Products are Lines, not Dots

I see a lot of founders and startups struggling with explaining what they are trying to accomplish. Many are just focused on how they are going to do the next thing. The next release, the next pitch, the next campaign.

Releasing a product is not an accomplishment in and of itself. Launching isn’t either. Getting a feedback and signs of traction never quite feels like enough.

Why are you doing all this?

Mark Suster wrote an important blog post in 2010: Invest in Lines, Not Dots.

The tl;dr: Relationships are important.

It’s easy to think that when you meet someone once, you’ve MET them. It just isn’t true. A relationship is that line that is formed across a series of encounters.

Products are no different and the sins that we commit are the same as those Mark describes.

Mark says:

“[ . . ] I tell entrepreneurs the following: Meet your potential investors early.  Tell them you’re not raising money yet but that you will be in the next 6 months or so.”

Screen Shot 2015-01-20 at 1.01.31 PMIn a world of fast iteration and Running Lean, it’s easy to think of products as the entire picture. It’s one big giant dot that we hope brings us success and a mass of users.

It’s never like that though.

Your Product  is a relationship with your users. Like Mark (and the rest of us), Users invest in Lines, not Dots.

When you have that first meeting you need to not only make a good impression, but you have to tell everyone where you are going. We call it Vision.

Release Early, Then Release With Purpose

Fast product iteration is important: You listen to users, you monitor and assess metrics and you make changes that bring your product closer to perfection.

Perfection is not what you need: Purpose is. Why are you releasing and why should users and customers continue to invest in you and your product with their time, money and feedback?

In looking for perfection (product/market fit?) it’s easy to think it is something that *just happens* and then you are instantly successful. It’s never like that. It takes work and focus, and a vision for how the future is going to be different for your customers because of it.

Screen Shot 2015-01-20 at 1.23.18 PM

Vision is what defines the future you see for you and your customers. It’s why they try things for the first time and it’s why they will stick around even when you don’t quite get things right.

It’s easy to miss and it’s easy to get bogged down in the day to day, but if you have it and if you can articulate a vision, then you have a better business plan than you could ever put in a doc or deck.

When you iterate on your product and deliver releases, it should be about taking the customer closer to your vision for your product and why it’s important.

 

 

 

Founders & Funders: Nov 18, 2014

beerwall

It’s that time again – to bringing together the people that start emerging technology businesses and the people that fund them, early.

Who should attend?

Uhm, yeah. Founders & Funders.

Founders

You are a founder of a emerging technology company or a technology-enabled company. You are actively raising a round of capital or starting to think about raising your next round. Feels like we’re leaning to Seed and Series A – basically if you’re name is Tobi or Ryan most investors know who you are ;-)

Funders

Space for funders will be limited. We have room for approximately 60 people. And we like to keep the ratio of 3:1 founders to funders. This means we roughly have room for 15 funders. We’re going to be picky, the target will be Seed and Series A.

Why should you attend?

Relatively small and intimate gathering of other emerging technology company founders and the people that fund them. The funder mix ranges from individuals that write first and very small cheques to larger institutional funds.

  • Social event – no formal pitches
  • Community is the framework – chance to talk to other founders about the current fundraising climate

What to expect?

It is a chance to have a bite to eat and a drink with other founders and investors that are actively investing in Toronto companies. It’s a chance to figure what has worked for others, to figure out which investors you want to spend more time with, and just connect.

How do I attend?

Submissions will end on Nov 10.

How we raised a $2MM seed round in 2 weeks

CC by Dino Quinzani

This is a guest post by Mike Katchen, founder of Wealthsimple, Canada’s first online investment manager. He recently moved back from San Francisco where he led marketing at 1000memories (YC S’10, acquired by Ancestry.com).

In May, we raised a $2MM seed round for Wealthsimple (and didn’t really tell anyone). It took us 2.5 weeks to raise from 15 amazing investors in Toronto including David Ossip, Dan Debow, and Roger Martin. Here are a few tips based on what I think we did right.

Note: Table stakes for seed rounds are a good idea (in a massive market) and a killer team.

1. Find your lead investor early.
Most first-time founders I know make the same mistake. They think that fundraising is about convincing investors of the merits of your idea and the strength of your team. Unfortunately, that’s bullsh*t. Investors follow the herd. They care more about who else is investing than what you do as a company. When you start to fundraise, laser-focus on getting your first investor. Don’t go broad until you have your lead lined up.

I met our lead investor the day we started fundraising. He is an icon in the financial services industry. We got him on board through a combination of special terms and appealing to him emotionally about building his industry “legacy”. It took 2 meetings over 1 week to get him to sign. Once he was in, it took 1.5 weeks to close the round.

2. Your angel investors don’t have to be in tech.
We closed our round with 14 angel investors, only 5 are from tech. The other 9 are from financial services. I see lots of entrepreneurs focus exclusively on local tech angels and VCs like those listed in this great post by David Crow. That’s a mistake. Look for successful entrepreneurs and executives in your industry – you’re likely to find a sizeable group of potential investors that actually know your business. A few industries with strong local investors include real estate, financial services, professional services, and healthcare.

3. Most decks suck. Make yours good.
A compelling deck is short, clear, and well designed. If you have a solid story (don’t forget the table stakes above), then tell it in 4-5 pages: (1) what you do, (2) market size, (3) team, (4) growth plan, (5, optional) competition. Here’s our pitch. You can also find great examples at bestpitchdecks.com. Keep it short, pretty, and exciting.

4. Set a deadline.
Fundraising has a nasty habit of dragging on. As soon as you have your lead investor, set a closing date (2-3 weeks out) and use that to drive urgency with other investors. You don’t have to stick to it, but you’ll find that things move way faster with a deadline.

5. Put some money in yourself (if you can). It goes a long way.
The Wealthsimple team were the first investors in our seed round. If you can afford it, investing in your own round goes a long way. It signals to investors that you are committed, aligned, and will be a responsible steward of their capital. Surprisingly few teams invest in their own rounds so it can also help you stand out.

Let me know if you have any tips to add or want to discuss fundraising strategies – always happy to chat. You can reach me at [email protected] or @mkatchen