Beyond the Buzzword: What “Viral” Really Means
“Every time I hear the word ‘viral’ I throw up a little in my mouth.”
Ok, I cheated a little. No one I know actually said that out loud but I guarantee you that there isn’t a venture investor out there who hasn’t felt this way at one time or another. Why? Because some entrepreneurs waive that word around as if it’s a magic wand that can make any and all marketing related questions disappear.
It’s not. And it stopped being cute months (years?) ago. If you want to avoid investor MEGO, you need to show them that you truly understand what viral means for your service. To that end, here’s a little primer on what I call “The Virality Spectrum.”
Negatively viral products are things you might use but that you actively don’t want others to know about. If you use AshleyMadison.com to cheat on your spouse or spyware to get intel on the competition (or your spouse), you probably don’t want anyone to know. It is certainly not impossible to market services like these, but do not expect testimonials from satisfied customers. You had better have some other tricks up your sleeve to get the word out. AshleyMadison’s PR campaign is a good example. If your keywords are cheap enough and your conversion rate and lifetime customer value high enough, search engine marketing can also do the trick.
Virally neutral products are ones that people use but don’t think much about. They tend to be utilities like Microsoft Word. We all use it, but when was the last time we bragged about it? You can sell products like these with traditional advertising, marketing, distribution channel strategies, etc. but if you mention the word viral in a pitch for this type of company, you aren’t going to get very far.
Optionally viral products are ones where you hope people who really like then will pass the word on but there is really no special reason for them to do so other than the fact that they think you made something pretty cool and they want the social cred they can get from being the first to pass something new along to their peer group. Games like Angry Birds certainly have gone viral but you never know when or where lightning will strike. If you have a product like this and your strategy is to have it go viral, you had better have a lightening rod. Put another way, would I invest in a record label that scouts out new music talent? No way. Would I invest in Simon Cowell‘s record label? Any day.
Inherently viral products are where things start to get interesting. These services become more valuable for the user if he or she tells others. The classic example of inherently viral products are Facebook, LinkedIn, and other social networks. You still have to show that you can acquire that initial core audience (or better yet, that you already have that core), but if you can prove that you have an inherently viral product that fills a real need that no one else is servicing, you are well on your way to seeing a checkbook emerge from hiding.
But wait! There’s more. Some products go even further; they are necessarily viral. These products can’t be used without letting your friends know about it. In theory, you can use evite without emailing your friends, but it’s going to be a very small party. Similarly, VolunteerSpot, the volunteer management tool I mentioned previously (and that – full disclosure – I am invested in), is designed to allow the prospective volunteers who you have invited to sign themselves up online for tasks. Using VolunteerSpot without sending out that email or posting a link to your activity pretty much defeats the purpose. With inherently viral products, using the service and the ask (“tell your friends”) are still separate tasks. The beauty of necessarily viral products is that you don’t even have to ask.
So you can see why I love investing in necessarily viral products. :-)
* I love them so much, I’m even working on one right now. So of you are a developer / potential CTO who appreciates the power of a necessarily viral service, give me a shout.
How To Handle Product Disconnect
“Why don’t you give Karen a call?”
I was chatting with Ryan Armbrust, an Associate at ff Ventures, about their portfolio companies. ff Ventures is one of those rare VCs that has built a dedicated infrastructure within their fund to help their portfolio companies with the various functions (staffing, biz dev, et. al.) that they desperately need but are not yet able to support in-house. Funds that devote full time resources to this are rare enough; in the early stage investment space that ff Ventures plays in, it is virtually unheard of.
We were discussing VolunteerSpot, a company that takes the pain out of organizing volunteer-led events. 87% of their nearly 3M users are moms and, since my prior two startups (Bunk1 & Layercake) were both family-focused, Ryan thought I might be able to offer some potentially useful insights. So I set up a half hour call with their CEO, Karen Bantuveris.
