Startup Fundraising Office Hours Free Monthly Livestream for Entrepreneurs
MasterMinds Startup Fundraising Video Office Hours help early stage company founders raise money for their startups.
The fun, friendly live video Q&A sessions answer financing and strategy questions from entrepreneurs from all over the world with FREE expert startup advice.
Startup Founder Discussion Questions
Scott took questions from startup founders live on camera and via chat, including:
- Kelly (Orange County, California) asked how to encourage outsourced software developers to finish and deliver products that are delayed
- Aruna (Washington DC) asked how developed her new startup concept needs to be before approaching potential investors - is an MVP (minimum viable product) required?
- and many more...
To watch this month’s Startup Office Hours replay click here.
And see a complete TRANSCRIPT BELOW.
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MasterMinds Startup Fundraising Office Hours are a free community service of the Startup Council.
MasterMinds Startup Fundraising Office Hours TRANSCRIPT for March 2, 2021:
00:04
it's masterminds
00:07
it's time for startup entrepreneur
00:09
fundraising
00:09
office hours i'm scott fox i'm your host
00:12
i'm a serial internet entrepreneur
00:14
angel investor author of a bunch of
00:16
books
00:17
these guys over here behind me lots of
00:19
different languages around the world
00:21
and today we're here to talk about how
00:23
to help you raise money for your startup
00:26
raising money is the probably the
00:27
biggest challenge that most
00:28
entrepreneurs face i've been there
00:30
myself
00:30
the same idea it's a challenge even in
00:33
good times and these are good times
00:34
these days for
00:36
early stage entrepreneurs and of course
00:38
it's even harder and bad times
00:40
so we're going to talk about the
00:41
strategies behind all that based on my
00:43
years of experience
00:44
and the many many entrepreneurs i've
00:46
worked with from all over the world
00:48
so thanks for joining me today we're
00:49
going to spend a half an hour an hour
00:51
together based on questions submitted
00:53
from the audience we've got some folks
00:54
who are going to come on live
00:55
and talk about their startup challenges
00:58
and we're going to try to work through
00:59
those together on a live basis
01:01
also if you're watching live on youtube
01:02
or facebook or linkedin or any of those
01:04
places go ahead and type into the
01:05
comments
01:06
and i should be able to see those as
01:08
well
01:09
and hopefully respond to you or maybe
01:11
even invite some of you on camera
01:13
to join us um the opportunity today is
01:15
to get some
01:16
expert feedback from me um and to
01:19
hopefully learn some things from each
01:20
other as well which is the whole ethic
01:22
behind
01:23
the masterminds approach that i've
01:25
pioneered like i said in my books and in
01:27
the mastermind startup founders forum
01:28
which i've been running since 2009.
01:30
so who am i why am i doing this well i'm
01:32
a serial internet entrepreneur like i
01:34
said i've written a bunch of books also
01:36
but this isn't just theory i've been
01:38
building early stage
01:40
internet companies for over 20 years
01:43
after i graduated from stanford i went
01:45
into the internet not surprisingly like
01:46
most people in my generation did
01:48
and have made some good money working on
01:50
a lot of small ventures that you haven't
01:52
heard of mostly
01:54
some big celebrity driven ones that you
01:56
may have heard of
01:57
and i also started the digital division
02:00
for a major fortune 500 company
02:02
that you've definitely heard of
02:03
multinational
02:05
since then i've evolved more to run my
02:07
own businesses quietly privately in the
02:09
background and these days i operate
02:11
mostly as an angel investor
02:12
investing in early stage companies and
02:14
even more importantly mentoring and
02:16
helping
02:16
early stage companies all over the world
02:18
trying to get from that
02:20
hardest zero to one stage you know
02:22
taking the
02:23
vision from your head and getting it out
02:26
not on the paper like the old days but
02:28
into code
02:28
that will then realize your dreams by
02:31
presenting whatever it is you're
02:32
you're about out to the world so that
02:34
people can participate
02:35
hopefully help each other benefit from
02:37
it so that you're adding value
02:39
and in return that brings some money
02:41
back into your pockets and
02:42
and your backers as well so that life
02:44
cycle to me is very interesting i've
02:46
spent a lot of time on it
02:47
and i'm here today as a community
02:48
service essentially to help more of you
02:50
benefit from
02:51
these same opportunities that have done
02:53
well for me and and many other folks
02:55
so um so enough about me if you want to
02:58
know more about me you can go to
02:59
scottfox.com or there's a page about me
03:01
on wikipedia
03:02
and today we're going to talk about um
03:04
well startup fundraising
03:06
i've got uh kelly here and aruna both
03:09
are going to come on camera looks like
03:10
and um i want to thank let's see
03:14
um okay right so this community service
03:16
so i could use your help
03:18
so the quick commercial is there's no
03:19
sales pitches today but the quick
03:20
commercial is
03:21
i'm doing my best to share knowledge so
03:24
if you like this and you find it useful
03:25
please give me some feedback
03:27
you can email us or even better is to
03:30
post on linkedin page to post on
03:31
facebook
03:32
post on instagram wherever you hang out
03:34
and let the people know about the show
03:35
we're doing it the first tuesday of
03:37
every month
03:38
at the same time and hopefully that hits
03:40
a lot of time zones and a lot of people
03:41
around the world
03:42
to help you um you know get your startup
03:44
going farther and faster
03:46
if you have a question you can submit
03:48
that in advance
03:49
and we'll give you free tickets to our
03:51
next masterminds workshop so that's
03:53
another service i run once a month we do
03:54
workshops
03:55
with 30 40 50 entrepreneurs from around
03:58
the world these days they're all on zoom
03:59
not surprisingly
04:00
and do a networking and peer group
04:03
coaching and pitch practice which is a
04:05
lot of fun
04:06
so that's more information on that is at
04:08
mastermindsworkshops.com
04:10
okay so please follow please subscribe
04:12
please do all that social stuff
04:14
all right now so um
04:17
another quick note this these are public
04:18
and recorded discussions
04:20
so please be aware of that don't share
04:22
anything too confidential
04:23
and two things i want to talk about
04:25
before we get to the questions
04:26
one was an article that i read today
04:28
that i think is really useful for
04:30
anyone that is watching this we're going
04:32
to publicize this
04:33
wide and far if i can this is a new
04:35
study that came out today that i thought
04:37
was really
04:38
useful and it's about why startups fail
04:42
now the conclusions from this are not
04:44
earth shattering
04:45
but they are really useful because most
04:47
of the numbers and attention that i've
04:50
seen
04:50
around startups are given to the big
04:52
companies right you know
04:53
airbnb went public or you know the early
04:57
stage
04:58
rise to the top the media likes to focus
05:01
not surprisingly on the billion dollar
05:02
exits the unicorns right
05:04
and especially the solo founder the mark
05:06
zuckerbergs of the world
05:07
who managed to build a colossus from
05:10
essentially nothing from an idea out of
05:12
his head right so
05:14
i think what is more interesting and
05:16
what's more actionable for regular
05:17
people
05:18
is to do things small because that's how
05:21
you start
05:21
everybody starts small with you know no
05:24
investors and no subscribers and no
05:26
customers it's just you
05:27
or hopefully you and a friend or a few
05:29
friends to build a team
05:30
so this study i'm going to share with
05:31
you here visually i just think this is
05:34
pretty cool and you can check it out on
05:35
your own time
05:36
but this is a study that i ran across
05:38
just today this is brand new at least to
05:40
me
05:41
from wilbur labs and i don't know wilbur
05:43
labs
05:44
but this is called why startups fail
05:45
those of you who can see the video
05:47
this is it you can see it if you're
05:49
listening on the podcast or elsewhere
05:51
this is wilburlabs.com in the blueprints
05:53
section
05:54
and it's called why startups fail
05:56
lessons from 150 founders
05:58
so these folks phil santoro shout out to
06:00
