Lecture 19 - Sales and Marketing; How to Talk to Investors (Tyler Bosmeny; YC Partners)

keep talking okay great um so okay 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 um I graduated college I actually studied math uh and statistics probably like some of you here in this room and thought I was destined for this world of uh Finance I was about to go started a hedge fund um and at the last second uh a friend of mine roped me into 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 there figuring out sales for this very early stage company and then uh when it came time to start clever um you know we started clever and I did it with two co-founders who were 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 um but it turns out that some of the

things that uh I picked up at this this previous job where I was figuring out sales have been huge parts of uh what's made clever um grow so quickly today a quick background on Clever uh we build software for schools um we are an app platform used by developers and it's used today by about one in five schools in America um and we started it about two years ago and so sales has been AIG 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 there's 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 uh and a lot of people see sales uh as having this you know a lot of Mystique around it you know it's people who are uh you know really articulate and impossibly charming and they have these you know killer closing lines that they use and I think this is how I saw sales and I think this is how a lot of Founders

I talk to C 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 we're going to hire the salespeople and what I've learned is that hire 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 uh 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 to some people cuz like I've never done sales and and I wouldn't even know where to begin uh but it turns out that as a Founder you have some unique advantages that make it uh possible for you to be really really good at sales um and one of those is your passion for the product and what you're building and the second is your industry knowledge of what you're 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 uh this is actually my co-founder uh doing sales this is what sales looks like you know in the very earliest days of a startup it's not Don Draper it's it's a lot of calls like these um but this is something that uh even as a Founder who's never done it before it's very easy to do but you have to commit yourself and what we did at clever was we dedicated uh one founder which was me to peel off and say Okay Tyler you got to go figure this out and

um and work on this full-time because it's so important to our business so couple things that I've picked up about sales along the way in 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 of the funnel and you move your customers through it um pretty common categories there's this prospecting uh category where you're trying to figure out uh 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 um and then of course you're in the promised land of of Revenue and what I thought would be interesting would be to talk about each each of the stage a couple strategies that we've used at clever that have uh worked really well um so that these aren't abstract things but things that um 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 um you know one of the things that I realized early on so there's this guy Everett Rogers who who's created this technology life cycle adoption curve and he describes it is a bell curve where you've got you know your innovators and who will try new things and you've got your early adopters your mid-stage adopters your late adopters your laggards and one of the things that was really helpful for me in understanding sales at an early startup is he's Quantified the tale 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% 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 2.5% 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 you if you're starting to do

the math you're hopefully starting to realize you have to do a lot of calling you have to do a talk to a lot of people um so early on in the early days of clever this was my job uh you know in the in the two months the first two months of YC I reached out to over 400 companies trying to get them to take a call and um and talk to us about what we were building there's that there's three ways that I have found most successful in uh in in prospecting and getting these

people uh one is your personal Network that's obvious I'm not going to spend any time there uh 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 E3 or something and uh actually the kind of conferences where sales happen look more like this um 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 in uh Milwaukee guess what that's probably where you should be so we go to conferences like these we'd get the attendee list in advance we'd email every single person in advance and and try and set up meetings so that when we get there every single minute of that trip was was well spent um and this was huge in clever's early's day these this is where we met all of our earliest

customers uh the second thing I mentioned is cold email a lot of people don't know how to write cold emails um it's actually really easy and the key is not to write a lot should be really concise um this is an email template that I used early on and you're welcome to copy it but 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 could we find time tomorrow um it's really easy and 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 uh I think uh just have a lot of questions about what to actually do um and the biggest thing to take away in fact if you only take away one thing from this presentation today

um 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 3 months that all they want to do is get on the phone and talk about every feature and talk about all the different things it can do and talk about why it's

the greatest thing in the world and I have that Temptation too 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 talking they do in fact I've seen calls where the where the salesperson told me their goal was to only spend uh 30% of the call talking and have 70%

of the call of 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 um 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 uh what this person needs and hopefully understand their problem even better than they do that's what really great sales is and in fact uh this is something

