This Week in Startups - Twitter bans sharing “private media” + Startup Checklist: How to raise capital | E1336

Episode Date: December 1, 2021

First, Jason covers Twitter's confusing major new privacy policy revision (1:54), reacts to a 1995 clip of Bill Gates talking about the internet on Letterman (12:36). Then, in episode 9 of the Startup Checklist, Jason explains how to raise capital from venture investors (16:47). This includes: finding investors and evaluating if they are the right fit (29:35), nailing cold emails (35:33), pitching your startup, sending investor (47:42) updates and more.

Hey, everybody, welcome to this week in startups. It's episode nine of our startup checklist. And this is the one you've been waiting for. You've got your startup really tight. You've figured out your product. You know your market. You got your team. You got your culture.

Everything's just dialed in and you want to raise money. So today we're going to talk about how to raise capital, finding investors, figuring out if they're the right fit for you, how to nail that cold intro and how to pitch your startup perfectly so that you don't frustrate investors and they understand what you do, why it's important. why they should invest and you get that second or third meeting. We also talk about sending investor updates, which makes raising more money easier in the future.

But first, Twitter just announced a new privacy policy revision. It's super confusing. I'm going to break it down for you. And then we're bringing back our tweet of the day. And this is an archive video of David Letterman interviewing Bill Gates in 1995 about this new thing called The Internet. Stick with us. It's going to be a great show.

This week in startups is brought to you by LinkedIn Marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash checklist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a sock to report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. and Odo is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you build and scale your business. Your first app is free forever and right now Odo is offering $1,000 off your first implementation pack at Odu.com slash twist.

That's ODOO.com slash twist. All right, everybody, it's the day after. Jack said he is leaving as CEO and we'll be leaving. the board of our favorite company and favorite social network, Twitter. Right after he did that today, Twitter updated their security policy. Now, their private information policy is designed to keep people safe in a world where anonymous accounts on Twitter can go kind of crazy and do things like dock somebody. What's doxing?

Well, if you don't know what that means, it's basically your personal information. There are levels of doxing. I was doxed by Mother Jones earlier this year, where they put the actual town where I live, which is a very small town. And I was like, why would you do that? And I asked the writer, please don't mention where I live, just say the Bay Area, because they were trying to dunk on me because, and they tweeted it. And then I actually reported it to Twitter that they did that and they changed it after I called them out on it. Because it is dangerous. And the reason it's dangerous to dox people should be apparent to anybody.

I've been doxed three times in the last two years. in one case somebody took a picture that I took up the skyline and they did a reverse image search and then basically found a listing of my home and this person was a professional and they are upset about me because of some political thing I think it was because I was from Mike Bloomberg and not Bernie or something and they literally posted my home address on Twitter and I immediately reported it. It got taken down but it is dangerous because I've had two stalkers, three stalkers I've had death threats. When you become a high profile person,

even moderately, you know, 10,000 people, 25,000 people following you, which a lot of people have now on social media, 1% of people having a bad day, suffering for mental illness, you know, on pharmaceuticals, legal or otherwise, people can do really rash things.

We're seeing it now in the pandemic. And so it is a very important thing that social media companies get this right. So what was the change they made? Well, they added, and I'll just read to you directly from it, new. Media and private individuals without permission of the person depicted. And there's a bunch of other things that are not permitted in this. Contact information, non-public personal phone numbers, email addresses,

financial account information, bank account information. This should all seem super obvious to everybody, medical records. And you can't threaten somebody. You can't threaten to expose somebody's private information. So even threatening to dock somebody asking for a bounty, or a financial reward for somebody else, posting somebody's private information, all of these things are not allowed.

This is really a backstop for the bad 1% of people, people who get too heated. But it is a real issue. If you go on TMZ and you just type in stocker, you'll see all the celebrities who have to deal with, you know, this kind of issue. And it can be scary for individuals. I know many people with security

and many people in the tech industry who live otherwise normal lives have massive, massive security presence. You could read about Zuckerberg having a stalker and a pretty serious issue. And I'm actually reticent to even talk about this because sometimes that insights more, but we do need to have a talk about it. And it's a super important issue for us to address on social media. So the goal is obviously preventing harassment, which is great.