Karen and I hit it off immediately. A recovering consultant like myself, she built VolunteerSpot to solve a personal pain point. As she explained, she would turn on her phone after a flight home from a client and her inbox flood with dozens of emails. But work was not the worst culprit; the majority of the email overload had to with her personal life. Every time she was invited to volunteer for something (e.g., with her daughter’s school, her church), she entered Reply All Hell. You know the place. It’s where otherwise intelligent people think it’s fine to spam all their friends with short emails (“I’m in,” “Sounds great!”, “Cool!!!”, etc.) that don’t answer the question (e.g., “When can you man the concessions table?”) or omit key info (e.g., their name (Really?!), their contact info).
Two hours into this half-hour call, we finally agreed to finish the conversation the next day. By the end of the week, we were talking about my devoting a sizable block of time to help them with strategic partnerships and business development.
Now I am a product guy at heart. As much as any non-developer can make this claim, I build every product I have ever been involved with from the ground up, from vague concept, to prioritized feature list, MVP, wireframes, detailed specs, UX, etc. all the way through QA and customer support. But because everyone at a startup wears multiple hats, I’d also done quite a bit of biz dev, marketing, sales – whatever had to get done – so I dove right in.
After a few weeks of networking, I began to notice a strange feeling of disconnect from the product I was pitching. I quickly figured out why: every other time I’d done biz dev it had been for products I’d built. I knew them intimately, inside and out. If a potential partner had a slightly atypical use case, I knew which lesser-used product feature to steer him to. If he wanted something custom-coded, I had a good sense of whether it was a big or small ask from the tech team. But VolunteerSpot was built and up-and-running over a year before I got involved and so, for the first time, I didn’t have that deep product knowledge. It felt oddly surreal.
So I’ve had to adapt a little. I am happy to share my strategies for beating product disconnect… and eager to get any suggestions you might have.
1. Learn the product
There’s no excuse for not putting in the hours. You should know enough about the company to understand the typical use cases and to try to use product that way. Then look through the help section of the website to get a feel for known limitations, suggested workarounds, and other, less typical use cases.
It helps to have a few email accounts you can use for testing, especially if your product has multiple user types. For instance, I needed to experience VolunteerSpot’s services both as an event organizer and as a participating volunteer. If you use gmail, you can set up email aliases on the fly for this. If your actual email is yourname@gmail.com, you can use yourname+organizer@gmail.com and yourname+volunteer@gmail.com. No prior setup is required and both emails will go to your normal address but you will be able to tell which email was sent to which user by seeing which alias is in the email’s sent to field.
2. Set expectations
In my case, since I don’t have an official role at VolunteerSpot, I often frame my participation as my “helping out a company that I am invested in.” So if I don’t know every nook and nuance of the service, it is to some extent excusable. When this is not an option, you might instead acknowledge that you joined the company relatively recently. Done correctly, this can segue into all the great things about your current company that seduced you into leaving your old one. Sometimes the same pitch sounds less salesy when phrased as “but what I really loved about this company….”
And when all else fails, you can always mention a recent product redesign. :-)
3. Don’t fake it
It’s much better to firmly say, “I think so / don’t think so but let me double-check and get back to you” than it is to fake it and not sound genuine. Or worse, get caught getting it wrong. If you’ve done your homework (see #1 above), odds are that this situation will only arise in response to an obscure or novel use case. Your prospect is likely even aware that he is taking things off the beaten track and won’t judge you harshly if you don’t have the answer right away.
4. Learn from it
When this happens, don’t just hook your prospect up with someone else in the company who can answer the question. You talk to the expert and educate yourself. Or invite the expert to a conference call to answer the prospect’s questions while you listen and learn.
(Afterthought: Reading over the post above, I can’t help wondering how wide an audience it will find. Seasoned biz dev professionals may find this advice blindingly obvious; they may be used to joining companies after the early building stage and accept some level of product disconnect as entirely normal. On the flip side, startup veterans are more likely to be handing off their biz dev role to the pro when their companies reach that level than they are to be taking on a biz dev role at a different company. So please let me know if you found this post useful or not.)