I I I I drill into everybody uh at clever it's a really important part of sales and there's actually now if any of you 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 talked and looking at one of those emails uh you know if someone doing sales at 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 these people now you got on the phone do a lot of listening really understand their problem and then the other part of this stage that surprises a lot of people is followup so here's a lot of different steps uh that you can imagine uh going through you know emailing somebody not getting a response and emailing them back uh 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 uh 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 are all the different steps that we had uh 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 them 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 uh well guess what this is what it looked looks like in the best case and um and so you really have to have kind of this unhuman unreasonable willingness to follow up and drive things to closure now I'll qualify 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 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 a no as quickly as you can where you die is if you have a thousand maybe and sometimes I talk to Founders who say oh yeah I have this great pipeline of you know a hundred people who are who have expressed interest in our product and the Mayes are what kill you if you can get to a yes or a no in some ways a no is 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 of followup and ambition but make sure you're focusing it on the right pieces all right so you've talked to some you've talked to a ton of people you've had all these phone calls you've followed up with them ridiculously to the point where they they just know you're not going away and they've got to sign an agreement um 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 um if you're part of YC this is really easy because YC has standard template agreements that they give you so you don't have to find these uh and you can just you know use those uh but they've never been available you know if you weren't part of YC you kind of had to figure this out on your own um one of the things that I'm really excited about is um as part of this presentation YC has agreed to open- Source their deal

documents so these documents that uh YC 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 uh for their startup you've got some great documents and then the other thing I'll say about this a place I see so many F 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 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 um you know make sure the agreement is the way you want it but then sign move on uh I've seen Founders spend months quibbling over some indemnification Clauses and their business would have been way better off if they'd uh you know just signed the deal and and moved on to the next one so that's one closing

trap you can fall into um I have two more one other closing trap that I see Founders uh struggle with a lot is they they're talking to a company who says I will use your product but I just need one more feature you know 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 um oh well I can build that feature great you know

I'll build that feature and then they're 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 10 if you actually built that feature uh you go back to them and then there'd be one more feature or there' be some other reason that they're not using the product so if somebody says to you hey

I want to but 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 uh we'll put in the agreement that 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 um or more commonly what we did at 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 um and then you're not you don't have to worry about doing something that's customer one off which is what you really want to avoid so uh 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 H happens all the time people you know they go down this path with a with a customer it seems really exciting and then the customer says oh well can I

get a free trial and you can't blame them that's a totally reasonable thing to ask for but the problem is when you're starting a startup 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 you haven't made as much progress as you it's actually terrible You' you think you've made progress but really at the end of the free trial you're going to have to sell them all over

again so the way I handle this that has worked really well is when somebody says can I get a free trial you say um 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 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 startup so that

minor change is actually makes a night and day difference when you're when you're thinking about these things all right 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 as just like any other thing of a startup your goal is to you don't have to do things that scale in fact you can purposefully do unscalable things to try and get early customers um

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 is well what aspects of this are are repeatable and and what aspects of this you know are we going to scale further and um there's this Kristoff Jan says this really great blog post online about the five ways to build a$1 million company and uh he talks about you can have a thousand customers buy a product that cost $100,000 or you can have 10,000 customers

buy a product that costs $110,000 or you can have 100,000 customers buy a product that cost $1,000 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 a $100,000 product um 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 uh workday that's great but if you think

you're going to be a rabbit and sell products for $1,000 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 redlining um 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 um not thinking about how to do it in a scalable way and that's one area where uh you can get underwater or it just forces you

to increase your prices um so this is how I think about different businesses and it'll be helpful for you when you get started and once you've done enough for the sales to say okay you know where am I and uh the correl of that is is how do I have to price my product to be be a viable business so that is those are some of the things that I figured out along the way building uh Building Sales uh now at a at a few different companies um and specifically on this very narrow stage of

of 0 to 1 million uh after you get to 1 million you'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 uh this Zer to One Step uh I wanted to focus the presentation on that today because there's not as much about it and it is something that I think is uh very opaque to a lot of Founders um 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 uh would like to do what I did and join a startup that's figured it out and and and hone your skills and hone your Craft um we are hiring at clever so that's an option um but even if uh 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 thank you very much yeah that was awesome um all right so now we're going to