him whoever he is
06:02
thanks for actually looking at early
06:03
stage founders right and there's a lot
06:05
of data
06:06
here and it's not a huge data set it's
06:07
150 startups but this is where it gets
06:10
interesting
06:10
why startups fail now some of this is
06:13
obvious but
06:14
i'm going to get to a point here real
06:15
quick watch so why the most common
06:18
reasons they fail they ran out of money
06:19
well that's no surprise that's why you
06:20
guys are here today right
06:21
no financing or investor interest that's
06:24
starting to be interesting
06:26
no business plan or model okay those two
06:29
go together
06:30
no financing or investor interest and no
06:33
business plan or model
06:34
that means you didn't talk to investors
06:36
you didn't have a good model
06:38
that appealed to people that's a
06:40
research question
06:42
not an ability question right in other
06:44
words that's solvable
06:46
then you move down to lost focus okay
06:48
well that life gets in the way sometimes
06:49
i get
06:50
not the right team you're out competed
06:52
okay but then there's another one no
06:53
market need
06:55
so you mean you started a startup
06:56
without knowing anybody cared
06:58
that's a little that's a little
07:00
aggressive even for me right so
07:02
these are the kind of things that we
07:03
talk about in these office hours and in
07:05
my books the startup founders forum and
07:06
especially at the masterminds workshops
07:08
and here's what i think is interesting
07:10
the recommendations the founders in this
07:12
study at least
07:13
do more research create a plan to make
07:16
sense
07:17
and get to know the investors these
07:19
three things are well over the majority
07:22
of failure points right and these are
07:24
solvable there's some cool graphs in
07:26
here on you know the
07:27
the evolution of these different reasons
07:29
over time because obviously
07:30
the covid pandemic impacted a lot of
07:32
things more recently
07:35
and then down here's yes okay so here's
07:37
the advice this is the takeaways
07:39
learn from your mistakes okay this is
07:41
advice that everybody's parents gives
07:42
them but it's hard to do but with a
07:44
startup
07:45
it's only when my first startup failed
07:47
by the way i'm not perfect
07:48
i lost a lot of money almost everything
07:50
i had with my first startup
07:54
one of my cousins said to me something i
07:55
still remember it's only a mistake if
07:57
you don't learn from it
07:59
right so you have to be in learning mode
08:01
it's real easy when you're a founder to
08:02
get caught up in your own vision
08:05
and ignore feedback but that's dangerous
08:08
second listen to your customers honestly
08:10
that's even more important
08:11
i can't tell you how many startups i
08:13
meet that haven't talked to actual
08:14
customers
08:15
they're so convinced of the how clever
08:17
their idea is that they haven't gone out
08:19
and talked to anybody that's really
08:21
dangerous there you can see it
08:22
at 53.8 percent of the failure and third
08:25
is very related
08:26
tied for that in second place and sure
08:28
there is a market yeah
08:30
your ideas nobody cares about your ideas
08:33
unless it benefits them right
08:34
what's in it for me that's what
08:36
everybody wants to know and you get the
08:37
idea here create a solid business plan
08:39
and so forth
08:40
and passionate is down there in one two
08:42
three four fifth place
08:43
down here fifth place so if that's fifth
08:46
place
08:47
a lot of the advice that you're seeing
08:48
in the world um in terms of startup
08:50
success is about your passion and so
08:52
forth but you really gotta have your
08:54
crap together first right
08:56
figure out if there's a market figure
08:58
out what the competition looks like
08:59
figure out if investors will support it
09:01
like this is basic blocking and tackling
09:03
stuff
09:04
that you can do without spending a lot
09:06
of money and without
09:08
raising money this is the kind of
09:10
research that we're talking about here
09:11
today and all the services that i
09:13
offer uh to you as an aspiring
09:15
entrepreneur
09:16
so if that sounds interesting to you
09:17
you're in the right place welcome to
09:19
masterminds
09:20
okay so startup office hours what we're
09:22
really here doing
09:23
is talking about questions uh so
09:26
questions so i've got
09:26
two folks on the line here we're going
09:28
to start with that and if other folks
09:29
have comments
09:31
on youtube live or facebook live
09:34
or anywhere else you're seeing this and
09:36
you type them in they should show up
09:38
uh in this dashboard i'm using we'll see
09:40
hopefully they do
09:42
and i'll be happy to help you as well if
09:43
you'd like so comments are welcome as
09:45
well
09:46
okay so we've got uh let's let's do this
09:48
here uh
09:50
i'm going to invite my guests on screen
09:52
hopefully this let's see here
09:54
here comes kelly and here comes aruna
09:57
all right there we go that's good start
09:59
now let's see if we can hear you guys
10:00
can i hear you
10:02
hey how you doing scott there's kelly hi
10:04
scott
10:05
hi kelly excellent good to see you guys
10:07
okay all right so kelly
10:09
had a question about customers and aruna
10:11
had a question
10:13
about her business model so who who
10:14
wants to go first you guys can you can
10:16
fight it out
10:20
i guess i'll go okay there you go
10:23
all right so aruna we'll come back to
10:25
you in a few minutes and happy to see
10:27
you both
10:27
and if anybody else like i said you want
10:29
to join us message over and we'll try to
10:31
get you on the air as well okay rooney
10:32
we'll be back in a couple minutes okay
10:35
okay there you are kelly hey good to see
10:36
you today um
10:38
so you wrote in why don't you why don't
10:41
you frame the question for us and we'll
10:43
see what we can discuss here together
10:44
so we are a brand new startup using
10:46
basically friends and families money we
10:48
got an investment about 250 000
10:50
we've we've hired a vendor to basically
10:53
get our product
10:54
out so we can start getting in basically
10:56
to sales and actually getting something
10:57
in the market
10:59
and they've become increasingly
11:01
difficult and
11:02
started trying to upsell us really
11:04
unreasonably
11:05
um a lot and the problem is is
11:09
we've got friends and family money it's
11:11
very limited funds you know we're not
11:12
even we're not even earning an income
11:14
yet
11:14
um but they keep upselling us the
11:16
problem is is we need our product
11:19
so what's the balancing act how do you
11:21
deal with the difficult vendor when
11:22
in a sense we need the product more than
11:24
they need our money
11:26
um and so how do we deal with that with
11:28
not being suckers and just giving in to
11:30
every demand that they have
11:32
but also we need the product we have to
11:34
you know it's vital for the company that
11:36
we get this
11:37
that we get this product done what
11:39
they've given us so far you know we have
11:40
milestones and they've got they've
11:42
done fantastic work but they just keep
11:44
coming up with some really unreasonable
11:46
charges
11:47
and trying to figure out kind of the
11:48
balancing act between okay the you know
11:50
paying this to get the product but also
11:53
not blowing our entire budget because
11:54
you know it's you know pretty much every
11:56
dollar is accounted for
11:57
so yeah kind of that balancing act on
12:00
how to deal with just a difficult vendor
12:02
so we can get that and get out into the
12:03
market right right okay
12:06
first of all sorry that sucks
12:10
well it does happen and that that's
12:11
exactly right so for anybody else that's
12:13
watching this
12:13
i'm sure a lot of you are nodding your
12:15
heads going yeah that sounds familiar or
12:16
shaking your heads i should say
12:18
um so first of all don't feel bad kelly
12:20
this happens all the time it's not
12:22
you're not
12:23
you haven't done necessarily anything
12:24
wrong right i mean this is just this is
12:26
business right so
12:28
um and it sounds like you get that but
12:29
just to say that for everybody else this
12:31
happens right um and it's the good
12:34
news is that you were smart enough to
12:35
put milestones into the deal
12:37
so that they're getting paid presumably
12:39
based on accomplishment so that's a
12:41
recommendation for everybody else
12:42
listening right
12:43
don't just do a fixed price for the
12:45
finish line
12:47
try to squeeze it out into three four
12:49
six whatever milestone payments
12:51
so that incentivize the vendor to keep
12:53
delivering right
