Startup Whisperer

Do Not Demo Naked

I have made some of the worst mistakes doing demos. I also like to think that I sometimes do an ok job, too. When raising money, investors really love for you to get out of PowerPoint and show product. They love it. Heck, you love it. Its real (hopefully). Your product should get everyone excited about what your business and your company. I like to spend 5-10 minutes of my 20 minute investor pitch doing a demo. You should have it scripted out and burned into your brain. It needs to be well rehearsed. For a little inspiration, check-out some of the demos and CEO pitches that show up on Vator.TV, TechCrunch, and TED.

After you become a well-polished demo machine, don’t forget to prep for the little things. In particular, please prep your machine before a demo. Here are some simple things to do:

1. No demo noise - Turn off any alert-oriented applications like email or instant messaging. This is extremely annoying to your audience (and potentially embarrassing). I remember pitching to a well known firm on Sand Hill Road while little Yahoo Messenger alerts were popping up explaining how you can make a certain "member" larger.

2. Keep it clean - Prepare a clean desktop. Remove any personal background images or lots of icons on your desktop. Keep the vacation pictures off the screen.

3. Keep it local - Have your demo scripts, bookmarks, or local demo files, etc. ready to go either in your Web Browser (if its Web-based) or a file folder saved on your desktop. Always have a local demo available, too. You never know what type of situation you are walking into and not having a demo available is just sub-optimal.

4. Demo your company’s mojo - Remember what your demo is all about. Your demonstration should be constructed to reinforce the key investor points that you make around your unique sales proposition. You will only want to show features that reinforce your points around unique technology, as well as the attractiveness to the audience in your total addressable market (or TAM). You will want to layer specific examples in the demonstration. These examples can be comments and feedback from customers or they could specific pieces of data that you have (e.g., the feature is so compelling that customers spend 15 minutes on this one screen). Its wise to walk thru a couple of typical use cases (e.g., an older man with a heart ailment types "heart bypass" in Google, our site is so deep with SEO goodness that we show up in the second search result, etc, etc).

I like these tips from Jason Calcanis from a post last year that are good to read as well (part I and part II are here). Be prepared. Do no demo naked.

Showing Your Startup Mo’

I’ll never forget that scene in Fast Times at Ridgemont High when Mike Damone explains that no matter where you are make it seem like the coolest thing going on (some cool Fast Time quotes here).  I am always reminded by that scene when talking about a business’ momentum around investors.  You want to highlight and package your business in a way that makes it seem like the coolest enterprise on the planet.

I can tell you that a lot of aspiring entrepreneurs should really re-watch that movie in order to get some pointers from Mike Damone.  The amount of questions that I personally get on fundraising have been accelerating.  Per a recent post on the StartupWhisperer free investment slides, there have been a ton of free PowerPoints sent out and I would love to get feedback whether they were helpful. 

There are a lot of ways to show your If you are early stage, you will not have much to show.  In this case, you might want to show early results from customer tests or trials.  Key customer testimonials would also be a good compliment to this slide.  If you have data that is meaningful, then don't be afraid to show it. Data around unique users, searches, new v. repeat customers, organic traffic, subscribers, etc., is really useful.  If you are a B2B business, you might want to show your sales funnel here and highlight closed deals.

Whatever you have that shows some traction – use it in a while that tells a story.  The data that you use should explicitly tell the investor that your product or service works for your core customers and there is less risk investing today because there is early traction on the business.  This data should only be used if it is growing.  Showing flat growth trend lines will defeat the goal of this slide. 

So figure out what you’ve got and use it.  Not just your words.  Or said better by the immortal Mike Damone, “I mean don't just walk in. You move across the room. And you don't talk to her. You use your face. You use your body. You use everything. That's what I do. I mean I just send out this vibe …  something happens.’

Small Exits or Big Exits

I really like Will Price’s (CEO of WidgetBox  and not to be confused with WidgetBucks) post on his IRR multiplication table.   

There is a lot of debate around the changing role of venture capital – is it better to make small or bigger bets?  Everyone has an opinion on whether you need to shoot for base hits (smaller exit price, smaller money invested) versus home runs (bigger exit price, more money invested).  Whatever your religion is, this chart is a neat little reference to have on your wall. 

Free Investment Deck Available To Startup Whisperer Readers

It’s official - the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association confirms what all of you entrepreneurs already know:  it is damn hard to raise money.  The recent study shows that Q3 2008 had total VC financings down by 16% from the previous quarter.  Heck, Washington isn't even listed in the top ten states anymore (as measured by total invested dollars).

Since launching Startup Whisperer about a year go, a lot of folks have asked me to help them with their pitch decks or to review what they’ve prepared.  I try to offer advice where I can but frankly, I find it hard to squeeze in time to help folks given the focus on my own startup (which brought in $10M led by Draper in June 2008).  But not all hope is lost.  I have arranged some help from the pitch experts at PitchHammer.  I've run across these folks and they do a great job of offering advice around raising money.  As a special offer to Startup Whisperer readers, PitchHammer is offering a venture proven investment PowerPoint with an addendum that walks entrepreneurs through each element of the investor deck. 

I highly recommend these tools. Signup for the Startup Whisperer email newsletter or send email to sales@pitchhammer.com and you'll get these tools for free.  Not to be snarky but I ask investment professionals refrain from signing up for the deck -- like a band of magicians, us entrepreneurs need to keep our tricks secret.

