophobes that finally found the candidate that said what was on their mind. In fact, they’re hard working people that feel so disconnected from the rest of us that they were willing to look past Trumps misteps (and there were many) to finally have their own voice heard.

3. “It is impossible to react to this moment with anything less than revulsion and profound anxiety.” [Link] [Tweet]

Why not leave the country? But despair is no answer. To combat authoritarianism, to call out lies, to struggle honorably and fiercely in the name of American ideals—that is what is left to do. That is all there is to do.

4. “When somebody calls, I can usually tell within two or three minutes whether a deal is likely to happen or not.” [Link] [Tweet]

Trust your gut. Then do your homework.

5. “Startups are overdosing on ambition these days.” [Link] [Tweet]

If more founders would start with the goal of making $1,000/month in revenue, the better off they’ll be in the long run.

In the worst case, they’ve got an extra $1,000/month to spend as they see fit and a side project to showcase their talent. In the best case, they’ve got the base necessary to scale to $10,000/month or more.

Focus on making your first buck, then add a zero. Then repeat infinitely.

6. “On the Internet, no one really cares about you when you’re small.” [Link] [Tweet]

Distribution of your product is probably more important than the product itself.

7. “One of the odd aspects of modern air travel is that it’s not really getting any faster.” [Link] [Tweet]

I grew up in Northern Virginia watching the Concorde takeoff and land at Dulles Airport. I miss those days.

8. “Deep inside a Silicon Valley unicorn lurks a time bomb.” [Link] [Tweet]

The only people that want (and need) unicorns are VCs with huge funds. Everyone else, for the most part, is just trying to build something important.

9. “The tricky part isn’t the technical stuff… it’s the customer stuff.” [Link] [Tweet]

One of my favorite investments on the tech tour was a company that sold ten customers a product before they wrote their first line of code.

I wish more entrepreneurs would think like them.

10. “there’s nothing quite so rare or sexy as proving your product market fit with decent traction.” [Link] [Tweet]

I met Mac during our stop in Knoxville, TN last month. I owe him a call still (sorry Mac!) but he took the time to write down all the things we talked about during office hours.

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh.

-P

Traction is credibility.

If you want to raise money, you need to have small but measurable usage. No one funds ideas anymore.

You don’t need hundreds or thousands of customers (though, that won’t hurt), but showing investors that someone is actively using the product often and/or paying for it shows them that you’re building something that people want.

Traction gives you credibility. Credibility gets you meetings. Meetings are where the magic happens.

Once you get the meetings though, don’t screw it up.

Actually, I’ll spare you the pain: there’s something you should never EVER say:

“We did all this through word of mouth.”

OR

“WE HAVEN’T SPENT A SINGLE CENT ON MARKETING!”

Ugh.

When you say that, the investor is thinking, “Shit. We’re going to bleed money on this next round, aren’t we?”

If you want to raise money, you have to always be proving that your goal is to build a business. A BUSINESS.

In today’s age, that’s easier than ever: exploit the shit out of online distribution channels.

You’ve got access to 1B+ people via Facebook ads. You’ve got even more access to people via Adwords. And don’t forget about LinkedIn ads, Quora, Pinterest, Twitter, Android, iOS and other networks. Show investors that you’re testing distribution models on those channels.

That doesn’t take a lot of money (most ad platforms will let you test with as little as $25) but it does take some effort. SHOW INVESTORS THE EFFORT.

Stop talking about your idea. Stop talking about your product. Stop talking about changing the world. There are too many other startups saying the same thing. Just prove that you’re trying to build a business.

Just talk about your business. And, in order to have a business, you need to stay focused on the traction.

No one funds ideas anymore.

If you’re planning to raise money, your goal is to be the least-worst pitch that an investor’s heard in any given time period. You don’t have to be the best.

your goal is to be the least-worst pitch that an investor's heard in any given time period. Share on X

Let that sink in for a minute. I’m dead serious.

I’m sure we all know “idea guys” – people that have been talking about an idea for a long time but haven’t ever built it. (These people are notorious for hanging around networking events every week and repeating the same ideas week after week.) Don’t be that person.