Angel Profile: Angela Lee
Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch. Here’s the original article.
Why do you angel invest?
I love helping early stage entrepreneurs as I’m an educator at heart. I’ve started several companies and like being able to share my experience to help other entrepreneurs. I think there are way easier ways to make money so if that’s your only goal, you should not be angel investing.
What was your first angel investment? How did it turn out?
It was a movie and something I felt very emotionally tied to. It raised the profile of mental illness in the Asian American community and was a Sundance finalist. When I heard about it, I said, “This is a movie that more people have to see.” Even if I lose all of my money on this one, I’m still glad I invested.
What investment do you most want to brag about / why?
One that’s doing very well is Legends of Fighting. It’s like Ultimate Fighting Championships (UFC), but in Hong Kong. They just raised a $4M Series A on a $13M valuation. They are on TV, selling broadcast rights. I know nothing about the space, but my husband and I went to school with the two co-founders, and they are both really smart guys and one knows the MMA space very well.
What’s your biggest lesson learned?
I relied on other investors too much at the beginning. I would think, “This person seems smart” so I trusted their due diligence probably more than I should have. I have gotten pretty far down the process and have been within days of writing a check and something didn’t feel right in my gut but I kept saying, “But this guy is invested in it and he must know what he’s doing.” To be clear, it is less about those people not being smart and more about my needing to get my feet grounded as an investor before I understood what my investment style was.
People often say that there are three types of investors. You either invest in the team, the market, or the technology. I am a team investor, I care about the team first and foremost most so it doesn’t make sense for me to rely solely on someone who cares first and foremost about the market they are playing in. That’s what my gut was telling me. For instance, I heard great company pitch yesterday and several people whose opinion I trust are interested. And even though I think the company will make a lot of money, I didn’t feel a connection with the team so I won’t be pursuing it.
What’s the smartest thing someone pitching you (or who you invested in) said / did?
The entrepreneurs that I like most are the ones that I say “no” to and they a) ask for feedback and b) three months later email me to show how they responded to the feedback. They stayed on my radar because they realized that this is not in any way, shape, or form a short term transaction. Maybe I missed their friends and family round; maybe I said no to their seed round, but guess what? Maybe I can introduce them to a Series A investor. That’s smart. This is a long term game.
What’s the dumbest thing?
“American Idol” reactions. You know, the “I’m gonna be a huge star one day and you’ll be sorry” type responses.
You run 37 Angels, a community of women angel investors. What’s the difference between men and women angels?
In general, I think women feel the need for a higher level of confidence before trying something new. They feel they need to know more about something before jumping in and their appetites for ambiguity can be low. This makes them less likely to go into angel investing and it’s why women angels have something of a reputation for taking a long time to pull the trigger.
At 37 Angels I try to a) increase this appetite for ambiguity, and b) help them do more effective due diligence, to get it down to five weeks instead of 5 months. We show them that there are different levels of due diligence, what to do, what not to do, etc.
How will you know when 37 Angels has succeeded in its mission?
When what people remember about me is not that I am a woman angel investor but rather that I am a healthcare tech investor who has deep expertise in the pharma industry. I’ll know I’ve succeeded when I walk into a room and people don’t automatically introduce me to the other woman in the room.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
Seamless, real-time health monitoring for preventative medicine.
What’s the best way for entrepreneurs to reach out to you?
Please go to the Entrepreneurs section of 37angels.com. You can also check out my Linkedin profile: @37angelsny.
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here.
Angel Profile: John Ason
Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch. John’s profile went up a few weeks ago but I haven’t had a chance to post it here until now. Here’s the original article.
What got you into angel investing?