The official wording is confusing. And here's the quote, there are growing concerns about the misuse of media and information that is not available elsewhere online as a tool to harass, intimidate, and reveal the identities of individuals. So you remember there was that Central Park, Karen. I wouldn't say her real name here. I don't need to put any more heat on her. But she was recorded by a bird watcher.

A bird watch, I mean, just seemed to be all bad people. He asked her to get her dog out of the no dog area in Central Park. So two people just getting in each other's business. And, you know, this goes viral. And this is the thing that is unique about the world today is that when somebody does something, they're having their worst moment in life, they're having a freak out, they have a bad day. They literally have a literal nervous breakdown anxiety attack. It could be captured on video and it could ruin the person's life. And we have to ask ourselves as a society, like, does everybody have that once or twice in their life?

Or do some people suffer from acute anxiety or just are socially maladapted? And as much as you want to dunk on the person, there also is some compassion that should happen. So I think what we're seeing here is some sort of way to think about that, perhaps, but it's unclear. And, well, you probably don't remember this. But in September of 2020, Twitter was named in a lawsuit by a man who claimed he was incorrectly docks as a white supremacist and then lost his job. According to law.com, the lawsuit claimed Twitter had breached an implied covenant of good faith and fair dealing. Twitter was dismissed from the lawsuit in November of 2021, just this month, because the plaintiff had no contract with them, according to Bloomberg law. So there's all of this shared information, and when you put it out publicly and it trends, there are real war consequences. Some of the real war consequences are arguably a good thing, right?

If you do something really heinous, the world should know. Like, so if, I don't know if you, I saw somebody get a cup of soup thrown in their face. Like, nobody should have to do that. There is no excuse for that. and that person got arrested, or if somebody beat somebody up. And so how does Twitter actually apply this? Well, people on Twitter went kind of crazy

that maybe the new CEO, because of previous tweets he's done, or maybe he's a little more on the woke side, and they'll be controlling more speech. This is a juxtaposition from the founders of Twitter. Biz-Ev and Jack were known for being, the free speech party of the free speech party. In other words, they grew up like myself in Gen X or Baby Boomers, kind of trained that freedom of speech was a core tenant of America and even

ugly speech. You wanted to protect. If somebody said something completely inappropriate, you just want to always err towards more speech being better and drowning out offensive stuff with more non-offensive stuff. And so that was the concern people have. And it was a little bit confusing. And Wesley Yang, a Twitter account, tweeted that he has a substack apparently, and a number of people made the same sort of observation. Would the George Floyd video violate Twitter's new terms of service that prohibit posting video of private individuals without their consent? I'm reading Wesley's tweet. And that is a great question. So I think this is one of those situations where they post a rule. That's a backstop. It's not meant to be every time you upload a video,

as I said, like, well, if I take a picture at the next Knicks game and I happen to have five people in the photo and I don't have their consent to post it, am I breaking the rules? I'm going to lose my account. So, uh, enforcement of this rule is at Twitter's discretion. So it's a backstop against bad behavior. I don't think it's as bad as it looks and the timing certainly makes people's minds wander. But I don't think that this has anything to do with Jack leaving and then them wanting to, uh, do this. Obviously, there are rules against, uh, revenge porn or anybody's private photos that were shared. You can't do that.

That's pretty obvious. That's been around forever. So this is going to be a continuing saga as we figure out how to deal with social media at scale. And if there wasn't scale here, this wouldn't be such a big issue. But because of the algorithms, because things immediately surfaced to the entire corpus of users, pre-alorithm, this didn't come up as much. Because pre-alorithm, you'd have 20 people see it, two people see it. It would get resolved.