12:55
and certainly don't give them too much
12:56
upfront because sometimes they'll just
12:58
take you know half or whatever and
12:59
disappear
13:00
especially if you're talking with about
13:01
smaller uh smaller companies or vendors
13:05
the other good news kelly is that
13:07
they're doing good work so that's great
13:08
news as well so they're not absconding
13:10
with your money so
13:11
i know it it you're not in a good place
13:13
but man it could be worse
13:15
agreed yeah whatever that's worth okay
13:17
so can you can i ask a couple more
13:19
questions just to flesh it out a little
13:21
absolutely um what you don't need to be
13:23
too confidential here don't reveal
13:25
anything because this is a public
13:26
broadcast but
13:27
but what kind of vendor is this and what
13:30
is the product just
13:32
what is it they're delivering we have
13:33
basically a muscle memory device
13:35
it basically can track a thousand um
13:38
movements per second
13:39
and so they're more or less developing a
13:42
hardware and software kind of
13:44
combination for that um they're about
13:46
eighty percent done right now
13:48
right now it's just going to be used for
13:49
table tennis but we're going to expand
13:51
other sports
13:52
um once you know we first get our
13:53
initial product so that's kind of what
13:55
they're developing
13:56
about 80 percent done um it'll use that
13:59
you know basically
14:00
an ai coach for table tennis and we'll
14:02
branch out to further sports
14:04
so this is sorry this is this is a
14:06
physical product
14:07
it's actually a device it's a physical
14:09
product with they're also doing you know
14:11
kind of a code and getting us
14:12
ready for you know like a google play
14:14
store and getting us like the app
14:16
developed
14:17
as well and then our software engineers
14:19
will kind of take over once they we get
14:21
the basic core
14:22
so is the piece so what are they holding
14:24
up the deliveries
14:27
yeah they're basically they're
14:28
developing the
14:30
they basically the hardware is already
14:31
there they're just kind of assembling it
14:32
in a certain way
14:34
um to get it to basically get it to
14:36
where we need to be and we mostly
14:38
we have a prototype they're just mostly
14:40
shrinking it to you know about
14:42
the size of a nickel um and so that's
14:45
that's kind of what they're what they're
14:47
doing and for that and then giving us
14:49
code too so it can you know we can
14:50
communicate with the device
14:51
it can store provide feedback things
14:53
like that all right well sounds cool
14:55
okay so this is not a typical software
14:57
delivery issue this is right
14:58
it's more complex than that okay too bad
15:01
that's all right so okay and are they on
15:04
shore are they offshore
15:06
they're in canada canada okay so near
15:09
near shore i guess
15:10
yeah okay okay so all right so what are
15:13
my ideas and anybody that has
15:14
suggestions in the chat please go ahead
15:16
this is a common issue and there's lots
15:18
of ways to slice this
15:19
the honest answer is i don't have a
15:21
great answer i mean they've got you
15:24
where they want you right and especially
15:26
if the amounts of money you're talking
15:27
about are not materially significant to
15:28
them
15:29
i what are you gonna do right right yeah
15:32
and yeah and there we know that they're
15:35
not really making much money off of the
15:36
project that's kind of why they kind of
15:38
keep trying to come up with these costs
15:41
yeah you know
15:42
the contract is you know favorable for
15:44
us but that really just doesn't matter
15:46
because we need the project we need we
15:47
can't start off with another vendor
15:49
so we're just trying to you know what
15:51
how do we figure out okay
15:52
you know they keep coming up with these
15:54
costs that are kind of you know
15:56
unreasonable but we need a lot of and
15:58
kind of stuff you know we've we've done
16:00
things in the past where we've we've
16:02
gotten on the phone with them we've
16:03
listened to their side
16:04
even though they're you know their
16:06
excuses were absurd we like hey you know
16:08
what let we pay it and we've done that a
16:09
couple times or you know just a few
16:11
thousand dollars
16:12
paid it just to try and kind of hey we
16:14
want both sides to be working together
16:15
we've done that and it still hasn't
16:18
they're still just like
16:19
almost like oh well these guys are
16:20
suckers
16:25
and so you know or just is it a big is
16:28
it a big firm or a small group
16:31
they're they're decent sized they
16:33
they've they've
16:34
lost a lot with covid the we talked with
16:37
their ceo and they've lost about
16:38
50 to 60 percent of the company with
16:40
coven so they're
16:42
they're experiencing hard times too yeah
16:45
okay well i guess i have sort of three
16:48
ideas um one is to talk to the ceo
16:51
privately
16:52
i mean that's it sounds like you've
16:53
probably already tried that and try to
16:55
build a relationship and just be honest
16:57
you know and
16:58
he's screwing you over and he's gotta
16:59
stop the second
17:01
is uh the backup of you know threatening
17:04
legal action that's why i asked where
17:06
they're located
17:07
um especially apologies to any canadians
17:10
online but
17:11
you know canadians tend to be pretty
17:13
nice people and
17:15
and they don't like litigation so um
17:17
that might
17:18
have more weight than it would carry in
17:20
the united states the good thing is to
17:23
you know the canadian legal system you
17:25
might have a chance at least you know if
17:26
they were in
17:27
another country with farther away it
17:30
might be harder to pursue them legally
17:32
um and along with the legal threat of
17:34
course goes the social media threat
17:36
which and i i'm not a threatening person
17:37
but
17:38
you know if you're getting desperate you
17:40
know they're pushing you into a corner
17:42
then maybe you need to make them aware
17:43
that a
17:44
cornered animal acts desperately and you
17:46
don't want to do that i mean
17:48
it sounds like a just a kind of a bare
17:50
knuckle negotiation
17:52
razell is okay brazil that's a good
17:54
point i'll get i'm going to quote what
17:56
he just said there
17:57
the other piece is um well let me
18:00
actually say this roselle is in the chat
18:02
um over from youtube he says
18:04
i think they're uh struggling to deliver
18:06
on the price
18:07
so that might be something to dig into a
18:09
little more um and then he says
18:11
this is kind of summary what i was
18:12
saying best to sit down with them and
18:14
reevaluate position work on a
18:16
partnership and
18:17
that's where i was going is that the
18:19
things i started with all the negatives
18:20
but the positive is
18:22
maybe there's some way you can
18:23
incentivize them i'm sure you've thought
18:24
of this and you don't have a lot of cash
18:26
but worst comes to worst you know maybe
18:29
there's some sort of
18:30
um profit sharing or revenue split
18:33
or even equity i mean i hate to do that
18:36
but you know if you're stuck
18:38
you got to do something right so time is
18:40
money for you and if
18:41
if you don't think you have enough
18:43
resources to keep going
18:45
or raise more money then i think your
18:48
options are limited which is why you're
18:49
here
18:50
talking to us i guess right um so maybe
18:52
there's some sort of
18:53
i would rather than going negative or
18:56
it's that you know kind of the carrot
18:57
and the stick right we talked about the
18:58
stick right carrot is more some
19:00
you know what can you offer you know
19:02
what what it what else do you have in
19:04
your bag of tricks
19:05
um you know even if it's just something
19:07
nice like sending the ceo a bottle of
19:09
wine you know or something i mean
19:10
you know think outside the box a little
19:12
you know get their attention
19:13
because um hopefully with your
19:16
milestones you still have some money
19:17
that you still owe them i mean
19:19
you know the options for him sound to me
19:20
like look you either get no more money
19:22
from us and you force us out of business
19:24
in which case
19:25
i go social i go ugly on social and have
19:28
to sue you
19:29
which i hate to do or hey look i just
19:31
sent you a nice bottle of scotch and
19:33
you know how about i give you a two
19:34
percent on sales for a year or something
19:37
you know like help
19:38
me out here i mean it sounds like you're
19:40
at that place and
19:41
we're fortunately not a desperation
19:43
stage um but we do
19:44
you know we've brought on kind of a an
19:46
engineer that we're paying and
19:48