talk about uh a little bit more detail on how to raise money Michael Cel is first going to talk about how to c pitch and then d and c will do inves role [Music] play mind glowingly you know uh new uh it really is basic blocking and tackling but one point we wanted to make before we get started is we actually don't spend a lot of time at YC focusing on this uh 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 uh and so if you remember anything it's make your company better and the pitch will be easier uh we're going to spend uh the time into three kind of sections uh before the meeting which Michael will kind of focus on uh we'll 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 sa 5 minutes so if there's something

we don't cover please write down your questions and we'll go through them no without further Ado beautiful here all right so um my name is Michael cyel I'm a current YC partner I've started two companies one was called Justin TV um it ended up selling to Amazon the other was called uh social cam which sold to Autodesk and um what I really wanted to do Wasing break down and demystifying the process of creating a pitch so I think what 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 as a Founder so we're going to go over four things uh 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 um whether you're talking to people who want to give you money who don't want to give you money you're talking to your parents this is is your go-to the second is your two-minute pitch um this is for

people who are more interested this is people who you might want to raise money from or people who you might want to get to work for you or people you actually kind of need to get a little bit deeper um notice that's where I stop a lot of people practice 10 30 minute pitches hour pitches I think that's all garbage I think you can get everything you need done in 2 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 be better so then I want to tell you about when to fund raise cuz 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 um 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 straightforward that requires no pre-information on my part you have to assume I know nothing literally nothing about anything um 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 um 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 hey 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 we're Airbnb and we're a Marketplace for space I don't know what that is that's going to require more time so use Simple language very very important the second is how big is your Market um it makes sense to do a couple hours of research figure out what General Industry product is in figure out how big it is investors like to hear that you're in a multi-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 up second sentence how big is your Market third sentence how much track do you have ideally this sentence is saying something on the order of we launched in January and we're

growing 30% 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 in 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 isn't some long SLO that you guys aren't thinking about this like a big Corporation you're thinking about it like a startup 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 have no you have no idea how valuable it is to be able to explain to someone what you do in 30 seconds so really internalize that like if you take nothing else away that's going to help you okay two-minute pitch now you've got someone who you actually have to convince of something um maybe even someone you have to ask

for money so I like to add four additional components um and these also go by very quick the first is unique Insight now if you talk to VCS they'll say stuff like what's your secret sauce what's your competitive Advantage what's your unique Insight it's all the same thing um when I think about unique insight what I think about is here's your opportunity 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 in two sentences the aha moment so 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 two sentences so you get in and out fast so if I look at you and I'm like uh then it's okay 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 in 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 so many Founders run away from this question because they think things like if I say advertising people are going

to be like oh that's stupid just say it don't run away if it's advertising say advertising Facebook's a massive advertising business so is Google if it's direct sales it's direct sales if it's uh you know a game and you're selling inapp uh um inapp uh adups like that's fine just say it don't run away from this sentence it only has to be one sentence long where 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 well now 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 going to monetize instead I'm writing 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 like it's totally okay no one's going to hold your feet to the fire and say 3 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 s single way your company can make money the next one is team um I think that this answer is actually really clear I think you're trying to do um two things if your team has done something particularly impressive you need to call that out uh we were the founders of PayPal probably want to say that um we were the founders of Amazon probably want to say that so if you guys have done something that has made investors money you want to

say that if not then please don't go on about the awards your team has won 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 know each other we don't want to hear you guys metad at a Founders dating event 3 days ago um ideally you've known each other

either personally 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 um how you met that's it you can get in out of that two sentences very easy your 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 um when it comes to this and you have to figure out whether this is a conversation that 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 um this is a time where you have to know are you raising on a convertible 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

um you have to know uh what the minimum check size is these are things where if you don't know these these things investors going to be like oh these guys aren't serious or they haven't done their homework so whereas in the rest of this whole thing you shouldn't use any jargon in this part you shouldn't just be like oh we're just raising some money like now is time to actually use a little bit of that jargon if you don't know that jargon Google search it like it's it's real simple uh you guys learn it fast

