Here’s a quickie, partly (but only partly!) in jest:
- A startup that is seemingly an overnight success usually takes 9+ years to come to fruition (“In the 3rd year of his reign… On the 13 th day of the 12th month…”)
- The best startups attack truly huge markets (“… who ruled from India to Ethiopia, 127 nations”)
- There is typically an established incumbent that has become complacent and less responsive to their clients’ needs (“But Queen Vashti refused to appear by the king’s order…”)
- Many startups operate in stealth mode for an extended period of time (“Esther did not divulge her race or ancestry, for Mordechai had instructed her not to tell”)
- Even after landing their first big account and getting a substantial lead, steps often still face stiff, well funded competition (“After these events, King Achashverosh promoted Haman… above all his fellow ministers. ‘…and I [Haman] will pay 10,000 silver talents to… the King’s treasuries.’ “)
- But great startups know how to mobilize their entire community to counter any threat (“Go and gather all the Jews who are in Shushan and fast for my sake, do not eat and do not drink for 3 days, night and day.”)
- And when the startup finally best all the competition, they jacked prices up through the roof! (“King Achashverosh levied a tax upon the mainland and the islands of the sea.”)
Note: A version of this post appeared in my semi-regular column on AlleyWatch.
Since first launching in 2008, Dreamit has received thousands of applications – heck, I’ve personally reviewed thousands of applications in the not quite three years since joining Dreamit. I’ve had the pleasure to read some really excellent applications that crisply and concisely showcased what made that startup shine.
And then there were those other applications. Applications so bad that I threw up a little in my mouth. Applications so awful that I still have nightmares. Admittedly, that last part is an exaggeration but they were bad enough that I am writing this essay in the hopes that you will read it and not make these mistakes.
Consider this a self-defense essay. 🙂
We respect enthusiasm but we treasure brevity.
After the first few hundred applications, every word on the page is like Velcro across our eyeballs (which, btw, is why you should never wait until the last minute to apply to a popular accelerator program). So when we come across an entrepreneur who cannot resist using 20 words when 10 would suffice, it’s painful, really painful. We start skimming, skipping, and then bailing on the application altogether. We once received an application that ran 22 pages – of text, no graphics! One reviewer flat out refused to read it. Needless to say, that startup didn’t get an interview.
But it’s not just us being prima donnas. If this was the startup’s application, can you imagine how painful their investor pitch will be? Or their sales pitch?! It’s communications 101: listener attention spans are severely limited. Knowing what to stress and what not to say is crucial.
Thanks to this applicant, we now have a character limit on all application questions. But just because you have a 400 word limit does not mean you need to use at least 390 of them. If you can answer a question in 50 words, that’s awesome. You will have our respect… and gratitude.
(a.k.a. “The Repeater”)
Dude, we heard you the first time.
Sometimes repetition drives length. An applicant will cover the same material and cite the same facts in response to multiple questions. As sleep deprived as we are, I guarantee that we did not forget your answer to the question immediately above. For instance, we ask what makes your solution special and, in another question, ask you to specifically drill down into your competition and how you are better. You don’t need to list your competition in both places. If you find yourself saying the same thing twice, stop, think about the questions, and put that material in the one place where it fits best.
Tip: take 2 minutes to read over the entire application before answering any questions. You can even copy the questions into a Word file and work on them offline.
As much as we loath long-winded answers, I’ll take a long response that actually answers the question over a short one that doesn’t.
Sometimes I wonder what question the applicant thought he was answering. Check out these examples:
Q: What is your solution? What’s unique about your solution?
A: My mission is to right the wrong, which is just putting United States back on the ideology that built our country…
Q: Tell us about your customers/users …
A: We are using a combination of all the most successful solutions around the world
Tip: After writing you answer, re-read the question and ask yourself, “Is there anything in what I wrote that is not actually answering that question?”
(a.k.a. “The Hand Waver”)
We can’t evaluate an application without specifics. We want hard data and metrics – we want proof. What we don’t want is this:
Q: How big is the problem / how much “pain” does it cause?
A: Huge problem causing lots of pain for customers
Q: How big is your market?
A: Huge / Billions
Tip: If you can answer the question with actual, relevant numbers, do it.
