All posts by Carlos Eduardo

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Brand Tourism & Attention to Details

As a hobby, one thing I love to do when I travel is visit commercial establishments (be it coffee shops, stores, services, etc) that have excellent brand consistency. I call this ‘brand tourism’.

What I mean by brand consistency is where you get a feeling, as a customer, that every detail is thought through to reflect the values and vision of the founders. The more attention to detail, the more I enjoy the brand tourism experience.

This attention to detail typically includes how products are created/selected, how customer service is, and how people experience your product or service (packaging or locale).

To give you two visual examples of places in San Fran that I really enjoy for their visual attention to detail and store brand consistency, check out these two photo stories I made -

Taylor Stitch – A clothing store that has a very San Fran Hipster feel to it. - http://stories.iconografi.co/taylor-stitch

Four Barrel Coffee – Although these days the experience is perhaps slipping according to a few due to the popularity it has, its decor and how they hire staff has been very good. - http://stories.iconografi.co/four-barrel-coffee

I’ve chosen to share physical locations as examples (vs. apps) because they can set a good example upon which to base software products. Around San Fran there are several other really good example.. The Mission Workshop bags store and Triple Aught Design store to name a few others.

So, as you think about building out your website, imagery, icons, etc, ask yourself, am I making my brand consistent across all aspects and details of what I do?

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The Top Ten Fundraising Fails

Fundraising isn’t easy, even if done well, its fraught with all sorts of ambiguity and frustrations. To that very point, I recently wrote a blog post about the fundraising mindset in order to help you set a tone on approaching the process.

That said, there are things you can do to make it go better than others and things you can do to make it go worse… and in the spirit of the ‘Tonight Show’s’ top ten list, below are my top ten things that will likely cause a fundraising fail situation.

Avoid them and learn from your mistakes and you will increase your likelihood of success.

- 10 – Presenting with a style that doesn’t capture the right attention.

Yes, being over the top and dropping ‘f bombs’ might get you attention, but is it the right attention? Is it focusing the attention on what your message or just you? Also, what about a boring slide deck? Or a a deck that is missing product shots? Do these represent you well? What if you say your product is simple, but then your deck is really over complicated.. does that sound right?

 
- 9 – Not having a proper fundraising plan

Fundraising requires research. Find out if your potential investors are even interested in your sector.. have they invested in your competitor? What amount do they typically invest in? Going to someone that is a late stage investor when you are raising a little bit of money is like putting in a minimum order of 10 pizzas when you can only eat one.

 
- 8 – Not understanding your customer and how to reach them

When presenting or speaking about your customer, do you show a mastery about their issues? Do you understand what makes them tick and why your solution is the one that will likely best serve their needs? Do you also understand how to reach them? Where do they shop? What media do they consume?

 
- 7 – Unable to demonstrate a real pain for your customer (and how your solution fixes it)

It is always tempting to create something that is useful to you, but is the solution you’ve created really a necessity or just a nice-to-have? Demonstrating a real pain, usually through some form of customer validation, is crucial in making a convincing argument for your startup.

 
- 6 – Assuming that a general market size study applies to your startup

One of the things you can do to quickly show that you don’t have a full grasp of your market is by showing a much larger segment than the one you operate in.  For example, I’ve seen pitches where an iOS app that is for sports tracking, mentions all mobile users worldwide as their market size… when actually, its more like mobile-sports-tracking-enthusiasts, which is a sub-segment of that bigger pie.

 
- 5 – Not truly understanding who your competitors are

This one is easy. If you think you don’t have competitors, then you probably haven’t researched hard enough. Rarely are there ideas that no one has thought about, but secondly and perhaps more importantly, sometimes there are substitutes which are ‘good enough’ which you need to be aware of and show how your solution overcomes the momentum that those existing solutions already have.

 
- 4 – Not knowing your cash needs & cash burn

If you’re going fundraising and you don’t know how much money you need, how long it will take you, to achieve what, and how you will spend it… well, then don’t fault investors if they aren’t impressed with your request for investment.