It would get taken down. So in the era of blogs, blogs didn't have this virality. You could have people reblog something. They would then decide, I'm going to write a blog post about that blog post. But there wasn't some list that algorithmically just shot it in front of 100 million, 10 million, a billion people like we have today. The good news about the new system we have is that people can be super informed. The bad news is people can get hurt. And things that were mistakenly posted or posted with bad intent or posted to harm people

can go viral at such a velocity that it could actually ruin people's lives. And that's the, the, the reason why I think the algorithms are going to be what we need to change in this framework. When we're thinking about the framework of social media, the algorithms are just too powerful. Maybe things should not get shot up to the top of everybody's feeds all the time. Maybe that's not good for society. Maybe things should slowly percolate, right? And so, if everybody turned down the algorithm in terms of the number of people who saw something, they might lose a little bit of time on site, but we might gain a little bit of wisdom and maybe a little bit more judgment about what should be shared online. Because we've had chat rooms since the 80s and people have been online. And this has not been this acute of an issue that we see today. So good on Twitter for doing this and maybe not the best communication. But this is an opportunity.

Jack was pretty available to people on Twitter. He would reply to people. He would go to speaking gigs. And so let's see if the new CEO is as available. Before I start the ad read, just go to LinkedIn.com says checklist and you will get a $100 credit toward your first ad campaign on LinkedIn. Okay, let's get to the ad read here. Every startup founder and marketer has been in the situation.

You know it well. You're planning to launch your new campaign. You know your audience. The team is happy. everything's going according to plan. You love your creative. But you got that one thought in the back of your head, don't you? How can I be sure that my acquisition campaign will drive high impact leads for my sales team? You need those high quality leads. We all know that. And with LinkedIn ads, you don't need to guess. Because when you advertise on LinkedIn, your message reaches the people who are ready to engage you.

They're in the business mindset. You know that. LinkedIn equals business. Business equals LinkedIn. The end. Over 30 million companies are active on LinkedIn today. And over 71, percent of professionals use LinkedIn to make business decisions. So startup marketers don't wait to start achieving your brand and lead gen goals. No, LinkedIn is offering our listeners exclusively a $100 ad credit to get started today. Get the Hyundai and get your first LinkedIn campaign up and running at LinkedIn.com slash checklist. Linton.com slash checklist. Terms and conditions apply because they're giving you a hundy. Okay, now for a new segment, our tweet of the day. And it's it's going to do double duty here because it's also our video of the day.

But as we are now five days a week, I'm going to be reintroducing some of the great segments we used to do on the show when we were just weekly. This way you can look forward to something. So one of the things we're going to try to do is have the tweet of the day. If you have a tweet of the day, you can DM it to TWA startups, open DMs, or you can email producers at this week and startups.com. Today is tech analyst Jeremy Oyang.

He tweeted, we ridicule the newest technology we don't understand. And here's Bill Gates being left at for the internet. And a clip of Bill Gates on Letterman in 1995 talking about the internet. It's 70 seconds. I'll see you on the other side. But, you know, I think about this. And what about this internet thing? Do you know anything about that?

Sure. What the hell is that exactly? Well, it's become a place where people are publishing information. Right. So everybody can have their own homepage. Companies are there. The latest information. It's wild what's going on.

You can send electronic mail to people. It is the big new thing. Yeah, but you know, it's easy to criticize something you don't fully understand, which is my position here. Go ahead. But I can remember a couple of months ago there was like a big breakthrough announcement that on the Internet or on some computer deal, they were going to broadcast a baseball game. You could listen to a baseball game on your computer. And I just thought to myself, does radio ring a bell?

You know what I mean? There's a difference. There is a difference. It's not a huge difference. What is the difference? You can listen to the baseball game whenever you want. All right. Oh, I see.

So it's stored in one of your memory deals. Exactly. That's the way I'm the thing you talked about earlier. Do tape recorders ring a bell? It's so easy now to look back on that and say, well, it's global and it's free, and it's accessible. 24 hours a day for free. And those would be the other reasons that this is incredible. And anybody can publish to it.