The flip side to the hand wavers are the compulsive footnoters who provide every statistic available or lengthy background information. We review enough applications that we have a working knowledge of the key issues in most industries and know the basic numbers by heart.
This is especially true when you are applying to a specialized program. For instance, if you are applying to Dreamit’s Edtech program and we ask you about the problem, I don’t need you to explain the failings of our K-12 school system in detail and you don’t need to footnote basic statistics like the number of students in K-12 grade in the US. Just say, “We are improving retention for the 20M university students in the US.”
If something is obvious, we don’t need it explained to us. But anything more detailed, surprising, or controversial should be sourced. For instance, one applicant claimed that 8 year olds consumed over 8 hours of digital media per day. My gut response was “no way” and there was no footnote pointing me to his source. I Googled that claim and didn’t find anything. Even if he could support the claim, his credibility was shot.
Tip: if a quick Google search confirms your claim within the top 5 results – sometimes even within the descriptive snippets shown on the search results page itself – it’s obvious enough not to source or explain in detail.
(a.k.a. The “You find it”)
Can’t I just send you my pitch deck? It’s all in there.
I get that question from time to time and it’s a fair question. The entrepreneur has put a lot of time into crafting his deck and making it look pretty. Why fill out an application if the data are in the deck?
In many cases, the data are not all there. Our application questions represent the minimum amount of info we need to feel comfortable inviting a startup to the next stage of the process. I would guestimate that well over 80% of the investor decks we see are missing the answer to at least one of our questions. These aren’t bad decks. Many are likely very effective in getting the startup a meeting with potential investors. They just don’t have all the info we want to see.
The other answer is a bit more subtle. As I mentioned, every Dreamit reviewer sees hundreds of applications over the course of a few short weeks. Even if a deck is ‘complete’, each deck would still present the information in its own way and in its own order. We would have to hunt through the deck to find where the answer to a specific question is while mentally checking off the boxes to make sure all the bases were covered. That adds time and mental load to a process that already consumes massive amounts of both of these scarce resources.
Tip: don’t respond to an application question with “Please see my deck/website/video (link here).”
(a.k.a. The “Face Palm”)
I will forgive you the occasional typo but the whoppers will cost you.
Dreamit allows applicants to link to optional video. It can be the 90 second product overview video from your website, a product demo, whatever you feel will advance your application.
I especially like the short clips taken on your cell phone, where you just talk to us and tell us why you are so passionate about the problem you are solving and why you are excited about the opportunity to be a part of the Dreamit community. I urge you to take advantage of the video. If nothing else, it gives us a sense of who you are as a person and what it might be like to work with you.
But for God’s sake, if you are applying to Dreamit, the first words out of your mouth on that video should not be “Hello Techstars!” (Yes, true story)
We get that you are likely applying to other top accelerators – it’s the smart thing to do – and we get that the applications are time consuming and that you’d like to reuse material from one application to another. But if you muck up that badly on your application, you will eventually slip up on sales or investor pitches. Attention to detail matters.
Tip: We can see filenames too. We know what “YC_vid” means. 🙂
Accelerator Application Best Practices:
- Read the entire application before starting to answer the questions
- Copy the questions to Word and compose your answers offline.
- Don’t make us look outside the application.
- Review your answers to make sure that you are actually answering the question…
- … with actual data and metrics …
- … citing sources where needed …
- … but without wasting time on the obvious (to us) …
- … nor repeating yourself.
- Then edit down your answers to make them as concise as possible.
- Sleep on it and then review your entire application with all attached material from start to finish to make sure it flows and that you haven’t missed anything big.
Note: A version of this post appeared in an article in The 74 Million.
When I first met Adam Fried, superintendent of New Jersey’s Harrington Park School District — and newly-named Bergen County superintendent of the year — he told me, “We want to be a part of the conversation that is happening in the edtech space. For years edtech has been built for us rather than with us.”
Then, a few months ago, Stephen Hodas introduced Fried to Dreamit, which helps launch technology firms in education and other industries globally and which I direct.
