Interview Posts

Andrew Warner recently did us the honor of interviewing Naval for Mixergy:

Video: Naval on Mixergy

Watch the video to learn about the secret history of Venture Hacks and see why Naval calls this the most thoroughly researched interview he’s ever done. I also sneak on the set for 5 seconds before they throw me off.

Paul Graham says “The future [of funding] is no fixed amount, no fixed closing date, and no lead.” In other words, the future of financing is continuous, not discrete.

This post explains how to raise a seed round with no lead, no fixed amount, and a fluid closing date. The process is called mass syndication, or a party round.

Paul proposes eliminating rounds altogether, but we’re not there yet. Mass syndication is a single continuous seed round and I think it’s the state of the art in continuous fundraising.

We originally offered this interview exclusively to AngelList applicants — now it’s available to everyone.

Another future

The future of funding is also finding the right investors for your startup, quickly. Not just picking from the investors you can get introductions to.

How? You want to get instant meetings with any investor you want. And you only want to meet investors who are genuinely interested in your startup. That’s what AngelList is for. One danger of this approach is that your round is oversubscribed.

Despite the name, you can use AngelList to request intros to any subset of investors on the list — you don’t need to send it to the whole list.

Leads aren’t going away

Fred Wilson writes “If you don’t want a lead investor, then don’t knock on my door because I don’t know any other way to be.”

This interview explains how to raise a seed round with the conservative assumption that a lead won’t step forward — but it doesn’t preclude you from changing course if a lead appears.

1. Interview

Video: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript: Below

2. Outline

Here’s an outline and transcript:

  1. You can close an angel round with ‘mass syndication’
  2. Start with terms and valuation below market
  3. What you want in your term sheet
  4. What you don’t want in your term sheet
  5. Should you have a board seat for seed investors?
  6. This isn’t comprehensive term sheet advice
  7. Memorize the term sheet before your first meeting
  8. How do you set your valuation? Price it to move
  9. How do you bring up the terms in a meeting?
  10. Describe how the terms are investor-friendly
  11. A preferred round is a good way to set up good initial terms
  12. Does a small seed round need protective provisions? Pros and cons.
  13. Get feedback on the terms in the first meeting
  14. Drop names to build social proof
  15. Social proof works differently in a Series A round with VCs
  16. See if the “interest” includes a dollar amount, intros, and name-dropping (a.k.a. soft circled)
  17. When do you need a lead?
  18. Approach the financing as if you won’t find a lead
  19. What’s a lead investor?
  20. If they say “find a lead,” ask why
  21. How to create a deadline
  22. Raise the money when you don’t need it
  23. Send two emails to the angels
  24. Do a rolling close: the cash comes in just- in-time
  25. Mass syndication can fail if a very high social proof investor drops out
  26. Use AngelList and StartupList to get intros to angels
  27. What do angels look for?
  28. Advisors are good for getting your foot in the door, not in a pitch
  29. Get advisors by going to events or talking to entrepreneurs
  30. Before you raise a seed round, you need a product in the marketplace
  31. Use customer development and lean startup techniques to get to market with less
  32. Pitching hacks free chapter: Advice on getting investor intros
  33. If you need money to get something in the marketplace, pitch idea investors
  34. Pitch incubators or do your startup on the side
  35. What are the different types of seed stage investors?
  36. If you’re talking to a VC, make sure they really do seed stage rounds
  37. Potential concerns with pitching multi-stage and seed-stage firms
  38. Get intros to seed investors with AngelList/StartupList

3. Transcript

Music: Squarepusher

Nivi: Hi there, this is Nivi from Venture Hacks.

Naval: And Naval from Venture Hacks.

Nivi: And we’re going to talk about how to close an angel round, how to put together an angel round, or in other words, how to herd a motley crew of angel investors and turn those meetings that you’re getting into money in the bank.

I think we’re going to start off by talking about mass syndication, which is an approach that I think more entrepreneurs should be taking to close their angel rounds.