Whereas only a small number of people can publish to the radio, right? There's a gatekeeper. So we never even got to the gatekeeper part of this. But this is triggering all these discussions I used to have where I tried to explain the internet to people when I was 23, 24, 25 years old, probably 24 when this was going on. And that's, I think, what's happening now with Web 3, although we had a different definition of Web 3 just 10 years ago.

the original definition of Web 3 was going to be the semantic web. Basically, every component on the web was going to be tagged. So you could know this page had a recipe on it. And then these were the ingredients. These were the steps. This is a temperature. So you could pull information semantically in an organized basis into databases, etc.

That was kind of behind the scenes and nobody really cared much about it, except for Google and other database providers. So now we have Web 3. People are trying to figure out what is all the stuff. and you're explaining it to people when they haven't used it or when it's very difficult to use. And I think that's what we're seeing with Dow's, NFTs, obviously Bitcoin, Ethereum, and other cryptocurrencies. We'll say how many of those actually turn into reality. But there was reasons to be skeptical about it. In 1995, it really didn't work very well. I did a radio show

on the internet starting in 97 on sudo.com. I have actually the tape somewhere. I'd literally have cassette tapes because they used to at the studio record the cassette and I have the MP3. So I'll pull them out. But I was doing a really bad Howard Stern impersonation in those days. Probably just horribly embarrassing, like my performance and center of the world that some of you got to watch on the live stream the other day. Of course, there's nothing better if you want to do great misses. Barron's May 31st, 1999 cover story, Amazon.bomb. So this could be another great headlines in history, another segment we do. and you can go ahead and pull that up for our live audience watching live.

But basically in 1999, Amazon.com, which was retweeted by Jeff Bezos recently. Okay, next up on the pod, episode nine of the startup checklist. This is going to be the most important part of the checklist for most of you. It's the one you all ask for, which is how do you run a fundraising process? Everybody wants to secure the bag. Money equals power. money equals resources to finish your product, to get to scale, etc. And so people ask me all the time, how do I run a fundraising process?

Well, at the launch accelerator, we took the fundraising process and we really made it into a scientific process. I'm going to reveal some of that today on the startup checklist, episode 9. You can look at all of the items on the checklist at this week in startups.com slash checklist. This week and startups.com slash checklist. and if you want to talk to all of our producers at once, you just email producers at this week in startups.com. One disclaimer, we do not take pitches for the podcast.

If you do pitch somebody to be on the podcast, you know, as a PR person, we're likely going to put them in the penalty box and not have them on for a year or two because we don't like that people tell us who would have on the podcast. We have three full-time producers. I'm sitting on maybe 10 pitches from them of people they should have on the pod. Now, if you are a fan of the pod and you, want to see somebody on the pod, you can just do that publicly on Twitter and say, hey, we'd love to have, you know, the founder of Airbnb on the pod.

And you just out mentioned them and, you know, publicly give them a little nudge. That's fine. But we take our own counsel on who to have on the podcast. We do not take pitches, period. And I've instructed my team to be very hardcore about that. Anytime they get a pitch from anybody, PR, we reply with, thanks. We don't take pitches for the podcast best. And I send these five times a day.

and I like sending them because I like people to know like to stop sending pitches. You're just not going to get somebody on the program ever. We do this. It's our job to find great guests and it's not yours as a PR person. And then there's all these folks out there who are running like booking services where you can sign up and then they guarantee you to get a couple podcasts. And somebody had put me in their documents and I went ham on this person. We do, nobody can buy you on this podcast.

So this one person was kind of insinuating that he had the inside, line on this. What he had done was, the real scumbag move, I'll be honest. He had talked to our sales department about buying ads for a customer. Then he launched this other, or had this other parallel business where he was booking guests. And then he put that we were one of his partners. And I also, and then he also put like NPR Radio Lab was one of his partners. Like, hey, dude, what the fuck are you doing here? Like, you don't get to book people. He's like, oh, I'm not saying that. I'm like, that's what the pitch deck is for. He's like, oh, well, I talked to your ad sales people. I was like, yeah, I'm going to destroy you if you do this again.