Hodas, whose many ventures have included running the Office of Innovation for New York City’s public schools, worked with Dreamit when we first ran a program nurturing education technology startups. When I informed him that the company was launching a new edtech initiative in partnership with Penn State and were looking for principals and superintendents who were, no kidding, seriously interested in working with startups, he immediately mentioned Fried.
“Having an engaged, supportive educator can be the critical success factor for an early-stage startup,” Hodas told me. “Teacher feedback is essential to creating relevant and useful products, but if your model involves selling to schools, then principals and superintendents are the ones who launch your business. Only they can greenlight pilots”
This is what Hodas told Fried as well, but the superintendent wasn’t satisfied with merely advising a few entrepreneurs and implementing a pilot or two. He had larger ambitions.
“I’d spent the past two years bringing in entrepreneurs and empowering my staff — basically doing everything possible to create teachers who are fearless about taking chances,” Fried said. “But ultimately, I’m just one district. And then I thought, ‘What if I were twenty schools?’ Then the entrepreneurs would come to us, listen to our problems, and go out and solve them.”
With that idea and twenty like-minded principals, superintendents, and other school leaders, Fried founded the Northern Ignite Cluster. Its near-term goal: meet every two months with four or five pilot-ready startups capable of addressing real needs in their districts.
NIC held its first meeting in April at Dreamit’s New York office. Four startups currently in our accelerator program (i.e., startups whose businesses we’re helping to develop), along with a company that recently completed our program, demoed their apps and services for the educators.
“The ingenuity and creativity of the apps had real potential for future use by school districts,” said Superintendent Richard Kuder of the Wyckoff School District. “It was invigorating to be a part of the early side of the creative process. I am looking forward to the next opportunity.”
Fried is already looking ahead to how groups of educators like NIC can scale to dozens or even hundreds of members, partnering with scores of startups — and how groups that size will determine which ideas are best.
As we brainstormed possible structures and processes, it occurred to me that there was an organizational model surprisingly close to home: angel groups.
Angel group investing has been around for decades, arising from a time when finding individual investors was more challenging for startups, with the result that investors weren’t seeing a sufficient number of proposals to be confident they were investing in the best. Change “investing” to “piloting” and you have the problem Fried wants to solve.
As angel groups grew to dozens and in some cases even hundreds of members, they did in fact attract many more startups — too many, in fact. The groups developed screening mechanisms to weed out entrepreneurs who weren’t quite ready for investment or who were outside of the sectors that most interested the groups’ members. The process often involved a formal application reviewed by a committee of five to ten members. Only startups who making it through this filter were able to present to the group as a whole.
The possible usefulness of this kind of model to a tech enthusiast like Fried was intriguing, so I introduced him to Mindy Posoff, Managing Director at Golden Seeds — an angel group that invests in young companies with diverse management teams.
Posoff saw the potential immediately. “The power of working within a strong angel network allows you the ability to access a wide range of experiences, perspectives, and resources,” she explains. “In talking with Adam, it became apparent that our dynamic screening, due diligence and investment process could be easily adapted and scaled for his needs.”
With an organizational framework in place, Fried is ready to grow his group. “If you are a district, school or thought leader that would like to be apart of the Northern Ignite Cluster please contact me at email@example.com. We are looking forward to the future and what this will do for our children.”
Note: A version of this post appeared in my semi-regular column on AlleyWatch.
I interview a lot people – applicants to Dreamit’s accelerator program, prospective employees, interns, etc. – and one of the questions I never ask is, “What is your biggest weakness?”
I’ve learned that you never get an honest answer. At best, it’s a test of the candidate’s negotiating skills as they try to figure out what the lowest ‘offer’ they can put on the table is that is just credible enough to keep the bidding going. At worst, it’s just an invitation to lie. But the real reason I never ask this question is, I already know the answer. In fact, your biggest weakness is the same as mine:
Our biggest weakness is the weakness we are not aware of.
We all have parts of our skill sets that are not as strong as others and we all have character traits which, while positive in some situations can be counter-productive in others. But since we know what these are, we generally have ways to compensate for them or even to neutralize them entirely.
If it is a set of skills that were lacking, we choose people with those skills to help round out our team. If it is a critical skill that we think we need to internalize, we take the time to find the resources we need to study up and get up to speed.