You can close an angel round with ‘mass syndication’

Nivi: I think entrepreneurs make two typical mistakes when they’re doing an angel round, and they come from what they’ve read online about how to close a VC round. So, there are two things.

One: they don’t name drop enough. They don’t mention who else is interested.

Two: and I guess more importantly, they’re looking for a lead, which you don’t necessarily need in an angel round.

When you put those two together and combine them with a term sheet that you essentially write yourself, you’ve got a new way to close an angel round which we call mass syndication, which I’ve done personally. And Naval, maybe you can talk about how often you see that happening, or if you don’t see that happening, or whatever.

Naval: It happens fairly often these days. Especially the Y Combinator companies, which are well trained by Paul Graham and crew, will exercise mass syndication a lot. So, they take the standard term sheet that they’ve been given and they go out and do a rolling close of various convertible notes. And it generally works pretty well.

The keys are that you have to set the terms and the valuation very, very reasonably. In fact, you have to probably price slightly below market, because otherwise the angels don’t trust you, then they want a lead who’s done the due diligence. You have to work with people that you have warm intros with, you have to name drop like crazy, and you have to create forcing functions to get the round to close. You can’t give people all the time in the world.
[Read more →]

GigaOm TV released an interview with our Naval today. It’s pretty damn good:



Video: Naval on GigaOm TV

The topics aren’t new but I always learn something when I listen to Naval. He discusses the three traits you need to look for in a partner, how important it is to be in Silicon Valley, and lots more.

Howard Greenstein from Inc. recently interviewed Naval and me for a post called 5 Questions for an Angel Investor:

Howard Greenstein: How does a start-up know when it is ready for Angel funding?

Venture Hacks: If you’ve just got an idea, check out incubators like Y Combinator and TechStars. Or you might be able to convince someone who knows you well (a former boss or family member) to invest. Or you might be able to convince someone who knows the market really well  (they’ve had the same idea as you) to invest if they believe in the team.

If you’ve got amazing pedigree and connections (your last company was acquired and the investors made money) you might be able to raise money on just that alone. If investors are clamoring to invest before you start raising money, you can take this route, otherwise, you can’t.

Otherwise, build something (anything), put it in the hands of customers and get some traction before raising money. Any hardware/software/whatever startup can do this thanks to lean startup and customer development techniques and the decreasing costs of doing *everything* — the exception is startups with predominantly technical risk. Also get some social proof (brand name advisors) before contacting angels. Social proof lubricates getting in the door.

Read the rest of the interview for our answers to 4 more questions, including our thoughts on what to look for in an angel and trade-offs between raising money vs. boot-strapping. I think the interview turned out well. Thanks for pulling it together Howard.


Sean Ellis taught me that startups need to be as creative and thoughtful about their marketing as they are about their products. But we’ve never applied that thinking to Venture Hacks. We focused on writing stuff that doesn’t suck, didn’t engage in marketing histrionics, and figured the customers would come. More important, we simply weren’t excited about marketing.

But! Since we started AngelList, we’ve suddenly gotten excited about marketing — who knows why. And so, on to the histrionics…

Interview: How to close an angel round

Naval and I have recorded one of our best interviews yet: how to close an angel round. But there’s only one way to get it: apply to AngelList. And if you don’t want to apply AngelList, apply anyway, tell us why you don’t want any intros, and we’ll still send you the interview.

Here’s a 10-minute teaser of the full 40-minute interview:

SlideShare: How to close an angel round – Teaser
Video: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript: Below

¡Get the full interview by applying to AngelList!

Outline

Here’s the outline of the full 40-minute interview (not just the teaser).