Like, please do not, do not say that you can get people on this podcast. You cannot. Here's how you get on this podcast. One, do something interesting in the world. Two, be successful. Three, have a hot take on something that people are talking about in the world. Write a great blog post. Use memes to start a $10 million venture fund.

You know, mix it up on Twitter. Have something interesting to say. but generally speaking, I would say building interesting stuff in the world, having a great track record is how you get on the pod. And it's our job to find great things. And you see, we are filling up our dance card here with all kinds of great features, et cetera.

And so it's sort of like, don't call us, we'll call you. Like, if you're meant to be on the pod, you're meant to be on my producers listen to, I don't know, they check in on all the different podcasts out there. So, you know, if somebody's been on other podcasts, have been on Tim Ferriss or something, we know it. And if they would be good on our podcast, yeah, maybe we'll have them on.

We know if there's some sleeper guest that comes on a, you know, niche podcast, maybe some, maybe they're on Pumps podcast or Mb Farber's or whatever, 20-minute VC. There's all these great podcasts out there. Somebody's on one of those, knowledge project, and we think, hey, that might have a good conversation with us that we can build on. We'll find that out too. So sometimes doing a good performance on another podcast is another way to get here,

because I'll ask my team, when they suggest somebody, listen to other podcasts, they better. Are they actually a good guest? Are they honest? Do they talk like a PR person? We want guests who can be real. And can you imagine somebody coming on here media trained? Like, it's going to be, they have come on media trained.

And it gets unmedia trained immediately when I say, hey, you didn't answer my question. But thanks for that answer. It was really delightful media training. Like, I've actually said that to people. Like, don't give me the media trained answer. Give me the real answer. And that really makes PR people lose their minds. SOC2 compliance is critically important.

Why? If you don't have your SOC2 type, you can't close major customers. Vantta is going to give you $1,000 off your SOC2 right now. Vantas compliant software makes it easier to get and renew your SOC2 because they continually test against technical and non-technical SOC2 requirements. They partner with over two dozen audit firms who have been trained to file SOC2 reports directly within VANTA. It saves a ton of time.

And on average, Vanta customers are SOC2 compliant in just two to four weeks compared to three to five months without Vanta. Just take it from Kitty Hawk CEO, John Hegrains, who heard me read Vantta's ad on this very program. And then he emailed me and told me how much he loves Vanta. John told me Vanta was essential in helping Kiti Hawk get SOC2 compliant so they can target larger customers, which are the ones you want, those lighthouse customers who pay on time and who pay a very large contract. Don't screw it up, folks. Get that SOC2 compliance done. with Vanta, and you're going to unlock bigger sales and give your employees time to work on more

business critical assignments. Vantas giving Twist listeners, I kid you're not, a $1,000 discount on their subscription. You just have to claim it at V-A-V-A-T-A-com slash twist. That's vanta.com slash twist. To get 10-hundies, $1,000 waiting fee at vanta.com slash twist. Go get it. Okay, let's get started. These are items 81 to 90 on the checklist again this week in startups.com slash checklist. Item 81, be able to pitch your startup effectively and concisely. This is something that seems super obvious, but oh my Lord, people do not know how to pitch their own startup. And if you are not practicing 10, 20 times, recording yourself, looking at a transcript of yourself, you're not doing deliberate practice.

You need to deliberately practice your pitch. This is uncomfortable. Set up a camera. Record yourself pitching. Then make a transcript. Look in the transcript for the ums and the ayes. Highlight them. Then do a second shot at it.