you know they're starting to at first
19:50
they were just a few thousand dollars
19:51
here and there but they're starting to
19:52
get
19:52
much larger kind of on their on their
19:54
increases and that's going to cut you
19:56
know we kind of know where we need to
19:58
get you know
19:59
our software engineer for x amount of
20:00
time to get where we need to be
20:02
for you know to get this product out and
20:04
to do what we need to do with it
20:06
and you know they're cutting into that
20:08
so you know we're still able to finish
20:10
the contract if the problem is you know
20:12
down the road we're not going to be able
20:14
to
20:14
to you know keep the engineers on and
20:16
and things like that to
20:18
what we need to do to get to the finish
20:20
line to where we can
20:21
you know move to the next stage yeah
20:24
that's awkward is a nice word for that
20:26
right yeah
20:28
sorry we're trying to keep from getting
20:30
desperation i guess
20:31
okay okay well all right well then we've
20:33
outlined the worst case scenario for you
20:34
hopefully you don't get there but
20:36
maybe some of those tips that helped
20:37
yeah yeah i know no that's that's
20:39
interesting
20:39
i mean you know i think the
20:40
incentivizing thing i know that they've
20:42
uh you know
20:43
they're hurting too so maybe we can
20:44
figure out some way to
20:46
work it out and just see what their
20:48
issues are i guess maybe just get on get
20:49
on with them again
20:50
and um you know have a blunt
20:52
conversation like you know
20:53
yeah and if you can do very friendly
20:56
yeah yeah and it sounded like you're
20:58
um you had a conversation with the ceo
21:00
but maybe it was in a group
21:01
but if you could do it one on one you
21:03
know where he's not one of his people
21:04
and you're not in front of your people
21:06
or whoever whoever the decision makers
21:07
are on both sides
21:08
you know maybe he's not the decision
21:10
maker honestly you might poke around on
21:11
that too the ceo may not be actually the
21:12
boss
21:13
there may be somebody else pulling the
21:14
strings who's the chairman or the
21:16
chairwoman you know or their
21:17
lead investor is his dad you know or
21:19
something right i mean there may be
21:21
something else going on that you could
21:22
poke around at
21:23
um and see you know to make sure that
21:25
you're actually talking to someone who
21:26
has the ability to
21:27
change the game in a positive way for
21:29
you okay perfect
21:31
all right well greg good to see you um
21:34
thanks for joining us
21:35
and uh we're going to bring on aruna and
21:37
if this is the kind of stuff guys that
21:38
we talk about all the time
21:40
uh in the mastermind startup founders
21:42
forum so if you haven't checked that out
21:43
go ahead
21:44
be happy to see you over there okay so
21:47
that was kelly hopefully that was
21:48
interesting and useful to folks alright
21:50
so now we're going to talk to our friend
21:51
aruna
21:52
and like i said if you have a question
21:54
or a comment
21:56
sounds like it isn't working on youtube
21:57
okay brad thanks for posting that
21:59
not much i can do at the moment i guess
22:01
um but i'll look at that for next time i
22:04
guess but if you're watching this
22:05
or listening uh it sounds like it's
22:07
working on facebook live so
22:09
head over there although we're getting
22:10
actually a bunch of you look like you're
22:12
on youtube so
22:13
maybe brad there's a couple different
22:14
youtube links try going to uh
22:17
facebook. sorry youtube.com scottfox
22:20
that hopefully that one okay so aruna is
22:24
up next aruna we're going to talk about
22:25
um
22:26
well i'll let aruna tell you what we're
22:27
going to talk about hey rona nice to see
22:29
you
22:29
hi good afternoon yes good afternoon
22:32
thank you thank you for having me over
22:34
so
22:35
um my concept is more service based but
22:38
it is
22:40
more based on an i.t platform this is
22:43
supposed to happen
22:44
not in the united states but outside of
22:46
the country
22:48
my concern was two things
22:51
one was um where should i go
22:54
to raise funds two at what time should i
22:58
go to raise fund like do i do i
23:00
get my um you know some kind of a proof
23:04
of concept before i go
23:06
uh to vcs or investors trying to invest
23:09
in this
23:10
or should i just say this is what the
23:12
concept is this is the number
23:14
i know there is potential i know there
23:16
is need
23:17
um and i've done a mock test before for
23:20
myself and just go ahead from there
23:22
based on my experience my past
23:24
experience
23:25
i'm a little confused there because i'm
23:27
hearing two things
23:28
one get an mvp um you know try to go
23:32
that route
23:32
two do a mock-up and give some live
23:35
examples so you can tell them exactly
23:37
what your
23:38
product is and what you're trying to
23:39
resolve uh
23:41
the reason why i'm going between these
23:43
two is because it's very intuitive
23:46
um uh solution into the
23:49
intuitive solution where it's very
23:52
apparent you can see it you can see what
23:54
i'm offering
23:55
and that is my concern and that's where
23:57
i am right now
23:59
okay so there's a couple questions in
24:01
there um
24:03
and all good ones you're in the right
24:04
place so let's
24:06
start let's start at the beginning so um
24:09
how to raise money basically um can you
24:12
do it with a mock-up
24:13
can you do it with or do you need a mvp
24:16
um
24:16
and for those of you listening that's
24:17
minimum viable product if you're not
24:19
familiar with that terminology a better
24:20
way to say that is minimum valuable
24:22
product
24:23
um something that other people because
24:24
that implies that other people
24:26
actually care about the product not just
24:28
that it's viable but it's valuable
24:30
and i credit that to my friend barry
24:31
james folsom um maybe he got that
24:33
somewhere else but anyway
24:34
uh minimum valuable product um the short
24:37
answer is
24:38
the rules that you read about or hear
24:40
about online all the time there's no
24:42
rules really it's just
24:43
it's a continuum right these aren't
24:45
discreet silos and you're smart enough
24:47
to know that but just to make it clear
24:49
if you can raise money with a minimum
24:51
valuable product
24:53
uh sorry with just a mock-up then
24:55
absolutely do that right
24:56
um if it takes more than do that if it
24:59
takes less do that
25:00
right you raise money however you can
25:01
right so you just gotta it's more a
25:03
question of
25:05
who i would turn the telescope around as
25:07
it were
25:08
and think about who are the likely
25:09
investors um i
25:11
this is the kind of research i was
25:12
talking about a few minutes ago it's
25:14
really easy as a product driven founder
25:16
and i
25:16
am one myself
25:20
to get caught up in the product and the
25:22
features which is good because you need
25:23
that of course
25:24
but if you really think you need to
25:25
raise money then you need to do the
25:27
research on the investors right
25:29
so who are the likely investors in this
25:31
what do they want to see
25:32
how have they funded uh people in the
25:34
past and what do they require
25:36
so if you have an uncle who's in you
25:38
know the textiles business which is your
25:40
focus
25:41
and has some money well you know all it
25:43
might take for him is a greeting
25:45
a birthday card right because he's your
25:46
uncle right so
25:48
that's a different different situation
25:49
than going to you know sequoia or
25:51
kleiner perkins or andres and horowitz
25:52
who are going to require absolutely a
25:54
minimum viable
25:56
product but actually traction in the
25:57
market and user growth
25:59
metrics that are impressive right so i
26:01
think um
26:02
a lot of it is about the investor target
26:04
uh not just the product target
26:06
so that's kind of a wishy-washy answer
26:07
but hopefully that heads you a little
26:09
bit in the right direction
26:11
and the other thing i would say is that
26:13
the um
26:16
the question of whether you want to
26:17
raise money at all is really
26:19
the threshold question there you know
26:21
the gating question why raise money at
26:23
all right
26:24
everybody thinks they need to do that
26:26
but i'm here to tell you the less money
26:27
you raise the happier you will be
26:28
right if you if you can make it without
26:30
the money right so
26:32
you have some experience we've talked
26:33
about actually roon is a member of this
26:35
forum we're talking about
26:36
i think we traded some messages there
26:38
about uh you having bootstrap some
26:40
previous stuff is that right