I came out of AT&T Bell Labs, doing bleeding edge technology for 10 years, and then marketing and business management of large telecommunications projects sold overseas. So when I left, this was a natural extension of what I was doing AT&T. I made money in the stock market and apply the same discipline to angel investing: sell the losers and double down on the winners. Getting out of an investment is very difficult for most angels when the company is no longer viable as opposed to putting more money into it. I also play poker and most angels and entrepreneurs are good poker players.
What was your first angel investment? How did it turn out?
It’s either Xlibris or TuckerToys, I can’t remember. Xlibris, the first self publisher on the internet, sold about three years ago at a very nice profit. TuckerToys makes the Phlatball – over 15M sold, mostly overseas. TuckerToys produced a couple of great years of dividends and is still in existence.
What investment do you most want to brag about & why?
The two companies I am most famous for are Diapers.com and Bikini.com. People used to make fun of me for investing in Diapers.com because we were selling diapers on the internet… until Amazon bought it for $545M. And the really neat part was that I contributed absolutely zero to it, other than money and encouragement. It was like watching a really good movie. Marc and Vinit were super operational people and did not need any advice.
I like to mention Bikini.com because that humanizes me as an angel investor as opposed to those money hungry number crunching VCs. I need to have some fun too!
Notable train wrecks and lessons learned?
I’m proud of some of my train wrecks because I learned things from them. For example, MakeUsAnOffer was doing exceptionally well and then we got into some legal patent issues. We were probably in the right but couldn’t survive the lawsuit. Some things can’t be anticipated or planned for and you just don’t have the resources to handle.
Tell me about the startups that got away?
Never had one that got away. The closest I came to this was a company I wanted where a big VC did not want any other outside investors to get in. Ultimately, I got in indirectly through a VC fund where I am a limited partner. In most cases, the startups are just starving for cash; it’s almost always never the issue that it is so oversubscribed that you cannot get in.
Most humbling experience (relating to angel investing)?
Coming from Bell Labs, I assumed I could make anybody a good manager. But you can’t. At best you can influence them four or five degrees. You simply can’t make someone a good manager. That was my first humbling experience.
What impresses you about an entrepreneur?
I like someone who is clear, concise, compelling and elegant. I like to see an executive summary that fits on a single page with a lot of white space. And I love an idea that I have never seen before. Most ideas are retreads or rehashes.
Hotlist especially made an impression. They had amassed a massive database on events that people had gone to, were going to, or would be going to and there is a lot of location based services one can offer having that information. I had researched this area by doing due diligence on a few companies. Hotlist just had everything buttoned down and I made my decision in 28 minutes.
What turns you off to an entrepreneur?
Whenever people use the word “conservative” or “next generation.” I have a secret dictionary of these words which earn demerits and can disqualify the entrepreneur. This is how I “gamify” my investment process.
What makes you different from the average angel?
I like to invest in only industries that I know nothing about and I generally “let the dogs run.” I offer light overall guidance and try to introduce them to people who can help them. I am not an invasive investor.
Also, I mentor a lot. I have mentored companies which I did not invest in because they didn’t need the capital. I do it pro bono, because most entrepreneurs are nice people and in return I learn from the experience. I currently mentor 10 to 15 companies like this. They call me every four to six months for some advice or guidance and it’s usually a 15 to 20 minute session so it’s not a real time burner.
Recently, I’ve begun to mentor a number of international companies through Springboard and the Worldwide Investor Network. I also mentor women entrepreneurs through Astia & Springboard as well as women angel investors within Pipeline Fellowship, Topstone Angels, and 37angels. I have funded 11 female-founded companies, five of women were foreign born.
What financial returns do you target for an angel investment?
I aim for 10x returns. I say I want it within 3-5 years… although that’s never been achieved.
You have been angel investing for 17 years. How has it changed since you first started?
There has been a dramatic change over the past two or three years.
- The costs of starting a company are close to zero.
- The cost of proving the market with landing pages – sign up for the beta, sign up for a newsletter, answer a survey, stuff like that – is also close to zero. You can prove that there is a market without having a product.