And you want to get good at presenting your product, but you also don't want to sound like a robot. So you're not reading a script. The slides are your guides. So you don't want to memorize your deck in like a script. What you want to do is when the slide comes up and you're giving your presentation, that fires off in your mind what you're supposed to talk about. And you can actually read the slide. So we say internally at the launch accelerator, the slide is your guide. Don't memorize it. When you click next slide, the slide should guide you through what you're supposed to say. Now remember, the five golden rules of pitching. This is something I've come up with from when We had Meet the Alley, which you can look for the New York Times story.

In 1996 or 1997, I hosted an event called Meet the Alley, where I had five people present startups to Ted Leonesis myself and a bunch of other venture capitalists. Meet the Alley was the name of that one. So that's when I started doing pitch competitions, literally in 1997, at the loft 600 Broadway, pseudo.com. And I did TechWrench 40, created that with Mike Arrington, and then went on to do the launch festival. So I know how these pitches were after sitting through thousands of of them and coaching hundreds of people on them.

Here's your five golden rules. And this is so 81.1. Number one, get to the product in 15 seconds. You really want to get to that product in 15 seconds. You want people to see it so that their neurons fire and they are like, oh, whoa, there's an Uber app. Oh, there's com.com. Number two, examples matter.

If you can't give crisp examples of people using your product, then you suck as a founder or you're not being diligent. You really want to show your product and action. And the way to do that is within a specific example. Why is a specific example a great way to do this? Because then now they've seen the product, they've seen the specific example. They can now start to imagine other scenarios where your product might be in action. So Airbnb comes up as an example.

Okay, meet Susan. Susan is in college. She's looking for what she's going to do at spring break. She has a budget of $1,200. She looks and she finds. that she can get a hotel in Paris for the cheapest hotel is $179. So Paris is out of the question. She wants to go for eight days.

That would have blown her whole budget, just those eight days. But look, there's a room available that she can rent for $60. Okay, well, maybe she can make it because that's going to be $500 for the room for eight days. And, oh, look, she found a ticket for $379 in coach. Hey, she's still in budget. Now she can afford to go to Paris, which is her dream, as opposed to going to Tampa for spring break. Great. Boom. That example shows you that Airbnb allows people who would normally go to a domestic trip to go on an international one. It gives you the price,

and it just shows you why this matters, right? Because people can take trips that are longer and more interesting than they previously could. So really think about that. Number three is synchronicity. What you're talking about should match what's on the screen. So when I was doing that example, if on the screen was our projections, now people are reading the projections or they're reading your mission statement or whatever you got on the screen. And you're telling them a story. So cognitively what happens. What you should do is you should say, hey, meet Susan.

Boom, Susan's picture comes up on the screen. Click. She is deciding with her $1,200 budget where to go. Click. And now you show the first option. Okay, here is our first option of Paris and a hotel. Does it work? Click.

Her friend tells her about Airbnb. And she finds this beautiful extra room and it's small, but she doesn't need a lot of space because she wants to be out on the streets of Paris. boom, what you're saying matches what's on the screen. And screens want to move. So I love when somebody's doing one of those pitches and they one, two, three reveal three things on the screen, right? One slide, one message is point number four.

You are not writing a novel when you're doing a PowerPoint or a keynote presentation or Google slides. So one slide, one message. People will be like, our business model, and they have four different paragraphs with six different bullets. That's a deal memo. One slide, one point. If you have three different business models you're considering,

you shouldn't. You should really be focused on one, maybe two. Our business model is, one, we're a marketplace. We take 5% on either side of the market for a total take rate of 10%. Slide two, we also offer a SaaS offering. Slide three, we also are considering a white label product. Boom, one slide each, not on the same slide. Why?

You want people to remember it. You want to let the slides breathe, and you want to keep the slides moving. If the slides are moving, people are going to stay engaged, especially in the age of being an added event or being online. Point number five, show, don't tell. Don't tell us what your product does. Show us your product in action. Don't give us vague descriptions.

Show us data. Show us your customers. Show us the product in action. Show, don't tell. So whenever you're telling people stuff, but it's not being shown on the screen, we're not being shown in an example. You've kind of failed, right?