 
- 3 – Not explaining why your team is the team that will make this happen

Your team is 99% the reason why your company succeeds, and the idea is probably like 1% (I’m guessing on the numbers, but this guess feels right). If you skim through the ‘why’ of why your team is the right one for this investment, then you’ll likely miss an opportunity to impress an investor. I recently wrote a blog post about how to best think through your team slide here. Also, if you want to learn about how an investor evaluates your team, read this one.

 
- 2 – Having your existing investor shareholders own more equity than the founders

Toxic rounds that precede the round you are raising for can really negatively affect your fundraising plan. Read about why here. In general, try and make sure that you take investments that don’t jeopardize your future ability to raise follow-on funds.

 
- 1 – Not reaching out to an investor through an introduction

Lastly, the best thing you can do for yourself is get an introduction to investors that you want to meet. Introductions are great ways to have immediate validation. Here are some other ideas on how to reach out to other investors.

 
- Bonus – Not learning from your mistakes

Learn from your mistakes. You will make many, and that’s OK, so long as you don’t beat yourself up, understand what went wrong, and then iterate on it. In the words of Einstein – “Insanity is doing the same thing over and over and expecting different results.”

Below is the slide deck that I used to present at Google Campus’s Fundraising Day.

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The Perfect Team Slide And Why It Matters

Originally posted on Netocratic.com on July 2, 2014

When an investors considers your company for investment at the earliest stages, who you are is so much more important than your idea. Your team is such a crucial part of your company’s success, and yet many teams omit their team slide or bludgeon it because they don’t feel they have anything interesting to add other than team photos and a job-title.

What’s worse is when pitching, founders usually just point to the team slide, and say something like – here is our team, we have lots of rockstars or something generic like that. And that’s it…

Wow.. way to undersell who you are!

Let’s look at what the major selling points of a team slide should be:

1. To show a team’s capability to deliver

Basically, does your team know anything about what you are doing. If you are a healthcare company, do you have a healthcare background? If you are making something for the financial industry, have any of your team members worked there? What companies have your team worked in that can validate you? If you’ve worked at Google before, for example, it would be worthwhile to put that company logo up on your team slide because the image of the brand would speak faster to your audience, than any number of words you could say in the same time frame.

2. To show a team’s capacity to deliver

Are you effectively complete or incomplete as a team? Is your team mostly business people but lacking the technical capabilities to deliver or is your team well rounded and able to execute? If your company industry requires an amazing specialist, do you have that specialist?  By the way, do not assume that it is a bad thing to admit you are looking to hire for specific functions you don’t currently have in an early stage startup, it shows maturity and your team’s self-awareness, although you don’t have to state it as part of your pitch (just saying, in case it is asked as a question).

3. To show a team’s culture & communication style

What is your company like? Is it a fun place to work in or is the tone more serious? What ‘titles’ do people have? How many of your team are outward facing and how many inward facing? These details are all items that an investor can pick up on based on your team slide.

In terms of where your team slide should be… there is not hard and fast rule, but I’ve found that if you are building something born out of a personal experience at your prior job or of interest.. it makes for a decent early slide to explain the background to your story/pitch. If you are building something that isn’t part of your background story, then where the slide sits is more about flow. Focus on telling a good story that is complemented by your team slide rather than the other way around.

So next time you are doing a presentation in front of investors… ask yourself, are you doing your team slide justice?

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New Beginnings from Old Ends

Originally posted on TheNextWeb.com – 5/19/14

I’ve been fortunate to have been part of over one hundred founder’s journeys from developing their initial idea to raising investor money for scaling, and as such, several of these founders shared with me their stories in order to help put this blog post together. Some of the most inspiring stories have been those where the founder has persevered to overcome difficulties with their original idea, but equally inspiring have been those stories where a pivot has led to something new and better than the original idea. As such, the focus of this blog post is to explore some of the thoughts that come into play when considering whether to persevere with something or pivot onto something new, and what can sometimes stop us from doing so. 

In the words of Albert Einstein – “Insanity is doing the same thing over and over again and expecting different results.”