- AngelList. I used to do 1 to 2 deals a year, very painfully. Finding a company was a big problem. Now AngelList has close to 19,000 startups on it so finding startups is not an issue. So is finding investors. In the past I used to syndicate deals. In my first 10 years, I knew everyone who invested with me intimately. Now, I tell my founders to list the company on AngelList with me as an investor and they assemble the rest of the syndicate. The majority of the other investors in my current deals are people I have never met.
- Accelerators like ERA, DreamIt and TechStars are producing large numbers of high quality, fundable companies.
- Super angels and micro VCs like John Frankel’s ff Ventures have a lot of cash for angel level companies, assisting in the fundraising process in a very positive way.
- Deal size. The average round until about a few years ago was $250K-$275K. It is now close to $650K. Many of these companies will skip their A round.
- International. The biggest response to my website comes from overseas asking me how they can invest in my companies and be angels in general. I received four investments into my companies. I have also received interest from foreign government organizations and universities on how to foster startup and angel ecosystems. We are also seeing a large number of foreign companies seeking funding.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
Brainwave chips. There are several startups that let you control your computers with brainwaves and they are starting to get a little bit of traction. They have various devices that go over your head and with this one can control a device that provides input to a computer. As this industry matures miniaturization will occur that will lead to a brain chip.
Will they really implant these chips in their heads?
Why not? I have a defibrillator. I don’t want to carry one around so I had it implanted. They could put it on sunglasses, but fashion will win out and they will ultimately be implants.
What’s the best way for entrepreneurs to reach out to you?
Email me at ason@comcast.net but read my website first!
Also, check me out on AngelList, Linkedin, Twitter, Pinterest, Spling, Tip or Skip, & PRESSi.
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here.
Angel Profile: Michael Moriarty
Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch. Michael was actually the 2nd angel I interviewed but, due to an unfortunate confluence of circumstances, his profile was not published until now. Sorry, Michael for the delay. Here’s the original article.
What got you into angel investing?
Originally it was from a personal asset allocation perspective. I had the obvious equities and fixed income but had a big hole in private equity and startup type exposure. I was really driven initially from that but I didn’t foresee how much I would enjoy talking to startups both pre- and post-investing, being a sounding board for them. So it’s now really asset allocation plus intellectual curiosity.
When/What was your first angel investment? How did it turn out?
TiqIQ is Ticketmaster meets StubHub meets social media. They have done a great job of being the ticket portal for sports team’s blogs. Fans with extra tickets can sell to just other Phillies fans or can make sure they don’t have to sit next to a Mets fan. Now they are getting into music and smaller venues and niches (e.g., indie folk music) where the social element can help you identify concerts that you really want to go to.
I invested in the seed round and my note converted when they closed their A round. I invested a little more in that round as well. It’s going well so far but the story is still being written.
What investment do you most want to brag about?
My most recent investment is Windowfarms, an indoor, hydroponic herb garden that you can hang vertically in your window. It’s very much non-tech but is very exciting and was written up in the Wall Street Journal a few months ago. It goes back to how I think about things. I get making something, selling it, making a profit, and trying to do it as many times as possible. I can’t poke holes in something like this.
Notable train wrecks and lessons learned?
There’s one company that’s not dead yet but on life support. It’s a great idea. They get Fidelity, Schwab, the Ameritrades of the world to compete for your IRA rollovers. They are running out of money and having trouble raising more because they don’t have enough traction or data to say “Yes, our model works.”
Also, there was one strategic investor that it made sense to be in bed with since they could also handle the company’s backend, letting them avoid building out the infrastructure themselves. But their technology was not as good as initially billed, the customer experience was not ideal, and they proved not to have the same sense of urgency that any startup wants to have.
You could draw the conclusion that you need to keep all critical infrastructure in-house even if it costs more money and time but I still think that there are times when the efficiencies gained by piggybacking off someone else make sense. In general, when you are heavily reliant on outside parties, make darned sure the founder has fully vetted that partner and that you understand why their survival is dependent on you success.