so that's it by the way that's to that's all your pitch done like game over um now you let them talk so when to fundraise um 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 um often times though you guys will be in the situation where you're just starting or maybe you just launched so what you need to do is you need to think about how do you flip

the equation um your entire mindset should be typically you are the ones asking investors for money and therefore they are strong and you're weak how do you create a scenario where you are strong and they are weak right that's where you want to be fundraising so first how do you know that you're strong if investors are asking you to give you money you're strong that might be a good time to start fundraising if investors aren't asking um 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 and you're getting the word out either that's through 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 can 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 want it to be this thing's moving we all left our jobs we're all working full-time and it's moving if you want to jump on great if not there are 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 and always 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 they're 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 um this is really really simple but I'm surprised at how many companies don't get this right um the first is

you want a warm introduction from another entrepreneur preferably or a previous investor of yours um that's where you want to start if a someone who's passed on your company as an investor offers you uh to make introductions that's Kryptonite don't touch that so first Warm introduction very simple you don't want to coold 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 second 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 the investors email you back you say hey we love to St 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 schedules that meeting three weeks out it's better for them because their Calendar's 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 can meet 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 um it shouldn't be something that 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 put my hand in it to Big Dalton yeah oh beautiful hi um so my name is Dalton Caldwell um I'm camera can get us okay yeah I'm one of the partners at YC and one of the things that we're going to do today uh real quick is a mock pitch and

first of all I know this is a bit contrived um but this is in this format of like a college class we're going to do our best uh to to have fun and kind of demonstrate what it's like and I realized there's a million reasons why this why you could say oh this isn't realistic of what pitch is really like but um you know again there there's a lot uh that we can show you just in terms of of my background um over my career I've raised uh 85 million over several companies so I've set

in a lot of investor meetings and so I'm going to be pulling as many things as I can um so again we're just going to try to show you uh something to talk to and use it as a learning session um and you already did your intro earlier caser right it's uh yeah I mean I've done a couple startups y y y um so we're going to do two pitches and we're go through them pretty fast as as Michael said these tend to go fast uh so let's go dive into the first one okay so

um so caser I understand you you're coming to pitch me today can what can you tell me about what you do uh so we're building a communication platform uh that will allow uh you know businesses and consumers to collaborate uh on one single platform rather than the kind of fracture state that they're in right now um I don't know I I don't follow so like think about like what uh like WhatsApp or SnapChat does for consumers we want to do that for businesses um and and so what the I have to do this with a

straight face what that uh what that means is um we want to enable consumers to talk to businesses that that's really what really the goal of our buiness of our startup is I still don't so who uses this what does the product do um so I mean it it it's for consumers and businesses it's a messaging product um it allows consumers to why would why would a consumer want to use your product because they want to message the business okay uh well okay what can you tell me about the the market or what the opportun

what's the size of this how big do this company get messaging companies are very big obviously WhatsApp sold for like $19 billion uh and Snapchat is like really growing very quickly as well um so we I mean we think the opportunity is very big okay uh so okay okay can you tell me a little bit about your traction your numbers like have you have you given this to people yet uh yeah I mean uh we don't want to kind of open the Kono and kind of go into all the details here uh kind of at

a high level uh we're live uh we we definitely have thousands of users uh in the Bay Area hundreds of businesses you know kind of can you tell me who some of those businesses are um there's ones that you've been to uh we don't we don't really want to get too much into the details because you know we're still early and we don't want you know we're trying to stay stealth 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 to these businesses

and we think that's great um so and these businesses are responding to the messages and and we think that's you know I don't think that's obvious uh that that would happen so can you tell me about what your business model is and how yeah so we we uh we charge businesses um like a monthly rate we haven't precisely fig figured out what that is uh we we've right now we're full we're free uh for the you know few hundred companies we're in right now uh but we're looking to probably do a monthly how much do