One of the most powerful quotes on the subject of moving onto new things, comes from Seth Godin’s book called ‘The Dip’: 

Extraordinary benefits accrue to the tiny minority of people who are able to push just a tiny bit longer than most.
Extraordinary benefits accrue to the tiny majority with the guts to quit early and refocus their efforts on something new.
In both cases, it’s about being the best in the world, about getting through the hard stuff and coming out on the other side.

On New Beginnings

If you knew that by changing one aspect of your project, or moving onto a new project (leveraging the experienced you gained working on your current project) would be better for you, would you do it?

One of the best stories out there about how a tough time was made into a success is the story of Twitter.. it’s best to simply watch the video and hear it directly from one of the early employees, but suffice it to say, the founders are much better off for having made that leap of faith onto what has now become Twitter.

The question is, what can you do to predispose this kind of thinking and/or kicking things off in the right direction from the beginning? Let’s start from the top…

On Starting – Being something for someone, not everything for everyone

Positioning is an oft-ignored concept that gets lumped into ‘general marketing’ and isn’t thought of as a starting point for defining value to your customer as well as your company’s strategy. Positioning, in summary is about thinking how your company sits within the mind of your potential customer and the overall market. 

In ’The Dip’, Seth Godin talks about how if you cannot be ‘the best’ then you might consider the incremental benefits of persevering down the path you’ve chosen. I propose, for the purposes of early stage startups, that what Seth meant by being ‘the best’ could be restated as ‘being appropriately and distinctly positioned within the mind or circumstances of your target audience’. 

If from the start of your company’s launch, a customer sees value in what you are offering because no one else offers it, then by default, you ARE the best option. Thus, ‘bestness’ can be achieved both by either entering a market that already exists and with a new proposition appropriately positioned in a way that ‘bests’ all of your competitor’s offerings, OR by create a new market to satisfy the latent needs of customers and creating a new ‘best’ category for yourself.

If from the onset of a new project or business you cannot conceive on how you can either push through the necessary work to be the best in an existing category, or appropriately position your value proposition as a new type of offering to a target customer, you might want to continue refining your ideas until you reach one that has a clear value to a clear group of users that will see you as ‘the best option’ for what they need. Anything short of that, and you start running into differentiation problems against established competitors. As a starting point, on my blog post on the product market fit cycle I talk about how you can integrate the concept of positioning into part of your company’s ongoing analysis.

During – Knowing what you want

Just being the best or differentiated from your competitors isn’t always enough. If you don’t know what you want, how will you know if you’re getting it (or not)?

Having a strong vision of how you want to operate your company and how you want your company culture to develop, matters. It matters in helping align all employees around a cause, around a work ethic, around solving something for someone that they fully understand. It allows you to make decisions about the tone of your company when speaking to your customers and employees, the quality and nature of your products, and what’s sufficient for you to consider a product experiment succesful.

The best talk on the web about this very topic is Simon Sinek’s TED talk on the subject.

Define what you want and why you want it, anything short of that will lead to you and your team being pulled in many different directions constantly.

On Ending - the benefit to quitting at the right time

Let’s say that you’ve hit a plateau in growth or exhausted your ability to find a segment and/or beachhead for your company to target, one potential solution is that you start compromising on your original vision.. Perhaps you wanted to have a certain type of service offering or a specific customer, but by having to address a different segment or customer your personal goals are compromised. For example, lets say you had a social cause in mind, but the only way you could get your idea to ‘work’ is by moving to a non-social cause. Will your heart be in it?

If this happens, now what?

Well, time and resources are precious, wether we are talking about life or startups. By shifting your focus of energy at the right time onto a new project or by altering the one that is not working, you free yourself up for a new victory rather than perpetual stagnation or worse, failure.

So if you’re in a situation with a product, feature, or company where it is clear that persevering could merely create a waste of resources usually in the form of time and money and frustration for all, it might actually be better for you to quit and attempt something new, or ‘pivot’ one aspect of your customer to positioning/product/go2market relationship.