26:41
yes yeah okay so so you have some
26:44
experience in that
26:45
so here here's the short answer the
26:47
longer you can bootstrap the better
26:50
because that's likely to obviously keep
26:51
other people out of your business
26:53
literally um but also give you something
26:56
increasingly positive to show
26:59
the fact is that anyone who's looking to
27:02
raise growth money these days which is
27:04
what i
27:05
call uh angel investor money or venture
27:08
capital type money or private equity
27:09
money
27:11
those businesses and they are businesses
27:13
they're looking to invest in companies
27:14
that are
27:15
already moving right you have to already
27:18
have built the car
27:19
and they're just adding additional
27:21
gasoline right
27:22
they're not looking for ideas anymore
27:25
there's just too much product in the
27:26
market
27:27
too many business plans too many smart
27:29
people the internet makes it too easy
27:31
for everybody to reach each other
27:32
these are all good things i think but
27:34
from their point of view they get
27:35
overwhelmed with
27:36
business plans and opportunities so why
27:38
wouldn't they hold out for the one
27:39
that's already proven it can make some
27:41
money and hopefully some significant
27:42
money
27:43
and not only make money but it's growing
27:44
quickly right so the bar is really high
27:47
i haven't heard of anybody raising any
27:48
money recently
27:50
with just an idea or even just a mock-up
27:53
or a business plan
27:54
or a powerpoint you really need
27:59
demonstrated what they call traction
28:01
meaning revenue
28:02
um but again that goes back to my first
28:04
point how many who are you talking to
28:06
right so if you're talking to your uncle
28:08
hey you know
28:09
happy birthday uncle fred you know here
28:12
is this thing i'm working on
28:13
you got 50 grand right i mean that
28:15
that's a does that is that helpful i'm
28:17
just trying to give you the goal posts
28:18
here
28:19
uh it is in a way but it is also the
28:22
problem with this
28:23
venture is you either you go big or
28:27
you're going to be like squashed by
28:31
the other people that are there in the
28:33
online
28:34
uh space yeah so this has
28:37
like the the amount of money that i'm
28:39
gonna start off with is about two
28:40
million dollars
28:42
and i require that for the technology
28:44
that i'm going to be putting in
28:46
the other back-end stuff that i have to
28:49
set up
28:50
um in order to and and i need to have a
28:52
minimum number of customers which i
28:54
don't have an
28:55
issue with because of the population and
28:58
the need
28:59
um and not not just the population but
29:02
the right amount the targeted audience
29:04
that
29:04
we're looking for for my kind of a
29:06
project
29:07
um the issue however is that i you
29:10
either go big or you go home
29:12
yeah unfortunately that is that this is
29:14
that kind of an idea and i've been
29:16
through ideas
29:17
that has started in my home started in
29:20
like a small
29:21
thousand square feet uh space
29:24
all that stuff great but unfortunately
29:28
because of the technology because of the
29:29
database because of everything that is
29:31
in the back end
29:32
that contributes towards the success of
29:35
this particular
29:36
project so to speak i cannot go
29:39
like i can't do like a mock-up i mean i
29:42
could do a mock-up
29:43
do some virtual stuff but i can't do
29:46
like the
29:46
mvp the website and whatnot because it's
29:49
going to be of no use
29:50
yeah okay so you're
29:54
i've got the answer that you don't want
29:55
to hear you got to do it anyway
29:58
right nobody's going to give you two i'm
29:59
going to do that anyway yeah okay now i
30:01
started saying those but you know this
30:02
right
30:03
you got to do the mock-up to get to the
30:05
mvp anyway
30:07
you have to do this all anyway if you're
30:08
going to do this then
30:10
you need to change your mindset already
30:12
about what you're going to do
30:13
and say this is what i'm doing right
30:15
you're right i can see you're right at
30:16
that threshold right i meet
30:18
entrepreneurs like this all the time
30:19
like
30:19
i'm going to do this i'm going to do
30:20
this i'm like well then do it
30:22
right and there's you don't have any
30:24
choice here right i mean you're gonna
30:25
have to do a mock-up anyway
30:27
right so i think you're kind of um
30:31
i mean you're smart right you want to
30:32
avoid your minimize your risk i get it
30:34
right totally but you're going to have
30:36
to do a mock-up anyway so get going
30:38
and if you need somebody along the way
30:40
who your mock-up impresses enough to
30:42
invest
30:43
yahoo right i mean that's that's the
30:46
whole point right
30:46
so you're going to have to sounds like
30:48
going to have to do that anyway so
30:50
so i would so here's here's another way
30:52
to help you along then so
30:54
the concern here is that you're wasting
30:56
your time right
30:57
and wasting your time your money your
30:58
effort um and this is everybody we all
31:00
face this as entrepreneurs so
31:02
i would think of this in terms of
31:05
i don't think this isn't one of my books
31:07
but i should probably write it down
31:09
a budget and people talk about budgets
31:12
all the time in terms of money
31:13
but i'm talking about a time and
31:15
motivation and energy budget right
31:17
like i don't know the rest of your life
31:18
and we don't have time to talk about it
31:19
right now but like
31:20
think about this like how much time do
31:22
you have to invest in this and i'm
31:24
talking about time money it helps right
31:25
but you need time because it's you this
31:27
is all coming out of your head right so
31:29
do you have two hours a week 10 hours a
31:30
week 100 hours a week
31:32
you know and figure out how to allocate
31:34
this and write yourself a project plan
31:36
and you know the steps we've just talked
31:37
about them right you've got the idea
31:39
and then you've got you know a minimum
31:41
like a mock-up and then hopefully it
31:42
goes to this to this to this
31:44
and then give yourself some sort of
31:45
timeline and see what you can execute
31:47
in that amount of time and put yourself
31:49
like it is a business because it is a
31:50
business it's just a business of so many
31:52
customers investors or revenue yet
31:54
right and get going um and then
31:58
out of then here's where i'm going with
31:59
that so if you're if your pie is this
32:00
big
32:02
maybe you can carve out 20 percent of
32:04
that to also be doing research on
32:05
investors
32:06
as you go because this is a big problem
32:08
with people they do this all the time
32:10
um our next masterminds workshop the
32:13
workshops i run
32:14
are once a month also the next one is
32:17
next week
32:18
and i'm getting questions in already and
32:19
people people do this all the time
32:21
i built this thing now i want to go find
32:23
investors it's like
32:25
you're doing it wrong right you got to
32:27
be thinking about investors all along
32:30
you want to be building relationships or
32:32
at least researching who the investors
32:33
are in this space
32:34
so that they can be part of the journey
32:37
i mean you know every investor would
32:38
love it if people show up with some
32:40
fantastic high growth company
32:42
that has no previous investors you know
32:44
okay great i'll i'll invest
32:46
but that's not how it works right for
32:48
every month that you go along
32:50
uh it's getting more complex you're
32:52
you're bringing in cousins and friends
32:54
and family rounds and the cap table gets
32:56
difficult and then you've got a couple
32:58
old customers who don't do the right
32:59
thing or you get in the situation where
33:00
kelly is
33:01
it gets complex right so all this has to
33:03
happen at the same time and
33:05
there's no way out of it the point is
33:07
that you allocate some time for research
33:09
to investors along the way
33:10
so that they grow with you and that way
33:13
they can help
33:14
their good and good investors are guard
33:16
rails that will help you avoid those
33:18
kind of problems
33:20
so that they can invest in you later
33:21
even if they're not investing today
33:36
okay i think we're back did we
33:41
okay so anyway i was just my point was
33:43
um go ahead and get going you're gonna
33:45
have to do these certain basic steps
33:46
anyway give yourself a budget
33:48
but allocate a chunk of that for
33:50
investor research and relationship
33:51
development just as you would for
33:53
marketing or product development or
33:55
recruiting and those other pieces right
33:57
um and um
33:58