If we have a tendency to make quick decisions but are currently facing a complex problem that requires analysis to tease out all the possible repercussions, we put processes in place to make sure that we have examined the problem from every angle. Conversely, if we find that we tend to analyze problems extensively, we learn to recognize when we are in a fast-moving situation and create decision rules that ensure that we know when our analysis is good enough to make a decision so we don’t miss out on opportunities.
But if we are not even aware of the weakness…?
Recently, I screwed up. I was concerned about one of our recent tweets and I posted my feedback to our Slack channel. Read a certain way, it could have been perceived as critical of a colleague’s performance. I frequently discuss with entrepreneurs the importance of proofing emails by putting yourself in the shoes of the recipient to make sure there are no ambiguities or potential tone issues before hitting Send. I also caution all the Dreamit startups I work with that the speed and informality of social media can lead you to share info that you should really think twice about making public (or at the very least, phrase differently for public consumption). But the relative newness of Slack tripped me up. It feels fast and frictionlessness like texting or Twitter but is neither fully private nor fully public. Unlike email, you don’t initiate a post by entering the recipient’s email address or by selecting between Reply & Reply All; the path of least resistance is posting to the entire channel – effectively default Reply All – and you have to actively switch from the original channel to a different channel to direct message someone. In short, it felt familiar but functioned differently. I had a blind spot I didn’t know about… until the crash.
Fortunately, it was only a fender bender. My colleague pointed out what I’d done and I deleted the post. No lasting harm done.
But with the tools we use changing so rapidly, with the competitive landscape we operate in evolving so quickly, you have to wonder what other accidents are just waiting to happen.
So yeah, I already know your biggest weakness. Except that I don’t. And neither do you.
Note: A version of this post appeared in my semi-regular column on AlleyWatch.
I both love and fear that phrase.
I love it because a deep network of qualified mentors is a major asset to an accelerator program. It is one of the big differentiators between a top 10 accelerator and the other 1000+ unproven* ones.
(Although you sometimes have to dig a bit to tell the difference between a page of impressive faces who are rarely actually engaged and bona fide mentors… but that’s a topic for a different piece.)
I fear it because so many of the offers I get come from people who aren’t really qualified to mentor startups and I struggle with finding a polite way respond to these offers. After all, their hearts are in the right place and it is hard to say no without sounding like an asshole.
The following is a response I wrote to a friend who said that a “big time lawyer” ** he knew had expressed an interest in mentoring startups. I tried really, really hard to be tactful.
TO: <My Friend>
Your friend needs to think very carefully about what specific expertise he can offer to startups. If I were to tell him “I’d like to give legal advice to large corporations”, he would recognize that for the ridiculous statement that it is. I have zero qualifications and any advice I gave would be as (or more!) likely to damage the recipient, as it would be to help. They would be fools to even listen to me.
But somehow when you change “give legal advice” to “mentoring” and “large corporations” to “startups”, it suddenly sounds plausible.
In my case, I *might* be able to give large corporations advice on a few very narrow topics like what terms are typical in early stage investments and how to approach contracts with startups (viz., keep it loose, don’t over lawyer it – their incentives to please a large corporate pilot customer mean that they will overdeliver but they don’t have time or money to waste on drafting minutely detailed contracts). But that’s it.
Most “big time lawyers” have never run a business, much less a startup, so the value of any strategic business advice they might give is questionable at best. Their tolerance for risk and ambiguity and their need for speed are both *way* lower than an entrepreneur’s is (or should be) so their tactical advice will likely also be off base.
If your friend has deep expertise in a heavily regulated industry, that advice would be relevant to startups in that space. If he has deep and varied connections with large corporations who he would be willing to introduce startups to so they can get those critical first big name clients, that would also be hugely valuable. Similarly, if he wants to try to get his own firm to pilot with startups (e.g., legal tech startups, relevant enterprise software), that would be helpful.
If he’s willing to give free legal advice/work in areas that are relevant to startups and has expertise in those spaces (e.g., real estate lawyers have no business drafting seed round docs and vice versa) in exchange for just seeing what cool stuff is out there (and possibly investing), that is ok too.
In all of these examples, the key is sticking religiously to what he knows well and that is also applicable to startups and not straying into areas that are fun and sexy but where he has no business giving advice. In all but the last example, it also means focusing narrowly on the right industry where he has value to contribute.