And it breaks that synchronency I talked about before. And remember, bullet point 22 on this checklist is in fact one simple sentence to explain your startup. Can you do it? Can you do the OSS one simple sentence? No jargon, no marketing speak. Just say what the company does in the most basic way. Airbnb lets people rent rooms. And that's enough because obviously in that sentence, the other side of it is that people can rent it and people can host people. Boom. Uber is everybody's personal driver. Boom. We get it. Having a personal driver is dope. Get a ride in minutes with your smartphone. Boom. Get anything delivered in 15 minutes. Uber

or the new Uber Eats, your mission statement. So you're going to want to make this deck with your team. You're going to want it to be tight. You're probably going to have three different versions of it. You'll have a deck that you can send to people over email that doesn't have confidential stuff in it. It's called a teaser deck. It's typically 10 slides or less. Then you're going to do a deeper dive in a 2030, 40 slide deck. That would be done in 20, 30, or 40 minutes. One minute per slides, generally a good rule of them. Sometimes people like to go. even 20, 30 seconds per slide. In the example I was saying where you're clicking,

hey, we have three business models. You can move pretty briskly through those 10 seconds each. Okay, that's enough of what I'll tell you for, you know, being ready to present. Point number 82 on our checklist, do you know how to find investors? I know this sounds stupid, but half of my life when I tell somebody I, you know, that, yeah, this is an area we invest in. They're like, well, do you know anybody who invest in this area?

It's like, do you know about crunch base? Do you know about pitch book? Do you know about Google? I mean, this is really simple, folks. Look at your startup. Okay, you're in On Demand. So you're like DoorDash, Uber, but you're on demand pet grooming. Great.

Who has worked in on demand before? Okay, if you're an Uber investor, you're an Instacard investor, you understand somebody coming on demand, press a button, all those massage services, press a button, dog walking services, press a button. Okay, this is going to be related to those. therefore you find investors who have invested in that space before. Also, have they invested in any consumer technology? Have they invested in any e-commerce technology?

Well, you just work backwards. You look at who's invested in adjacencies or verticals around or that your startup is in, and you will be able to build a target list. Not only that, you want to drill down and double-click again, not just the firm, but who in the firm? So you might have somebody in the firm, when you look at their profile page online, and you look at their Twitter and you're targeting them, they're only talking about SaaS startups

and they only have SaaS startups and you're this grooming on demand. Well, you want the partner who does consumer or maybe who does commerce because you're kind of in that sector. So you really want to understand not just which firm, but who at which firm? And then adding to this complexity is some people do seed, some people do growth,

some people do series A, some people do the life of it. And there might be different partners at a firm who do the growth round when it's $25 million or more and there might be somebody who's a scout who writes the 100K check and everything in between. So understand the stage at which those investors. And you want to make a qualified list of targets. So anyway, you want to get to about 150 of those investors. One of the other things you want to know about your investors is, are they actually able to invest?

Sometimes people will be between funds. Sometimes people will have deployed the fund and they're only doing follow-on investment. So you can just ask them very easily. Are you actively investing? You know, do you tell me about your fund? Is it fully deployed? Is it half deployed? And what is your follow-on strategy?

You can ask these kind of questions to understand what impact their fund structure and their timing is going to have on your round. And you're totally within your right to ask that. If people ask me that, I'm like, yeah, our fund three is halfway deployed. And yeah, we'll be raising our next fund at this date. I'm just making this up, by the way, this isn't true. But, you know, because I don't want to generally solicit here. But they will tell you what's really going on.

If you listen to this week in startups often, you've heard me talk about O-Doo suite of business apps a lot. Well, they're going to give you your first app free forever and then $1,000 off your implementation pack at O-D-O-O-O-O-O-O-O-O-D-O-O-O-com. And here's why O-D-O-D-O-O-D-S. And here's why O-Doo is so great for startups. While their suite of business apps can help you run your entire company from just one platform, they're going to streamline all your workflows by bringing all your information together. This eliminates all the annoying, repetitive tests like entering data across multiple platforms. Plus, if you only need two or three apps right now, that's okay.