i think that'll get you where you want
33:59
to go
34:02
fair enough okay all right well great
34:04
well good to see you i'm happy to happy
34:06
to have you here
34:07
going to move on here to uh some other
34:09
questions and i hope to see you again in
34:11
the
34:11
in the founders forum again soon alright
34:15
okay so uh let me head over back over to
34:18
chat hey roselle hi ariel hey jerry
34:20
um you guys uh brad it looks like if
34:23
you're refresh
34:24
refresh on youtube that will work again
34:27
okay so a couple more things here um and
34:30
if you want to type anything into the
34:32
chat rooms go ahead we can try to
34:33
address those as well
34:36
let's see what did i have here oh okay
34:39
so i wanted to talk about
34:41
i found a great resource today
34:44
and it's online a lot of the questions
34:47
that we get are about early stage
34:49
funding
34:50
documentation meaning you know what kind
34:52
of um
34:54
well first of all what kind of structure
34:55
do you use to use a convertible note
34:57
or a series seed equity
35:00
or do you use a safe note or a kiss note
35:03
or a post money safe there's all
35:04
different kinds of structures and this
35:05
can be very confusing
35:07
uh to a new founder uh it's confusing
35:10
even if you're an experienced founder
35:11
it's confusing even to a lot of
35:12
attorneys right
35:14
but i found a resource today i wanted to
35:16
share which is from the coulee law firm
35:19
which uh shout out to cooley um they're
35:22
not a current sponsor
35:23
of my work but um uh they were the first
35:26
law firm that
35:27
helped me with my first startup back a
35:29
long time ago
35:31
and very helpful and generous with their
35:34
time back in the day
35:35
but anyway they have a portal now called
35:37
coolygo
35:39
and what i found today here i will show
35:41
you is a whole series it's a document
35:43
generator let me get to the point right
35:45
it's a document generator
35:47
so that if you can you still need to
35:48
figure out which kind of structure to
35:50
use and that's a longer discussion that
35:52
we could have some time if anybody wants
35:54
to
35:55
but creating the documents is
35:56
tremendously expensive
35:58
if you hire attorneys to do it from
36:00
scratch so just like you have kind of
36:02
like legal zoom or something where
36:04
you can create simple incorporation or
36:06
trademark sort of documents
36:08
this cooligo and i'm going to share it
36:09
with you here on the live stream
36:12
is a generator for that kind of stuff
36:14
and i'm not used this this is not legal
36:15
advice as i said a minute ago in the
36:17
captions
36:19
not legal or financial advice you should
36:20
consult your own experts etc etc
36:24
but here it is okay so this is the
36:27
national venture capital association has
36:30
uh financing documents so these are
36:31
standard documents the national venture
36:33
capital association uses
36:34
very useful to standardize this stuff
36:36
because all this stuff used to be custom
36:38
every time it was very expensive
36:41
but the national venture capital
36:43
association has model
36:44
venture financing documents and then
36:46
this thing at cooley go
36:48
um actually you can generate
36:51
i see here it's a series seed equity
36:53
financing package
36:54
or safe financing documents generator
36:57
and you can click on that and you
36:58
basically fill out the forms
37:01
and you can fill out the forms and it
37:05
will generate the documents
37:06
now like i said this is not qualified
37:09
legal advice
37:10
but this is a great place to start
37:13
because then you have something at least
37:14
to work with
37:15
and at least some of the documents like
37:16
the safe documents which stands for by
37:18
the way simple agreement for future
37:20
equity
37:20
are designed that you really could do
37:23
them yourself
37:24
now i as a non-attorney founder is what
37:27
i'm saying
37:28
here's the link for that by the way in
37:30
case you missed it
37:32
but i don't recommend that i think you
37:35
really should have qualified
37:36
um legal and financial advisors
37:39
absolutely and i'm not one of them but
37:43
this can give you the base documents
37:45
that you need to
37:46
at a minimum just learn this stuff
37:48
yourself of course but also to have
37:50
something to propose
37:51
or and here's the real point to give to
37:53
attorneys so that they don't bill you
37:55
for every minute
37:56
of creating this stuff which they're
37:58
really probably pulling it out of a
37:59
template library anyway
38:01
right but it gives you a base format to
38:02
use which is standard in the industry
38:05
and then you can more worry about
38:08
filling in the details correctly rather
38:10
than
38:10
you know rebuilding the whole house from
38:12
scratch so that can be a very valuable
38:14
thing and i recommend that kind of thing
38:16
to you guys
38:17
if you're looking to raise money so i
38:18
was impressed and thank you to cooley
38:21
uh to cooley for that okay let's see
38:24
here
38:25
back over to the chat and we'll see what
38:26
else we go uh
38:28
yeah latonya let's see that can you see
38:30
that yeah latonya says
38:32
tanya esquire looks like latonya is an
38:34
attorney
38:35
like me and she even says at least do
38:37
the documents and then get an attorney
38:38
to review exactly latonya thank you
38:40
that's
38:41
you said that better than i did it's a
38:43
good place to start right
38:44
uh rozelle says uh what's the uh
38:49
salary for ask for decent salary not
38:53
excessive just not something that will
38:54
not be limiting
38:55
people will tell me that i need to ask
38:57
for a minimum okay
38:58
so roselle uh sorry i'm just looking at
39:01
the chat here real quick what kind of
39:03
salary can we ask for as a founder cr
39:04
cto in my initial proposal
39:07
okay so um yeah
39:10
founder salaries are a tough uh tough
39:14
equation right because every dollar you
39:15
take out doesn't go into the company and
39:18
if you're using investor money they
39:19
don't like that
39:20
like when i invest in companies i you
39:21
know i don't i don't want to invest in a
39:23
company to see them immediately spend
39:25
the money
39:26
on something not directly related to
39:28
acceleration of the business that's
39:30
why i'm investing i'm not investing to
39:32
help you cover your mortgage
39:33
you know or pay your kid's school
39:36
tuition or
39:36
you know feed your dog right it's to
39:39
grow the company and hopefully make
39:40
money back because from the investor's
39:42
point of view it's an investment
39:44
right so
39:47
keeping sale salaries for founders and
39:49
cto in your example their
39:51
result low is is a tension that always
39:54
occurs in the relationship between
39:56
investors and founders and early stage
39:58
hires
40:00
there are guidelines online you can look
40:02
at this kind of thing
40:05
i don't know if you've googled that
40:06
question but there are
40:08
standards that have emerged and
40:11
generally
40:12
you know depending on how senior you are
40:14
and how well the company is funded
40:16
and uh the field you're in and the
40:18
living costs where you live that kind of
40:20
stuff you know those are all moving
40:21
targets right
40:22
but it means that you know a very
40:24
experienced senior person
40:26
might be able to live on 50 grand a year
40:28
if they're living in a
40:29
in a more affordable part of the country
40:31
or the world
40:32
but if they're living in the bay area
40:35
you know or in manhattan they might need
40:37
10 000 a month
40:38
easily right just to to live
40:41
and eat and if they have kids and you
40:44
know dependents and that sort of thing
40:45
so
40:46
there's not a hard and fast answer
40:49
a few thousand dollars a month certainly
40:51
seems reasonable
40:53
rather than picking a number or giving
40:55
you a number i would suggest that you
40:58
work backwards from how much financing
40:59
they have and figure out what is
41:01
reasonable
41:01
and fair especially compared to other
41:04
team members
41:05
and here's the key is that it's not
41:07
forever right
41:08
there's no reason this is gonna this
41:10
boils down to some sort of contract or
41:11
agreement
41:12
or at least a set of emails or something
41:14
and there's no reason it has to be
41:15
forever right
41:16
so um you know if you can if you can
41:19
survive on
41:20
whatever you think is reasonable three
41:22
five eight thousand dollars a month i
41:23
don't know what it is
41:24
you start there but put in an escalator
41:26
uh so that
41:28
you say you know after 90 days it goes
41:29
up a thousand dollars or two thousand
41:31
dollars after six months it goes up this