At the very least, hack together a “ghetto, but useful” prototype and get it in front of users. Better yet, get that prototype in front of potential customers. If you can’t get a prototype together for some reason, then pull together some slides / visuals and put that in front of people.

Just. Ship. Something.

In the worst case, that shows others — including investors — that you can hustle. In the best case, you’ve gotten at least one person you don’t know to buy something from you and that shows others you know how to build a business.

Jason Calacanis said it best:

Simply put, showing up without product today is like showing up without a business plan in 1995 — you simply won’t be taken seriously by most investors.

On a related note, come to the table with the right founding team: you need some combination of the hacker, hustler and designer on the team.

NOOB MISTAKE: avoid outsourcing any of your early work unless you have solid experience with that model. You’ll probably pay too much and, worse, you’ll scare off a huge set of investors that avoid early stage companies that outsource too early.

Founders should look at more deals.

There’s something obvious about investors that every entrepreneur gets wrong: an investor’s job is to end up with financial stakes in potentially successful companies and projects.

No one cares about your idea. No one believes you when you say you want to change the world. No one wants to fund your app.

That’s because there are too many people claiming to be founders out there and you’re competing with them whether you know it or not.

If you’re trying to raise money today, you should know that it’s only getting harder: the entire market is getting noisier. Everyone wants to be an entrepreneur. Everyone claims to be an entrepreneur. And your pitch is getting lost in the thick of it all.

Everyone claims to be an entrepreneur. And your pitch is getting lost in the thick of it all. Share on X

Before you even think about raising money, you should know your space inside and out. That includes knowing which companies exist, which have raised money, which investors appear to be most active in those markets. Thankfully, AngelList makes that super easy.

Take a look at the companies that have listed themselves on AngelList. (While you’re at it, follow me on AngelList.) Use the “Market” filter to reduce the list down to the companies that are actually in your space. (Don’t forget to hit “Save” so you begin to receive the weekly emails on deals happening in the markets you select.)

Once you’ve narrowed the list down, I recommend sorting the list by the amount of money raised. Now click to open the top 10 companies in separate tabs. Now, study everything those companies have disclosed.

More founders, from all over the world, are going after the same finite pool of money. The fundamental investor-founder relationship is based on asymmetric information. The bottom line is that the investor sees (in some cases) hundreds of deals while you probably are only thinking about yours.

Whether you decide to raise outside money or bootstrap things entirely, you can’t afford to not keep an eye on your entire industry at all times.

Friday roundup: 127 things entrepreneurs should know, the importance of timing and investing in yourself.

Happy Friday.

It’s been nice to get some downtime in DC this week. We’re heads down planning the 2017 tour and knocking out a huge backlog of investments. (If you’re still waiting on an email from me, sorry!) 

In case you’re wondering, here’s a quick wrap-up of our visit to Fort Wayne, IN last week and the audio from a radio interview.

As a reminder, these are the top 10 clicks across my tweets this week. You can always get the full firehose here.

  1. “Here lies the billable hour. It died a slow and predictable death, brought about by natural causes.” [Link] [Tweet]

    Everyone charging by the hour should be worried about what will happen to their jobs — and the broader industry — over the next few years.

    Lawyers and accountants should be fine though since there’s always a need for someone to keep you out of jail and count your money properly.

2. Things I will tell my kids if they become entrepreneurs [Link] [Tweet]

Love, love, love this but everyone has to be thinking like an entrepreneur.

When I was going through school, there was a job waiting for me when I graduated. For people graduating today, they need to be prepared to create their own job.

3. “get to $1,000/month in revenue and then worry about everything else.” [Link] [Tweet]

Until you have a little bit of revenue (or, in some cases, at least a little bit of traction), nothing else matters. So stop thinking about logos, domain names, business plans or anything else. Just sell.

4. “Hustle doesn’t mean working 24/7. That’s a sure way to burn out and lose.” [Link] [Tweet]

There are two kinds of entrepreneurial people you want to work with in your life:

  • Smart and hard-working. These people tend to be the best at build service / consulting companies.
  • Smart and lazy. These people tend to be the best at building a company around a product.

I prefer to invest in the latter.

5. “In 10 years Goldman Sachs will be significantly smaller by head count than it is today.” [Link] [Tweet]

Personally I’m a techno-optimist, in the sense that I believe technology grows the overall pie and provides over time, great opportunity for human beings in terms of quality of life, economic mobility and so on.