  1. You can close an angel round with ‘mass syndication’
  2. Start with terms and valuation below market
  3. What you want in your term sheet
  4. What you don’t want in your term sheet
  5. Should you have a board seat for seed investors?
  6. This isn’t comprehensive term sheet advice
  7. Memorize the term sheet before your first meeting
  8. How do you set your valuation? Price it to move
  9. How do you bring up the terms in a meeting?
  10. Describe how the terms are investor-friendly
  11. A preferred round is a good way to set up good initial terms
  12. Does a small seed round need protective provisions? Pros and cons.
  13. Get feedback on the terms in the first meeting
  14. Drop names to build social proof
  15. Social proof works differently in a Series A round with VCs
  16. See if the “interest” includes a dollar amount, intros, and name-dropping (a.k.a. soft circled)
  17. When do you need a lead?
  18. Approach the financing as if you won’t find a lead
  19. What’s a lead investor?
  20. If they say “find a lead,” ask why
  21. How to create a deadline
  22. Raise the money when you don’t need it
  23. Send two emails to the angels
  24. Do a rolling close: the cash comes in just- in-time
  25. Mass syndication can fail if a very high social proof investor drops out
  26. Use AngelList and StartupList to get intros to angels
  27. What do angels look for?
  28. Advisors are good for getting your foot in the door, not in a pitch
  29. Get advisors by going to events or talking to entrepreneurs
  30. Before you raise a seed round, you need a product in the marketplace
  31. Use customer development and lean startup techniques to get to market with less
  32. Pitching hacks free chapter: Advice on getting investor intros
  33. If you need money to get something in the marketplace, pitch idea investors
  34. Pitch incubators or do your startup on the side
  35. What are the different types of seed stage investors?
  36. If you’re talking to a VC, make sure they really do seed stage rounds
  37. Potential concerns with pitching multi-stage and seed-stage firms
  38. Get intros to seed investors with AngelList/StartupList

Transcript

Here’s a transcript of the first 10 minutes of the 40 minute interview.

(Music: Squarepusher)

Nivi: Hi there, this is Nivi from Venture Hacks.

Naval: And Naval from Venture Hacks.

Nivi: And we’re going to talk about how to close an angel round, how to put together an angel round, or in other words, how to herd a motley crew of angel investors and turn those meetings that you’re getting into money in the bank.

I think we’re going to start off by talking about mass syndication, which is an approach that I think more entrepreneurs should be taking to close their angel rounds.

[Read more →]

Thanks to KISSmetrics for supporting our interview with Sean Ellis. If you want an intro to KISSmetrics, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

Hiten Shah from KISSmetrics recently sat down with me to discuss how to optimize funnels with their upcoming analytics tool, KISSmetrics.

You may know Hiten from his Crazy Egg days and survey.io, which Hiten and I discussed in How to measure product/market fit with survey.io.

SlideShare: How to optimize your web apps with KISSmetrics
Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, play anywhere)
Transcript: See below

Prerequisites

You’ll get more out of this interview if you also read:

  1. Our interview with Sean Ellis parts 1 and 2.
  2. Our previous interview with Hiten: How to measure product/market fit with survey.io.

Outline

Here’s an outline and transcript of the interview. The interview and transcript are about 23 minutes long and we’ve highlighted some of the juicier bits for you.

  1. After fit, prepare for growth
  2. KISSmetrics helps you optimize your funnel
  3. KISSmetrics helps with all optimization steps
  4. First user experience isn’t necessarily the paid user experience
  5. KISSmetrics is most valuable after fit
  6. How Cloudfire uses KISSmetrics during fit
  7. Startups aren’t a science — but we’re getting closer
  8. How other people use KISSmetrics
  9. KISSmetrics is on it’s third iteration
  10. Why KISSmetrics’ hasn’t launched
  11. KISSmetrics tracks actions on a per-user basis
  12. KISSmetrics lets you calculate customer LTV
  13. Get more startup advice

[Read more →]

“Where the #@!*% is Part 2?”

That’s what I’ve been hearing since we published Part 1 of our rare interview with Sean Ellis.

Here’s part 2.