Startups you backed that should have hit but didn’t / why not?
None yet. It’s still early enough that they all still have a decent chance of hitting it big.
Most humbling experience relating to angel investing?
I am usually very self-critical but so far I’ve been lucky not to have anything too humbling. That said, going from a financial services “never talk to anyone outside for attribution” background to a world where it is all about getting out there has been a big transition. It is refreshing dealing with startups but the “Rules of the Road” are totally different from what I was used to. It has been a real eye opener.
What’s the smartest thing someone pitching you (or who you invested in) said / did?
He articulated that he could not let this thing fail. The founder had a wife and kids. This was his last bite at the apple. He showed me how he had made significant lifestyle changes (e.g., his wife went back to work) to get this one last chance to make it happen. It’s one thing to look an investor in the eye but when you are with your spouse every evening and can’t afford to look her in the eye… I like that.
What’s the dumbest thing?
I was discussing revenue projections with the CFO (an employee, not the founder) and he could not articulate the assumptions that drove them other than to say that “he had full confidence” in those numbers. The only thing we really know is that those numbers will be wrong, higher or lower, so at least give me the 3 or 4 high level assumptions that drive the numbers.
What makes you better (e.g., more helpful, more valuable) than the average angel?
I realize that it’s your company, not mine. I’m not going to be annoying; I won’t call every two weeks. To the extent that you find it valuable, I can help you think through the pros and cons of a particular strategic decision. I won’t impose my view of the world on you… but I will want to go back in six months and see how it worked out and how your assumptions held up.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
Driverless cars. They will be safer and more efficient because they can be in communication with the cars around them. They will know when the car ahead is breaking hard instead of just slowing down and can react faster. Also, they will know the quickest routes and automatically avoid traffic and accidents. Leave the driving to the computer and text all you want!
For more about Michael Moriarty:
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here.
Angel Profile: Fatih Ozluturk
Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch.
Here’s the original article.
Why do you angel invest / what got you into it?
I come from an entrepreneurial background. I’ve started several companies. I also joined small innovative companies. The last one when I left had gotten to be 300 people. As the companies get bigger, you start to lose some of the interesting ideas and that’s what gets me up in the morning. When I hear ideas and I wonder “How did they think of this?”- that makes my day. When I was getting started, people threw money at me and said, “here’s some money to enable you to get started.” Now I am in a good place in that some of my previous investments generated some return that I can reinvest now. So I think of angel investing both as making a good investment and as returning to the community as well.
What are some of the more recent investment you have made?
The first is Appy Couple, a wedding app for planning, logistics, guest communication, and a repository of images, notes, memories, etc. It was a great combination of an “A+ founders” and “A+ idea”. Great, passionate team with a great idea. And it’s not just what the app is today but what it can grow into.
The other is TripleLift. Their starting point was Pinterest, a very popular platform where people share their ideas, likes, and possibly purchase intents. However, a lot of this information was not being collected or used in a way that would enable companies and brands to act on it, so the amount of value brands get out of these platforms is not at the same magnitude as the interest these platforms get. Now TripleLift is evolving into an ad feedback tool connecting online advertising with users interests and intentions. TripleLift is a “Hail Mary pass” at solving this problem for me, but it could be a touchdown.
Was there a startup that you backed that you feel should have hit but didn’t?
I didn’t put money directly in this company but I was invested in it through Entrepreneurs Roundtable Accelerator and I was really surprised that they didn’t go farther. The company was called Glossy and their idea was to collect all your social network presence – your tweets, your Facebook updates, et. al. – into one site: your own repository, with a really beautiful interface. The analytics value of this would have been huge and they would have had my money. But before I could invest they folded, “pivoted” I should say, and are now in a completely different space.
What was the most surprising lesson you have learned since you started angel investing?