By quitting early, you don’t waste energy going down a path that is inefficient and leading you nowhere and opens the door for new beginnings and new ideas.

Paralysis – But why do we sometimes NOT quit?

So, if there are clear benefits to quitting when it is clear we are going nowhere with an idea or project, what generally stops us from doing so? 

Below are some reasons why we don’t budge when we should:

1) We Sweat Sunk-Costs too much – The IKEA Effect
 
Quitting or just giving up on something is a big word. It comes with lots of social stigma. We’ve been brought up in the west to ‘never quit’, to persevere at all costs. We are taught by society that quitting is what losers do and isn’t respected. Unfortunately, this mentality can create a myopic tendency to arguably stick with things way beyond when one should. Those accomplishments or efforts that we sometimes hold on to as barriers to moving on to new things are called sunk costs.

Sunk costs can come in many forms, you might be overly invested to what others may think of you if you quit, what your family might think, etc. You might fall in love with an idea or product too much, or you might have beliefs about commitment, perseverance and not letting anyone down.  

A version of sunk costs is the ‘IKEA effect’  whereby we value things more if we’ve put in effort. 

In the words of Nik Brbora, (a Clipper Round The World sailor and Chief Software Engineer for Seedcamp company Saberr): “The IKEA effect basically says that once you build something yourself you love it a lot more and place disproportionally high value on it. Even if it is not as good. You built it and so to you its way more awesome than to an outsider. By some factor. So if you are building a startup or a product you typically accumulate some value, be it the time invested or the knowledge about paths which don’t lead to product market fit. To you this value is way higher than to an outsider because you built it. To quit would be to face loss of this (to you) huge value. And that hurts disproportionally more than when compared to the outside market value of that gain. So what you need is a disproportionally high-value event to justify quitting.”

Having something fail doesn’t necessarily have to be a massive failure, it all depends on how big the attempted experiment was in the first place. One way to avoid building up too many ‘sunk costs’ is by taking smaller bets. For example, if you were trying out a new business idea, service, or feature, it could be that you ‘quit’ the market segment you are targeting, and you target a new one (the classic ‘pivot’)… 

In his book titled ‘Little Bets’, Peter Sims talks about how by not over-committing on massive projects from the start, you can cycle through ideas and innovations far faster and at a lower cost. This concept isn’t new, and any reader of the ‘The Lean Startup’ by Eric Ries will recognise the concept. However, it’s worth noting that many times we forget to think of ‘little bets’ in all aspects of our attempts, be they marketing, communications, or even a new sport, not just when it comes to product development. 

One side benefit, naturally, of accumulating these little bet ‘failures’ is that your experience and ability to adapt will grow stronger and when you do find something that works, you will be that much better at dealing with it.   

2) We fall subject to The Loss Aversion & Endowment Effects

The Loss Aversion Effect is what makes us prefer preventing a loss vs potentially gaining a higher gain later. It is one of those irrational quirks that makes us human. This is why trial periods work, you fall in love with something during the trial period, and then fear the loss more than the gain you would have by passing it up for something potentially better in the future. This effect is the reason why many hold on to stocks or their failing startup for longer than they should. Other good resources on this include Dan Ariely’s YouTube lecture on the subject and this Psychology Today article on the subject.

The Endowment Effect is proximal to the Loss Aversion Effect and the IKEA effect, but basically its about how we value that which we have far more than what we don’t have. Literally, we think it is worth more than the market pricing would give it just because we own it.
 
3) We actually don’t really know what we want, so we don’t really know if we are getting it.

As I mentioned early, from a strategic point of view, knowing what you want is such an integral part of actually achieveing it. This may sound absolutely basic, but its very easy to just get carried away with whatever others think and not really mentally commit to what you personally value and set out to do from the start. 

This ‘vision’ you should have isn’t necessarily about having specific clarity on how something plays out, as no one really knows what the future will bring, but rather about focusing other variables.. such as, what kind of company culture you want to have or what type of customers you want, or what kind of products you are passionate about.. the choices are endless, but you do need to start be defining what your vision is otherwise success starts becoming a moving target and moving targets make it hard to know when you’re failing.