(Almost) 40-Year-Old Product Review Virgin

I was recently asked by Fortune to do a product review.  I admit, next year I’m turning 40 and this is my first widely-public product review.  Not review and tell, but you can read about my experience here on CNN Money.  You can also see it in the February 2009 Fortune Small Business. 

I have written plenty of articles and normally blog startup advice but this assignment was much different and revealed a whole new perspective on the writing process.  It was a lot of fun once I channeled Walt Mossberg to produce a crisp and hopefully insightful product review. 

Traditional media assignments are interesting.  In the blogging world, you really can get away with a lot of grammatical mistakes, sloppy writing, etc.  Heck, many readers point those mistakes out to me on a regular basis.  Blogging is sometimes more about breaking news and the speed of information versus the quality of information.  While Twitter isn't blogging, you could argue that there is sometimes more value in 140 characters of text if you are reporting on a breaking story (e.g, like your plane just crash landed in the Hudson). The differences are obvious but I was surprised at the emotional differences of the mediums:

 1) Editors - I am not used to an editor.  I obviously needed one since my style of writing is more stream-of-consciousness versus well-groomed text.  Going back and forth with an editor was a new experience for me.  It was humbling to see entire sections wiped out due to space requirements.

 2) Patience - I am used to getting an idea out to completion within 30 minutes to an hour.  It was an unusual sense of anxiety around waiting to see your completed article in the newsstand.  It took months to see the work in print.

 3) Offline is Old School Cool - At the end of the day, it is really fulfilling to see something you've written in print.  It feels more meaningful and permanent.  Sure, I contributed to a small product review versus authoring a book of note, but there is something satisfying about it.

 With a recession on and rampant layoffs and closures in the media industry [like to http://twitter.com/TheMediaisDying], it will be interesting to see how the offline and online media disciplines merge over time.  There are some interesting examples recently of the merger of hack online news bursts combined with professional journalism, and we’re likely to see more.  I believe the CNN utilization of the Feedback Connect capability during the inauguration coverage gave us a window into how both worlds are merging effectively in the news world.

Straight Banker Talk: DeSilva + Philips Media DealMakers Conference 2009

I attended the 7th Annual DeSilva + Philips Media DealMakers Summit last Thurs.  It has been awhile since I have attended an investment banking conference.  It was a fantastic place to see East Coast-style, New York deal making and more importantly to be in the catbird’s seat on the financial outlook in media for this year and beyond.  The room was filled with an A+ roster of bankers, C-level execs, etc.  I think I was one of the only startups in the room.  Amongst all of the power brokers in the room, I was left with an eerie realization that the folks in the room were hit just as hard as everyone else.   Here are some high-level observations from the one-day conference:

Smart Deals In 2008
I very much enjoyed DeSilva's recap from their senior partners (Jay MacDonald and Reed Philips III) on 2008's top media transactions.  Although the mood was pragmatic and filled with a dash of fear in the audience concerning when we will exit this financial calamity, the partnership highlighted some major deals that did happen in 2008.  Some noteworthy ones, as well as some trends:

• Traditional media services players made some big bets even when the market was priced high.  These included WPP, Omnicomm, Comcast, and Waterfront Media.  Comcast bought Plaxo for $175M and Daily Candy for $125M in 2008. 

• New media made some bold moves like Waterfront Media acquiring Revolution Health for $100M to effectively take on the grand daddy of the space, WebMD.

 

The leaders in their respective markets are definitely going to exit the recession much stronger having picked up key components to their strategies and fair-to-cheap prices.

My Enemy’s Enemy Is My "Frienemy"
During the marketing services panel, key execs from WPP, Omnicom, and LBi talked about how they are using the downturn as a key opportunity to grow.  For example, WPP did over 5 deals in 2008 focusing on acquisitions that add to their geographic footprint, as well as their technology that provides insights for their customers.  They (WPP) even put a large minority stake into Omniture.  The discussion turned to Google after awhile -- where the consensus was that Google is both a friend and an enemy.  Or as WPP's Sheila Spence continued on this theme that they (Google) is their "frienemy."  The panel believes that the natural tendency in downturns is that "science is favored over art."  Meaning that performance-based solutions are favored over high-touch marketing services.  They believe that the pendulum will swing back as the economy recovers.  Google is clearly the leader in the science of advertising.

Yep, It’s Almost Impossible To Raise Money
The theme of startups with enough capital to last 18-24 months was echoed on the digital media panel.   One of the funniest moments on the digital media panel was when Patrick Kenealy of IDG Ventures told the tale of two types of VCs in this economy - the "carry-on VC and the baggage VC" (in response to venture investments in 2009).  As he put it, "some VCs have carry-on and some have baggage.  VCs with baggage (their existing portfolio) are busy doing triage.  New carry-on VCs don't have the baggage (new money in, not many investments) but are reading the bad press so that they are doing nothing.  Habib Kairouz, managing partner at Rho Capital Partners, said that their own ad-based portfolio companies used to have 9-12 months of IO (insert order) visibility and now they only have 30-day visibility.  Orders are still coming in but every month is on edge.   

Overall, everyone is obviously feeling the impacts of the economy.  Some lessons learned from the companies that were in attendance:

• If you have the capital or equity collateral, use this time to extend your capabilities by acquiring companies at fair valuations
• If you are a startup, the very rare company will be getting money in 2009
• Online advertising is still in its early infancy and huge businesses will continue to outperform and thrive against traditional players

 In other words, my advice for you startups is to survive.

Some Startup Tips On Vator.TV

I was recently interviewed by Bambi Francisco on Vator.TV on my tips for entrepreneurial success.  Check out the video clip.