I have a finance education from UPenn and a PhD in Engineering from UMass Amherst. I ran an investment fund for a few years. So I think that I know technology and I understand finance. I ought to be able to pick winning companies consistently and, when you think about it, it is pretty humbling that I can’t. It’s difficult to admit, but you are never smart enough to guess what a company will or won’t do. Nobody anticipated how fast a company like Facebook could grow, nor how fast other companies would fold. I had to learn the ropes like anyone else.
So you can’t just invest in one or two companies and think that you are going to get a predictable return. You have to invest in a portfolio. Now while I do invest in individual companies, I am also involved in the ERA. I’ve invested in all their classes. In fact, I was ERA’s very first investor, before they were even formed or had any investment. I really do believe that you need to spread your risk over a lot of companies and if you are a relatively small angel investor, investing in accelerators is a great way to do that.
Any specific advice for entrepreneurs?
Something that good entrepreneurs do consistently that is smart, is that they continue to update you on their progress, even if you passed. There are companies that I did not invest in, but I get updates on them and now I think that I may invest. They don’t look at an investor as a transaction. The more an entrepreneur gives you the sense that they view this as a relationship, the more likely that I would be to invest in them in the future.
Also – and it amazes that some many people cannot do this – every entrepreneur should have a 30 second pitch, a 2 minute pitch, and a 10 minute pitch just nailed down that they can recite in their sleep. It’s inexcusable if someone cannot get your attention and explain their idea in 30 seconds.
Finally, on the execution side, entrepreneurs should know the difference between perseverance and chasing a bad idea. You should check your assumptions constantly and should not hang on to an idea and waste your time if it is not happening.
Anything entrepreneurs should not do?
I’ll tell you two or three things that, every time I hear them, I just shut my mind. When people say, “We don’t have competition” and “It’s never been done before.” That’s just crazy.
Another thing I hear which is actually pretty intellectually insulting is when people say, “This is a $10B market and if I get half a percent, this is a $50M business.” The fact that it is a huge market doesn’t mean you will be able to squeeze 0.5% out of it. Size does not guarantee success. It’s just not true.
What makes you stand out as an angel?
My edge is in two things. One is that I have equally strong backgrounds in tech and finance, so when I look at opportunities, it’s not just a gut feeling. I come across a lot of successful entrepreneurs and they invest willy-nilly in companies just because they like the people or it is an idea they never thought of. That’s great but it’s not going to generate returns.
Also, it helps that I am an entrepreneur. Currently, I am working on three companies. One is a partnership but the other two I am basically bootstrapping myself. So being an investor plus a current entrepreneur in the trenches is a real difference.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
Let’s take phones. Haptic technology – tactile feedback – is just getting started. We think gorilla glass is great but imagine this: by electrical stimulation, you can make glass hard or soft. You can make the glass click. If you are dialing numbers, you can make that touchpad appear to your fingertips almost as raised buttons on your screen. You can even make the glass smooth or rough by electrical stimulation so you can find buttons easier. People are working on these types of materials technology right now. Or imagine this – and this is not that far-fetched: imagine your screen itself acting as your phone’s microphone by capturing the vibrations of the glass and that by making the glass vibrate, it can also be the speakers as well!
For more about Fatih Ozluturk:
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here angel@alleywatch.com.
Angel Profile: Jason Klein
Note: Angel Profiles is a bi-weekly column appearing on AlleyWatch
Here’s the original article.
Why do you angel invest / what got you into it?
I ran a national-local ad network, the Newspaper National Network, for nine years, starting with solely print and building it out into online. I had a lot of experience with tablets, mobile, Real Time Buying, etc. I then started thinking about how I could capitalize on this and what I wanted to do with the next stage of my career. I had made a couple of angel investments through a good friend in the past but I was investing in him; I did little further due diligence. Now I wanted to get more sophisticated about investing. I joined NY Angels and Harvard Business School Angels. It completely changed my conception of angel investing. There is a discipline about it, a best practice. I was surprised by how many accomplished business people are devoting their full time efforts to angel investing.