In the video I mentioned earlier, about how Odeo.com became Twitter, you can hear (at time 0:50) how very people people in the company were passionate about audio, and how for sure that probably influenced their ability to connect with their customers.. audio just wasn’t part of what they lived and breathed and therefore, not really likely to help them make decisions clearly for an audio customer.

From a more tactical point of view, defining milestones and KPIs for success can help you get a feel for whether a hypothesis you are testing out is met. By defining some milestones up front for your company  you can track your expected progress more tightly, rather than constantly letting things slip and not having clarity as to why they may be slipping.

4) We are too busy believing other people’s stories – The Bandwagon Effect

In the words of Gabriel Hubert from Seedcamp company Nitrogram  “I think some founders don’t quit because they’re still too influenced by perceived “success” or progress of others, etc…  Companies are rarely doing as well as they say they are, and founders should beware of attending too many events that only encourage them to listen to these stories.” 

We are subject to falling victim of the bandwagon effect  whereby we want to be like others. If other startups say they are ‘killing it’, you want to believe you are too.. even if that’s not entirely true. Fight your own battles, but know why you are fighting them and when you should reconsider.

5) We are fearful of what will happen and if anything better will come

The last main reason why I believe many are unwilling to quit is because we are afraid about whether anything better will come along after you move past your current project. Perhaps the product you built is so beautiful, the culmination of what you thought you could make, could you make something better? The people you are working with, could you build a better team? The idea you have, could you come up with a better one? The money you raised, could you raise again with a failure under your belt?

Ironically, in some recent studies around happiness, it turns out that there are a couple of tendencies that play in your favour. Apparently, how you feel over time, is inherent to your predisposition towards life. This is called the Set-Point theory of happiness  In other words, if you’re a positive person, if something negative happens, with time you will rationalise it, integrate it into your life, and after some time, your life perception will return to how you were before. According to the theory, basically, no matter what you fear will happen, your perception of the eventual outcome after a time, will be no different regardless of the positivity or negativity of the outcome, it all depends on how you, as a person, perceive life to start with. If you want to read about this more, another definition for this is the Hedonic Treadmill.

So, if ‘time neutralises all wounds’, so to speak, would you be that much more willing to give something a shot?

After a Transition – Your Recovery Network

In the past, I’ve discussed the benefits of networking for the purposes of helping you develop your company and find the right people and opportunities. However, it also has a hidden benefit.. networking is your post-transition safety net. People that are open to meeting new people and do so on a regular basis are more likely to see identify new opportunities and are also more likely to have the very people they interacted with during their previous journey help them out in recovering. 

It is pretty common to have CEOs of companies that have moved on to other things become employees of other startups, or go on an start a new company and have many of the people they met in their journey back them in their new endeavour. One of the things we have seen time and time again in a close knit group of companies such as Seedcamp s, is that because of the nature of how founders get to know each other, is that they transition to other startups within their network, effectively providing them a safety blanket of options from being in the same network.

In Conclusion

1) Understand what your vision is and what success means to you
2) Understand who your target audience is and what being ’the best’ in your category means to you and them    
3) Take smaller bets, which can fail, but won’t over-compromise you or your resources
4) Quit/Pivot when you see the signs of not being able to ‘be the best’ in your selected segment after your time goal has passed
5) Acknowledge the emotions that come with quitting, but know that whatever crisis you are going through, it too will pass
6) Never stop building a network, this will be your net – keep them posted on progress, ask advice, and notify them if you are moving on. If you’ve been talking to mentors and investors and other startups and given to the community, they will remember you and help you out.

A big thank you to Nik Brbora (a Clipper Round The World sailor and Chief Software Engineer for Seedcamp company Saberr), Gabriel Hubert from Seedcamp company NitrogramShawn Zvinis (read his startup’s post mortem here), Ben Wirtz (read his startup’s post mortem here), Tomaz StolfaSarah Nadav  and Louis Chatriot for their feedback and input in writing this post.

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