6. “One of the biggest challenges in tech is not being right. It’s being ten or fifteen years too early.” [Link] [Tweet]

As with most trends, you want to be early and right or late and right. Everything in the middle sucks.

7. “I began to see it everywhere I looked: too many startups like to play startup.” [Link] [Tweet]

Once a startup has $1 of revenue, it should never be called a startup again. You should be starting a company to actually build a company, not to be a startup forever.

8. “Let now be the time where we stop fantasising with the facade of overnight success and start hustling” [Link] [Tweet]

We’ve been fortunate to meet a lot of extremely successful people building huge companies in out-of-the-way places. The best part of those meetings, however, is listening to the founder’s real stories of the “10 year overnight success.” (Heading into 2017, we’re going to experiment with videos and other content to help share those stories.)

9. “I had the luxury of this decision because I had decided to invest in myself. So, I doubled down.” [Link] [Tweet]

I’ve been self-employed ever since. Monetarily, was it the best investment I could have made? If I had been interested in working at P&G, I doubt it. But, in terms of freedom to follow my curiosities and carve my own path, yes, 1000x.

When it comes to your professional life, always choose yourself. Always invest in yourself.

10. “No one needs another piece of business software. No one.” [Link] [Tweet]

This is the #1 problem technical people have with sales: people buy solutions, not products.

No one cares how many features you have, how many lines of code it took or how “passionate” you are about the business.

Solve problems. People will pay you for it.

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh.

-P

Get to $1,000 first.

One of my biggest regrets around the tech tour is that it isn’t about tech at all. It’s about entrepreneurship.

My personal goal is to meet as many entrepreneurs around North America, I don’t really care whether they consider themselves “tech” people or not.

I tweeted something yesterday that got me thinking about this:

At the time, I was listening to a Q&A session with Jonathon Perrelli and thinking about some of the people we’ve met in the last 39 cities we’ve visited this year.

At the early stage, so many entrepreneurs get hung up on things that just don’t matter. (i.e., patents, business plans, logos, NDAs, etc.)

The reality is that the default state of any company is failure and the #1 reason why it will likely fail is because there wasn’t enough money coming in the door.

The good news, however, is that sales fixes everything and that’s entirely in the founding team’s control.

If we could get more people all over the world to be thinking about how to make their first $1,000/month — even if it’s on the side while they hold a full time job — just imagine how much better off they would be.

Some of those side gigs would turn into a nice cash stream for themselves. Some of those could turn into $10,000/month businesses that support the founder full-time. Some could turn into $100,000/month businesses that support entirely new jobs for others.

Entrepreneurs sometimes get lost and it’s the community’s job to make sure they stay focused on the goal: get to $1,000/month in revenue and then worry about everything else.

The problem isn’t local investors, it’s you.

Investor pitches, particularly outside Silicon Valley and NYC, generally fall into two buckets: the founder either asks for too little cash or aims too low.

When founders ask for too little cash, usually in the realm of <$250K, alarm bells start ringing for most investors. We worry that you have no idea what you’re talking about, how much it costs to build a business or worse. If we give you too little money to hit a significant milestone, the likelihood of you hitting that milestone (or even surviving for 12-18 months) is small. That’s bad for everyone at the table.

When founders aim too low, it’s often even worse. This is when you get called a lifestyle company, regardless of whether it’s true, and the investor stops paying attention. It sucks, but it happens. As Charlie O’Donnell says,

Venture investing is hard.  You’re going off of very little in the way of predictive data–so if you’re not telling a big story, it’s hard for us to imagine one if we don’t hear it from you first.

Look, I get it though. Outside the big hubs, the local tech community will often tell founders to lower their ask to align with the local investor’s checkbooks. That advice is well-meaning, but terrible — ignore it. The problem isn’t the local investors, it’s you. No one’s a gatekeeper anymore.

The problem isn’t the local investors, it’s you. No one’s a gatekeeper anymore. Share on X

Get on AngelList, look for other companies in your industry and align your ask with the average seed round. If you can’t find the money locally, go elsewhere.

Understand that learning how to pitch a business is just as important as building the business itself.