If he has given this some thought and has specific areas where he thinks he can contribute, I would be happy to have a conversation with him and help get him more involved.
I hope this is helpful and that you can phrase this response in a way that does not make me sound like a dick.
* How is that for diplomatic?
** I’m not picking on lawyers here. Some of my best – well, reasonably good – friends are lawyers. Feel free to substitute “accountant” or “banker” here if you’d like.
Note: A version of this post appeared in my semi-regular column on AlleyWatch.
My friend is at a private equity fund and is now actively looking to move into venture capital…
I get that a lot. Sometimes the friend is at a hedge fund instead and occasionally, I’m approached directly instead of through a friend but the overall picture is the same: they are bored with large, public/established, old-school companies and think VC is cooler.
I get it. Before running Dreamit’s NY accelerator program, I managed a family office and we had investments in many asset classes. I can testify from personal experience that PE & hedge funds are (with notable exceptions) mindnumbingly boring. What would you rather talk about: a rollup of mom & pop industrial gas distributors or shiny new potential unicorns?
And since Dreamit is also a venture fund in addition to being an accelerator, I get why they come to me. VC & PE funds both hold portfolios of generally illiquid investments. They are structured similarly. The exits are even the same: IPO or strategic sale It’s just with younger companies, right?
Actually, it’s fundamentally different.
You see, I work with pretty much the earliest stage startups that are anything more than a cocktail napkin and a dream. To grossly oversimplify, in these situations the key question is “will this (the idea, the team, etc.) work?” In PE, the key question is “what is the right price?”
These questions take very different skills to answer and in general the skills aren’t that transferable. They are analyzing the historical data, adjusting forecasts, looking at comparables. I have no historical data nor any comparables. I look at the team, the idea, the overall market size. When I look at a financial model at all, I have zero expectation that it will be even remotely correct; I use it to figure out what the make or break assumptions are… and to confirm that the founding team knows what those are as well and are doing everything possible to prove those assumptions out quickly & cheaply. Heck, a lot of the time PE funds go into the deal with a new team ready on the wings to replace senior management. I’d *never* go into a deal with a team that needed replacing.
Also, the key marketing challenge for seed stage investing is wading through the masses of under the radar startups and finding the gems before anyone else does. The startup is going to take the money and it is a rare deal when a startup turns down your money for someone else’s (although it really stings when it does happen).
In PE, they typically have more information to find and screen initial prospects (especially if they take public companies private). The real challenge is either to get the prospect to do the deal at all (e.g., an unsolicited purchase offer) or to choose that specific fund to work with.
Lastly, seed deals are ridiculously simple to structure. The outlines of the deal are largely standard; we typically just need to fill in the amounts. (Only a slight exaggeration.) The reason for this is simple. Startups typically come to the table with a blank slate and their outcomes are binary: win big or bust. There’s no need to get fancy. When it comes to terms, “don’t make me think” is solid advice.
PE deals have to account for a much wider range of possible outcomes and protect the fund from anything in the company’s past that might pop out of the closet. There are elaborate payout formulae, reps & warrantees sections the size of epic novels, and fees up the wazoo.
(Did you know that PE funds get paid if the deal doesn’t go through? Really. They are called “Broken Deal” fees. That’s chutzpah….)
So what’s a poor PE analyst to do?
I suggest looking at later stage VCs. At that point, the idea/team/market is largely derisked and the question is more about whether the growth potential supports the valuation so spreadsheets start to matter more in the traditional way. Also, the prospects for C- or later-stage investments should already be on the fund’s radar. The challenge is to convince the especially hot ones to take your money instead of some other fund’s. And as an added bonus, you get to have fun with liquidation preferences and other terms to come up with a deal that both the fund and the founders like.
Good. Because I need you in those later stage VCs. I’ve got a lot of startups getting ready to raise follow on rounds…
In preparation for AccelFest in Montreal in 2 weeks, I have retooled my “8 Types of Fund Investors” as a Slidebean presentation:
Link to presentation: https://slidebean.com/p/CASr7YHPRx/The-8-Types-of-Fund-Investors