In Part 1, Sean discussed what you do before product/market fit: how to get there, how to measure it, and how to survey your users so you can improve fit.

In Part 2, he explains what you do after fit: optimizing your positioning, implementing a business model, and optimizing your funnel — all so you’re prepared to acquire users quickly and profitably.

If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia), Eventbrite (Sequoia), Grockit (Benchmark)… the list goes on. 12in6 “helps startups unlock their full growth potential by focusing on the core value perceived by their most passionate users.”

This is the first time Sean has done an interview on the record. I’m really psyched he’s making his insights public — this interview is a must-listen.

SlideShare: How to bring a product to market, Part 2
Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript with highlights: Below

This inteview is free — thanks to KISSmetrics

We’re bringing this interview to you free, thanks to our sponsor KISSmetrics.

Sean is an advisor at KISSmetrics and we interviewed their CEO, Hiten Shah, in How to measure product/market fit with survey.io. KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for funnel optimization that we’ll discuss in an upcoming interview with Hiten Shah.

Prerequisites

You’ll get more out of this interview if you also read:

  1. Part 1 of our interview with Sean.
  2. The startup pyramid.
  3. We use several phrases interchangeably in the interview: Growth = scaling = acquiring customers with a known ROI. Preparing for growth = after product/market fit = optimizing promise + implementing economics + optimizing the funnel.

Outline

Here’s an outline and transcript of Part 2.

  1. What comes after fit?
  2. Prepare for growth
  3. a) Put the metrics in place
  4. b) Optimize the funnel
  5. c) Optimize the messaging
  6. Prepare for growth as quickly as possible
  7. Remove bottlenecks to preparing for growth
  8. Preparing for growth is not a low-burn period
  9. Preparing for growth doesn’t require growth
  10. Use a business model to grow quickly
  11. Grow and create new channels
  12. Nail the first user experience while preparing for growth
  13. Leave no room for the competition
  14. Marketplaces are an exception to this model
  15. Why Sean decided to focus on startup marketing
  16. Just scratching the surface

[Read more →]

Thanks to KISSmetrics for supporting our interview with Sean Ellis. If you want an intro to KISSmetrics, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

Hiten Shah from KISSmetrics recently sat down with me to explain how to use their product, survey.io, to measure product/market fit and find the “best grass” in your product. You may know Hiten from his Crazy Egg days.

survey.io is a free survey tool that helps you implement some of Sean Ellis’ techniques to get to fit. KISSmetrics actually built survey.io with Sean. Unfortunately, there hasn’t been great documentation for survey.io besides Sean’s launch post. Until now.


SlideShare: How to measure product/market fit
Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript with highlights: Below

Prerequisites

You’ll get more out of this interview if you also read:

  1. An example survey from survey.io.
  2. Our interview with Sean Ellis.

Outline

Here’s an outline and transcript of the interview. The interview and transcript are about 19 minutes long so we’ve highlighted some of the juicy bits to get you started.

  1. survey.io: Before product/market fit
  2. survey.io measures fit
  3. How did you discover the product?
  4. How would you feel if you could no longer use the product?
  5. What would you likely use as an alternative if product were no longer available?
  6. What is the primary benefit that you have received from the product?
  7. survey.io is open-ended
  8. The flock will always find the best grass
  9. You don’t need survey.io to find the best grass
  10. Have you recommended the product to anyone?
  11. What type of person do you think would benefit most from the product?
  12. How can we improve the product to better meet your needs?
  13. survey.io is more powerful with filtering
  14. Would it be okay if we followed up by email to request a clarification to one or more of your responses?
  15. Upcoming survey.io features
  16. Get qualitative feedback before fit
  17. Must-have % by industry
  18. Ask the must-have question

[Read more →]

Sean Ellis recently sat down with us and explained how to bring products to market. You should listen to this interview for ideas on how to get to product/market fit, how to measure fit, and how to survey your users so you can improve fit.