41:33
much more
41:34
and or instead of just time key it to
41:36
milestones
41:37
once we get you know the the product
41:39
launched it goes to this once we have
41:41
our first
41:41
x dollars in revenue it goes to this you
41:43
know and if you can get that kind of
41:44
stuff
41:45
sorted out up front it should kick in
41:49
automatically assuming everything goes
41:50
well of course the reason we have
41:52
contracts is because things often don't
41:53
go well so you need to figure out what
41:55
else happens
41:56
um but uh that's the uh that's the
41:59
challenge for you is to negotiate that
42:02
and within reasonable ranges for
42:05
everybody else especially if you're
42:08
coming in as a leader of the company you
42:09
want to be a good example
42:10
uh and and show that you're you're doing
42:12
your share and
42:14
um and i'm sure you would right i mean
42:16
that's what you're trying to do
42:18
okay let's see what other folks say
42:19
about that uh uriel suggests uh to
42:22
resell that it all depends
42:23
my clients in the san francisco early
42:26
stage startups take a salary of 60k
42:28
which makes it hard to survive in the
42:29
bay but once they reach series a
42:31
they up the salary to 12950 they go
42:33
that's pretty much what i just said in a
42:35
more succinct way
42:36
uh thank you ariel that's that's right
42:38
right so you're starting like 5k a month
42:40
to 10k or 15k a month depending on where
42:42
they are
42:43
and you know the the stage and funding
42:45
of the company yep
42:46
um okay uh let's see
42:50
roselle what's the best way for this
42:51
chat okay so good point so next time i'd
42:53
love to have more of you on camera
42:54
that's fine
42:55
and you need to rsvp in advance and fill
42:57
out a little form so that i can give you
42:58
a special link i can't give it right now
43:00
because i'm busy
43:01
but if you'd like to do this again first
43:03
tuesday of next month i'll be back
43:05
and you can find the rsvp form online
43:08
it's posted on
43:10
youtube and facebook and linkedin and
43:12
eventbrite
43:13
uh all my places
43:16
uh and there's a form you can fill out
43:18
um and
43:19
um and then i'll get you the link we get
43:22
on camera like kelly and aruna did
43:24
okay um okay let's see
43:27
so uh sorry i think we covered that but
43:30
let me just scroll down here
43:32
um
43:37
okay sorry i wasn't we didn't lose the
43:39
connection there i'm reading okay
43:40
okay i think we covered that one for the
43:41
moment um here's another one that i got
43:46
this is a common one uh how can i get
43:48
attention or publicity from my startups
43:50
new services or products okay yeah well
43:52
that's a typical
43:54
uh question that i have a special answer
43:56
for actually
43:58
the typical growth marketing approach
44:00
these days is to raise some money and
44:02
spend it on
44:04
paid advertising essentially buy traffic
44:06
on facebook
44:07
is very typical and not a bad thing if
44:10
you can do that
44:11
in an additive way right you put a
44:13
dollar and get
44:14
two dollars out right so that your
44:15
customer acquisition costs are
44:17
reasonable
44:18
and that's a fine thing i have another
44:21
angle that a lot of people neglect that
44:22
i think is kind of cool
44:24
and that is podcast publicity
44:28
so podcasts are a growing area you guys
44:30
all know this
44:32
and especially during the pandemic audio
44:35
listening has gone up
44:37
you've got formats like a clubhouse that
44:39
are audio only getting lots of press
44:41
anyway a different way that isn't talked
44:44
about much that has
44:45
had great success for me and i think
44:47
good for you guys too
44:48
is to go on podcasts and get interviewed
44:51
about your product
44:52
now this is more obviously for consumer
44:54
focus type brands or products
44:57
although there are podcasts on just
44:59
about everything these days and there
45:00
are business to business podcasts
45:02
so even if you have uh you know some
45:04
sort of enterprise service or
45:06
or like kelly's example you know maybe
45:07
the product is something
45:09
that helps um you know with physical
45:11
therapists or doctors of a certain kind
45:13
you know
45:14
there might be a podcast about that and
45:16
by the way if there isn't
45:17
why don't you start one right podcasts
45:19
are easy to start and they're fun
45:21
um but where i was going with this is
45:22
that podcasts are a good place to
45:25
promote yourself and this is one of the
45:27
businesses i run actually there's a
45:29
site and a service called
45:30
radioguestlist.com and i started this a
45:33
dozen years ago or so when my
45:35
my second book came out um because i
45:38
wanted to get publicity and
45:40
it's a free service by the way free
45:43
and you can there they're upsells of
45:45
course
45:46
but you can get leads for podcast
45:49
interviews
45:50
uh and uh get yourself booked on shows
45:54
to talk about your favorite stuff which
45:55
is you
45:56
and what you're building right and there
45:58
are a lot of shows about startups these
45:59
days
46:00
and if that's your thing i'd recommend
46:03
radioguestlist.com
46:04
as well as the podcast directory
46:08
here i have one over here this is a book
46:11
this is a 2018 edition
46:13
but we publish a huge directory of
46:16
listings of podcasts and shows that you
46:18
can get on and the new one just came out
46:20
that's why i was thinking about this
46:21
literally it's just coming out this week
46:25
and you can find easy ways to get
46:26
publicity so if that's
46:28
interesting to you check out
46:30
radioguestlist.com it's a really ugly
46:31
website by the way don't hate on it
46:34
but it works it's like craigslist ugly
46:35
but it works
46:37
okay what else we got here uh well we're
46:39
45 minutes in already i'm glad you guys
46:41
are finding this interesting thanks for
46:42
sticking around i appreciate you being
46:44
here by the way i'm doing this
46:46
for free trying to help everybody
46:48
community service basically
46:50
just as i give the profits from my books
46:52
to charity
46:53
to help inner-city kids back in detroit
46:55
where i grew up
46:57
but i could use your help promoting this
46:59
so if you think this is useful if you
47:00
see us posting online or even right now
47:02
if you could tweet about it
47:04
post on linkedin post on facebook
47:07
subscribe
47:07
follow on youtube all those you know all
47:09
those verbs right
47:11
and if you have uh feedback by the way
47:12
officehours at scottfox.com officehours
47:16
scottfox.com or if you have trouble
47:18
finding um
47:19
the question form for next time if you'd
47:21
like to join me on camera
47:23
okay so i saw a couple more things in
47:25
the in the chat room there
47:27
let's see what we got here uh
47:31
sorry
47:32
[Music]
47:34
okay a lot of potential investors
47:38
ask how will i get paid back or
47:40
liquidate this is from
47:41
tri vista media i have experience
47:44
creating public companies for other
47:46
people how much easier is it to raise
47:49
funds as a public
47:50
entity okay so try vista i would do it
47:54
as a bdc
47:56
so any share sold our free trading no
47:58
reg a
47:59
financing okay i'm not sure what a bdc
48:02
is trevista so if you can fill me in on
48:04
that
48:06
the first so i'm a little confused about
48:08
the public company
48:10
raising funds as a public entity
48:13
unless you're just talking about share
48:14
sales for a publicly traded vehicle
48:16
already but maybe you can clarify that a
48:18
little looks like you're on youtube go
48:19
ahead and
48:20
post a little clarification there but i
48:22
can certainly talk about how to
48:23
the first part a lot of potential
48:25
investors ask how will i get paid back
48:27
or liquidate
48:28
absolutely that is the goal of investors
48:31
right
48:33
i invested in a company uh last month uh
48:35
known
48:36
uh two months ago december uh great
48:39
company
48:39
very exciting um but uh he's doing
48:43
so well that he may not raise any more
48:45
money right so i got in uh
48:48
and put some money in and now suddenly
48:50
they've got revenue coming at them from
48:52
left right and center
48:53
and um so what if he never sells right
48:56
so
48:56
great the ceo and the team end up making
48:58
a couple million a year maybe
49:00
why would they sell right it's a nice
49:02
life
49:03
so it's a very common concern and
49:06
especially
49:07
um this is especially important for any
49:09
of you who are
49:10
taking money from venture capital firms
49:12
because venture capital firms
49:14
they're not like me an individual where
49:17
this kind of the money
49:18
more or less comes back into my