you think a business would be willing to pay um we think certainly $10 to $15,000 a month okay um so so anyway uh could you tell me a little about your team and who you have working on this uh yeah there's uh we have five Founders um technically I'm the only one who's full-time uh right now the we're raising money so we can get you know the rest of the team uh on board uh yeah that's just are can any other Founders program or or uh yeah yeah I I mean uh we have I mean

one of them is a bio PhD uh but he's like he's really picked up coding um the the uh I mean I'm I'm a python uh developer I did learn Python the Hard Way oh look at the time well it's been really great meeting you uh please keep me in the loop this sounds fantastic I will send you I'll send you I'll send you an update great okay that was awful all right that was aw okay uh so let's just go through so that was 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 talk to you knows what you do this seems really simple but 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 that they don't know even what your app actually is is um 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 uh for Market size try to give some plausible bottomup analysis and don't just name drop big companies that aren't even really related to what you're doing um people tend to do that a lot uh try to have insights try to convince me that there's something that I don't already know about the market that I learn uh talking to you rather than just what everyone knows about what the market is right I I learned nothing uh during that particular pitch um also the team

just like why are you working on this why are you suited for it uh it's a good thing to do and finally like he didn't drive the conversation anywhere 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 um as fast as I could so anyway that was that was not um a good pitch uh so let's let's try that again okay all right let's do this okay all right Caster well um so I understand uh you have a company

and uh can can you just tell me a little bit of what you guys do yes so we're a messaging product we allow I mean that sounds kind of vague so what we allowed you do uh you to do is essentially message a location so when you walk into a Craton Barrel you can send the crat Barrel manager uh a message like hey there's puke in the hallway or if you're at the airport I'm trying to find this specific gate CU I'm not at this airport where is you know where's the terminal for Virgin or

if you're at Target what aisle is okay so is this a mobile app or what yeah so on the consumer side we have iOS Android app but really getting consumers to download apps is obviously very yeah I don't don't I don't usually just download apps to send most businesses we have a call to action which says text the owner directly uh We've tested actually a bunch of copy that works the best uh in small print we have the messages are Anonymous that also lowers the barrier to entry I think the most counterintuitive thing we've learned

in the kind of launch that we've had we in 350 locations in the bay we've been doing this for about 3 months uh we're about 11% uh weekly growth rate uh in terms of acquiring businesses but the most ctive thing that we learned cuz we weren't actually sure is will people send messages when they walk do people send what kind 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 we're in this uh location in San Jose this Kebab stand father and son it's just a takeout place and we saw message that go that went through that said like are you hiring and that's like very strange because you would think like why would you just ask the owner but we realize that we know this is the OWN owner and the person who's walking in doesn't and so they they do prefer to actually just text the

owner because they think that's that's an easy okay so it's like a suggestion box or it's like a way to just like message initially that's what we thought what it was but what we actually discovered is vast majority of the me I shouldn't say vast majority over half the messages are actually just things like when do you open when do you close cuz that's not on Google do you you know are you catering uh can you know do you have any uh reservations available tonight okay okay well look in terms of your traction it sounds

like you said you had some businesses like tell me about what what you guys have right now so with 350 businesses all from San Jose to San Francisco we sold them ourselves as three founders uh we're all technical but we actually did all the sales uh 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 recognized that closing those contracts and our limited amount of Runway 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 hey this like this messaging product that sound interesting it sounds like you have some customers I mean how this be big though like okay maybe you can get in terms of like numbers I we we see uh 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 or Google review in a lifetime of business they might get five or seven

so they're getting a a huge volume of messages relative to what they tend to experience and they're private so they're not public so in terms of how do we actually make money it's not you know Frankly Speaking we don't have a very clear answer there uh the two PS are the SMB side or the LCS side the large customer side large customers we know from our retail experience just regular feedback tools are three to4 million per year it's like a Sears where we came from uh smbs uh We've tested are willing to pay $50 a

month so I I you know uh I certainly I think this is this can be a large business but uh and there's clear ways to make money but I could I could see that um 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 uh there the the formula LTV minus CPA lifetime value Minus cost per acquisition SMB is never going to work out and so we