If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia), Eventbrite (Sequoia), Grockit (Benchmark)…  the list goes on. 12in6 “helps startups unlock their full growth potential by focusing on the core value perceived by their most passionate users.”

This is the first time Sean has done an interview on the record. I’m really psyched he’s making his insights public — this interview is a must-listen. We’ve broken the interview into two parts: 1) before fit and 2) after fit. This post contains Part 1 (and here’s Part 2.)

SlideShare: How to bring a product to market
Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript with highlights: Below

This inteview is free — thanks to KISSmetrics

We’re bringing this interview to you free, thanks to the kind support of KISSmetrics. Sean is an advisor at KISSmetrics and we interview their CEO, Hiten Shah, in How to measure product/market fit.

KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for funnel optimization.

Prerequisites

You’ll get more out of this interview if you also read:

  1. An example of the survey.io survey Sean uses before fit. (Several phrases we use in the interview mean the same thing: Product/market fit = Fit = 40% of surveyed users consider the product a “must-have” = 40% of surveyed users would be “very disappointed” if they could no longer use the product.)
  2. The startup pyramid.
  3. Some of our favorite posts by Sean.

Outline

Here’s an outline and transcript of Part 1.

  1. Half the marketing battle is the product
  2. Must-have products make marketing much easier
  3. How PayPal built a must-have product
  4. Understand the must-have users
  5. How to get to product/market fit
  6. How not to get to fit
  7. Should I launch?
  8. You can’t set a deadline on fit
  9. How to communicate with the board during fit
  10. How to use positioning to improve fit
  11. It’s frustrating to try to grow without fit
  12. How many users do you need to determine fit?
  13. Who do you survey?
  14. What is promise?
  15. Don’t over-position your product during fit
  16. Pivot the business around the love
  17. Focus the product on the love
  18. Create a great experience around the love
  19. Create a business model around the love
  20. First find the love
  21. Are recommendations a good indicator of fit?
  22. The must-have metric is a good indicator of fit
  23. Preview of Part 2: What comes after fit?

[Read more →]

We received a lot of good questions and feedback on How to pick a co-founder:

Is two co-founders the only way to go? How do we split up the company? Who’s the boss? How do I know when to compromise on a co-founder?

So Naval and I recorded a 40-minute interview to answer your questions, explain how to pick co-founders in detail, and describe not only what to do, but how and why to do it.

The interview comes in two versions: Mini and Pro.

Mini

The Mini version of the interview is free. It includes the first 5 questions of the interview — audio and transcript. Voila:

Audio: Mini interview with chapters (for iPod, iPhone, iTunes)
Audio: Mini interview without chapters (MP3, works anywhere)
Transcript: How to pick a co-founder (Mini) (PDF)

Pro

The Pro version is $9. Fuck that, it’s free. It includes the full interview, with all 16 questions plus:

  • A nicely-formatted 48-page transcript. Here’s a sample.
  • An MP3 you can download for your portable device or media player. Here’s a sample.
  • Chapters, so you can jump to the part of the interview you want. This only works on iPods, iPhones, and iTunes. Here’s a sample.
  • Your money back if you don’t like the interview.
  • THAT AWESOME FEELING OF BEING A PRO.

Questions

Here are the questions we cover in the interview:

  1. How many co-founders?
  2. How do you create a history together?
  3. How should you divide up the company?
  4. Who’s the boss?
  5. Do you even need a CEO?
  6. What skills do you need on the founding team?
  7. Why do you need aligned motivations?
  8. Should I compromise on a co-founder?
  9. Why should I partner with a nice guy?
  10. How can I tell if the other guy is a good builder/seller?
  11. How do I convince someone to partner with me?
  12. What if my co-founder needs a salary?
  13. Where do I find a co-founder?
  14. How do I start a business with family?
  15. How do I start a business with friends?
  16. How many co-founders? (Redux)

[Read more →]