I am most excited about what is happening in the NY startup community. I am incredibly bullish about the future of the NYC ecosystem. I wouldn’t be as committed to angel investing if I lived in Silicon Valley (which is too crowded) or Boston (which doesn’t have critical mass in my areas of interest). I am very impressed with this generation of entrepreneurs. Many of their peers in the corporate world have an unfortunate sense of entitlement. The 20 and 30 year olds in the startup world are very different, hard working, and passionate.
When/What was your first angel investment? How did it turn out?
My first angel investment since getting serious about it was an e-commerce startup 72Lux. Having come from the publishing industry, I knew 72Lux solved an enormous need: to enable content publishers to build out and control their own e-commerce business easily and quickly. 72Lux has some strong early customers – they just launched Wall Street Journal Select – and have a strong pipeline of first quarter launches, and are preparing for a big push around the 2013 holidays
What investment do you most want to brag about / why?
Certainly 72Lux would be one of them but I’m also very proud of my investment in the Entrepreneurs Roundtable Accelerator. It’s not an individual company. They are an incubator with 10 companies per round and I get a tiny slice of each. Having been to pitch events and demo days throughout 2012, I felt their class was head and shoulders above any of the others I’d seen in NYC. They have the best selection of companies, the best mentorship, the best growth in the companies they backed.
Notable/amusing train wrecks and lessons learned?
The advantage of being early in the process is that I haven’t had any train wrecks so far. I will say this: I am a big student of “The Common Wisdom.” Everyone will say “it’s a numbers game” and there are studies that say you need to make a minimum of 8 investments to hope to have a positive return, maybe more like 15-20 investments. That’s what the historical data say but as far as my investing goes, I don’t like the idea of expecting failure. It’s important to have a clear focus, to invest in companies that have a strong CEO in place, and to have your sights on early M&A exits. Most current exits are via M&A and I’ve been on the other side of that table. I often ask myself if I see this company being an attractive acquisition in a few years.
Startups you backed that should have hit but didn’t / why not?
None yet.
Most humbling experience (relating to angel investing)?
There was one company that I’d been looking at for quite a while. Clearly there was some kind of miscommunication and they topped off their funding much sooner than I had expected so I lost the opportunity to invest.
What’s the smartest thing someone pitching you (or who you invested in) said / did?
I don’t know about “the smartest” but I what really like is when an entrepreneur is incredibly concise in giving his or her pitch. I was trained at McKinsey: give the client the answer and the 3 main supporting points upfront. A truly exceptional pitch would capture my imagination right at the opening. A lot of presenters lose it by going off on a tangent about their background or detailed stats about the industry. While you’ve got everyone’s attention, give me the main kernel upfront and then you can tell the story afterwards.
What’s the dumbest thing?
There have been a few occasions when I shook my head and thought “Gosh, what an annoying individual!” In most cases it’s when they act as if it is a game. They think we’ve seen it all and they need to do something crafty to stand out. Get my attention with an innovative, winning idea, clearly stated and supported.
One other thing: If you are a food startup, bring samples!
What makes you better (e.g., more helpful, more valuable) than the average angel?
I’ve built and grown companies. I’ve started businesses. I’ve bought companies. Even within large companies, I’ve created and overseen small, decentralized business units that were basically startups. I understand how to operate in that environment and bring a lot of direct, relevant experience, particularly in the media and information world. This isn’t always true of other angels with different backgrounds.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
100% digitally integrated retail. Geo-targeting plus ecommerce is still very early. If you search for a car online, you are cookied and retargeted all over, but this has yet to expand into other sectors. Geo- and digitally-informed retail will grow well beyond banner ads into sophisticated lead gen, deep content integration, and other ways of getting the right offer to precisely the right person at the right place and time.
For more about Jason Klein:
AngelList
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Website/blog
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here.