have two solutions one is to go up market like originally planned to Starbucks or Walmarts or two is actually uh uh essentially pair with consumer facing companies Yelp Google Facebook have been talking them they want do it so we've talked to Google and Facebook uh we're meeting with Yelp but we basically want totr doce every time you search for a business there should be a message button we want to get consumers in the habit of knowing they can send essentially a text message to any business um that can help us get broad distribution our 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 yel don't want to give up that valuable property it's really an ad unit okay um we we do want to just sell this as a feedback tool to large large players all right can you tell me a little about the team we're running low on on time yeah there's three of us uh all technical we uh Mike and I did a company before uh Sunny is a ex Google engineer we come from

retail um so and our first startup was a failure so I don't know if that's good or bad but uh we we've worked together and um yeah we're all Technic we've built everything ourselves and we sold everything ourselves okay um so we've already had a couple of conversations with your firm um we're raising 500,000 and 8.5 million convertible note uh of that 500 250 is committed by Mike Maples Eli Gil and um aen sinit uh and and Mike with Floodgate is willing to fill the around we think you're you know you particularly you and your

firm can bring a lot to the team with your retail experience um is this something that's interesting to you yeah you know I think this is really interesting I mean I would need to to talk to a couple more folks on my side but I do think this uh this this could be pretty big yeah since we've had a couple conversations before uh and uh and we're certainly willing to meet again we are closing around this Friday um and so uh certainly take time and and let you know let your other partners know uh I'll

be available between now and Friday I'll give you another call before Friday before we close the round uh but we'd love to actually see you uh see you in the round okay well sounds good I got to go but uh thank thanks for for that we'll thanks okay all right um so very different type type of a conversation yeah so do you have the click uh so in terms of that one you know some key points here is try to actually tell a narrative that makes sense to people um you notice there was narratives there

was talking about people how they really use it were're able to tie it down to the real world which is good he was able to demonstrate insights and actually tell 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 meeting where it felt more like a conversation than just like a like I was interviewing him about something uh in my opinion um he actually asked for money and this is the other key thing is at the end you saw I

could have easily just been like okay got to go um but he he did uh talk about fundraising as Michael mentioned and he was able to provide all the context and all the questions I would need to actually have a serious conversation with him if he was kg about it or shy about it and not clear on the numbers that there's a very good chance that um you know I probably would have just ended the conversation uh due due to time pressure um yeah it's interesting you know we we sit on the other side a

lot you we really you can tell when people are very passionate and know their business very very well and that's what you have to become um okay so closing thoughts here before we uh what you want to do after the meeting before we get into Q&A uh we're running a little short on time uh after the meeting the first thing just like the Tyler said in the sales things follow up this is uh this is important and anything other than a check or wired funds is a no so if they say we got to keep

talking to Partners I assume that's a no um and so you do want to put some pressure uh the way that you can do that is get deal heat a deal heat is just a term which means there's a demand for you to to be in your round this is the easiest way uh and an important way to actually drive a price Etc um due diligence on the investor so let's say you have that 500,000 raise for your seed round on the 8.5 million like we use this example um do diligent investors uh if you

do find out I I do you know diligent adult and I find hey he's actually not a great investor I can get elot 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 to somebody you should know who you're selling it to uh to make sure they you know they're the type of people you think they are uh and then last um know

when to stop 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 you think you could fundraising does not equal success and just because you fundraised is not mean you succeeded and nobody realizes that and I'm we say this and we'll say this now but I'm sure everyone will still equate fundraising success and read about someone's fundraising and assume that means they're successful my my my guess is my intuition is why this is the case is because a

lot of smart people their whole life they've like applied to good schools and applied to good jobs and they they just think fundraising is another like application that they can just kind of check off and building a compan is much more ambiguous but anyways that's uh that's the session I don't know if we have time for oh just under underlining that build your company fundraising is not the goal you guys just stick around for a few minutes after and answer questions sure yeah we can do that all right thank you guys very much that was

great