49:19
checkbook a venture capital firm is set
49:22
up
49:22
with limited partners right so they
49:24
don't have money of their own they raise
49:25
money from what they call lp's limited
49:27
partners so so limited partners
49:29
each chip in say 10 million dollars and
49:31
the vc fund has a 100 million dollar
49:33
fund
49:33
and they go and invest that but here's
49:35
the trick they have a life span
49:37
expectation for that
49:38
that over six or eight or hopefully 10
49:40
years at most all the things that they
49:42
put money into all the companies that
49:43
they invest in
49:44
exit to return the money back of course
49:47
a lot of them fail a few
49:48
do okay and hopefully a couple are big
49:50
winners right but the point is the lps
49:52
want the money back they
49:54
they can't benefit they don't want their
49:56
10 million
49:58
um to come back you know 400 000 a year
50:01
forever as dividends that's not the
50:03
business they're in they need the money
50:05
back
50:05
the principal sum the whole thing in in
50:08
large
50:09
volume ideally right so so
50:12
um uh so how will i get paid back or
50:16
liquidate so
50:17
um that is the point you have to put in
50:21
um a uh you have to put in some sort of
50:24
exit strategy
50:26
some of the in-betweens on that this is
50:28
probably what you're digging for
50:30
are that you can have sort of exit
50:32
clauses this is
50:33
contracts which is a lawyer word for
50:35
meaning make up that we agree on
50:38
right so you can do contracts and you
50:40
can have an agreement that
50:42
when the company gets to x um dollars in
50:45
revenue
50:45
or x customers or a certain amount of
50:48
profit or ebitda
50:49
or x y and z then the company has to
50:53
start paying back
50:54
right sometimes that's done as a
50:56
percentage like in the form of interest
50:58
on a note
50:59
like you get 10 interest on your note
51:01
every year maybe forever or some time
51:03
period
51:04
another way might be a percentage of the
51:06
actual sales or profits
51:08
that they buy you out it may just be a
51:12
recurring revenue stream back to the
51:14
investor um
51:16
but again that might be okay for
51:18
somebody like me and that is what i
51:19
negotiated with the company i
51:20
was just talking about but for a vc fund
51:23
they want you out
51:24
they want the company to be sold so
51:27
uh the short answer is you got to
51:28
negotiate it and figure out a way
51:30
uh to give them liquidity because if you
51:33
don't expect to give them liquidity they
51:34
will not invest
51:36
their business is to give you money and
51:38
then get it back
51:40
and hopefully double triple 10 times
51:42
right so
51:44
that's that's the opportunity and the
51:45
challenge um
51:47
uh let's see so trivista is bdc is a
51:50
business development corporation
51:51
technically a closed and mutual fund
51:54
but it is a public company
51:58
okay okay so okay in that case so
52:00
travista i'm not familiar with that
52:02
structure
52:02
that's not a typical venture structure
52:05
at all but it sounds pretty cool
52:06
uh speaking as a former investment
52:08
banker that's very interesting
52:09
um so a business development corporation
52:11
essentially is a publicly traded vehicle
52:13
so this is almost like a spac right this
52:15
a special purpose acquisition company
52:18
that you can put out there so that the
52:20
public markets
52:23
have stock that trades so that's not
52:25
typical for venture investment at all as
52:27
far as i know
52:28
but yes it would allow you to raise
52:30
money from the public assuming that the
52:31
public is interested in buying the stock
52:34
so that's um that's beyond my expertise
52:37
quite frankly and beyond the world of
52:38
venture investing
52:40
in that case you'd have to engage in
52:41
investment bank or brokerage firm or
52:42
somebody
52:43
to market the thing out or maybe it's
52:46
more of a crowdfunding thing i'm not
52:48
even sure but you just have to market
52:49
and get public interest
52:50
in the stock um that is very different
52:53
than the venture model so
52:55
um happy to learn more or discuss it if
52:57
you'd like to join us in the startup
52:58
founders forum maybe we can figure out
53:00
an angle for you but
53:01
um that that's not a thing that i i can
53:04
help you with much more
53:05
um but liquid liquidity yes the
53:07
investors are gonna want liquidity
53:09
okay all right well we're almost out of
53:11
time here it's almost been an hour
53:12
already um
53:14
i don't see any more questions at the
53:16
moment or maybe i missed them and i
53:17
apologize
53:18
if i did there are plenty of questions
53:20
out there
53:21
obviously um let's say
53:25
let's talk about what's next okay so um
53:29
let's see sorry just look at my notes
53:33
okay so what we've got is upcoming
53:36
events
53:37
so there are other events like this i do
53:39
this twice a month
53:40
once publicly like this this is uh
53:42
startup office hours
53:43
this is this first tuesday of every
53:45
month and then sometime in the middle of
53:47
the month
53:47
we do the mastermind startup accelerator
53:50
workshops and those are private
53:51
group functions where both of our
53:54
question askers today are veterans of
53:56
that actually
53:57
so a lot of people come to those and
53:58
those are open worldwide thanks to zoom
54:00
so if you're listening and like to join
54:01
us
54:02
free tickets are available if you ask a
54:03
question or
54:05
if you are a underrepresented
54:08
underrepresented minority in the venture
54:10
world
54:10
basically meaning you don't look like me
54:12
then we'd be happy to help you out if
54:14
you
54:14
need help attending uh because the
54:16
tickets cost a grand total of ten
54:17
dollars
54:18
or twenty dollars we just do that to
54:20
keep out the knuckleheads so that we can
54:21
have legit conversations between
54:23
founders and help everybody get up to
54:24
the next level
54:25
i'd love to see you there the url is on
54:27
the screen it's mastermindsworkshops.com
54:31
mastermindsworkshops.com
54:32
at least right now the next one is the
54:34
11th which i think is next
54:35
thursday night and we'd be happy to see
54:37
you there if you'd like to join us
54:40
we also have if you like the way i'm
54:42
talking if this is helpful to you
54:43
there's over 100 episodes of the scott
54:45
fox
54:46
podcast posted on your favorite podcast
54:50
service so if you go check out itunes or
54:51
elsewhere
54:52
please leave a review plenty of me
54:54
talking about this kind of thing if
54:56
that's helpful to you
54:57
my youtube channel is another couple
54:59
hundred uh
55:00
clips about different aspects of startup
55:02
life and you're welcome to
55:03
drown yourself in that stuff as well if
55:05
you'd like but most importantly if you
55:07
would like to work together personally
55:08
the startup founders forum
55:09
i'm there every day helping out our
55:11
members so
55:13
um oh i was gonna give you a code for
55:15
the workshop so if you would like to
55:16
join us for the next startup accelerator
55:18
workshop
55:19
you can use a code save big
55:22
all caps save big and we'll give you
55:23
half off if you want to join us so half
55:25
off ten dollars
55:26
half off 20 bucks this is a community
55:29
service really like i said the
55:30
ticket fee is just a gating factor so
55:33
make sure that everybody's there for the
55:34
right reasons and we hope to help you
55:36
next time last i want to thank our
55:38
sponsor oh wait we don't have any
55:39
sponsors yet so if you're listening and
55:40
you'd like to help sponsor this
55:42
it does take some money and time to keep
55:44
this going my assistants and staff
55:46
get the word out and help you help help
55:48
me help you i'd be appreciative
55:50
of your support and last please review
55:54
share like comment um and uh
55:57
review on any and all platforms we'd
55:59
really appreciate it
56:01
so that's what i got for you today i'm
56:02
scott fox from masterminds in the
56:04
startup council service
56:06
that's hopefully helpful to you and your
56:09
startup dreams
56:10
let's get together and help make the
56:11
world a better place entrepreneurs are
56:13
the ones to do it
56:14
thank you for joining me today and we'll
56:16
be back again on the first tuesday of
56:18
next month
56:18
and like i said please go share like
56:20
comment review
56:22
and all that stuff thanks for being here
56:23
appreciate the folks who join me on
56:25
camera and if you'd like to do that next
56:26
time please
56:27
do rsvp send in a form and we'll talk to
56:30
you too
56:31
thanks for your time i appreciate you
56:32
being here bye