Use those two or three apps to optimize your workflow, and that's all you'll pay for. Odu is not going to charge you for apps you don't use. Of course, they wouldn't do that. So Odu offers 30 main apps and over 16,000 apps from their open source community. You know, the apps they have, bookkeeping, sales, CRM, website builders, and more. Again, your first app is free forever, and Odoo is offering $1,000 credit on your first implementation pack. go to odoo.com slash twist for a thousand dollars off that's odio.o.com slash twist. Okay. Checklist item number 83. Do you know how to build a fundraising pipeline?

If you're in sales, you understand what this means. But basically, you want to start with 150 targets, really curate that list. You're hoping to get first meetings with one out of four, one out of three, depending on how awesome your startup is, how alluring it is, how hot your category is. you might get 10%, you might get 20%, you might get none, you might get a third. I think that would be the upper bound. And it really depends on how targeted that list is. If you're putting biotech investors on the list and you're, let's say, a SaaS business, well, they're obviously not going to even respond. But if they're in the SaaS business and they're, you know, craft ventures, great.

And then you have to know, well, Jeff at Kraft is the person who does marketplaces and Brian and Sacks. They do the SaaS. So you have to understand which partner. You email the wrong partner. they may forward it to their partner, that partner never gets back to you. Boom. Now you've burned one of your leads. So be considered when making that list.

It's not a race to throw people on it. You want to really curate it and go slow. This is like really being thoughtful about picking that list. I get people who just send generic emails and they're basically spamming 1,500 investors. That's the wrong way. You're doing it wrong if you're doing that. You want to really target these in and you really want to be able to understand your target. First meetings, maybe you get a third.

Maybe you get, I don't know, 30, 40 of them. Maybe even 50, who knows? And if you can convert a third of those or half of those even to a second meeting, now you know something's good. If they want that second meeting, you know, you are in really good shape. But I would expect a severe drop off. So let's say you got to 40, now you're down to 20 or 15, maybe 10 go into diligence, maybe five going to delins, maybe three go into diligence. And maybe you get one to three term sheets. 150 targets really carefully selected to get but one, two, three, four term sheets.

In other words, one out of 50, one out of 75 of euros in the targets wind up giving you a term sheet. That's the funnel. It's a numbers game. Just like sales, just like dating, everything is a numbers game in this regard when you're trying to find a match with something that is super important. It varies greatly. You will get judged based on that email you send, right? And we'll talk about that template right now. Item number 84.

Do you know Jason's perfect cold template email? You know that? The perfect cold email. Shorten to the point. Examples matter. Steve, where we saw your interview on this week in startups where you talked about your investment in Robin Hood. We're doing something similar in Latin America for millennials and we're also doing cryptocurrency. We currently have 1,400 customers.

We charge $25 a month for unlimited trades and to be able to be able to. to talk to a money manager, and here's a quick product demo at this link, and here's a loom. If you don't know what a loom is, it's basically a video where you, loom is a company that helps you make these, but you can use any piece of software to do it. Basically, you're presenting and there's a little picture in a picture of you talking, and so you can really make it custom. You can send somebody a loom. Hey, Steve, it's Jason. I want to walk you through my deck just to save your time. So you basically take that first meeting, you put it in the deck. Pretty cool, if you're good at presenting. Charts work, but you want it to be short. If you write a novel,

that's not what you're doing here. Just think of it like a trailer. The trailer is not the entire movie. The trailer is to get you to buy a ticket to the movie. That's what this email is. You're trying to get people to buy a ticket and come see the whole movie, which is your long presentation,

which by long, I mean in today's terms, a 20, 30 minute Zoom, 15 minute presentation, in all likelihood, 15 minutes of Q&A. Okay, now, checklist item number 85. Do you know Looms Zoom room? Okay, this is pretty standard now. People are sending looms or short emails

with a short deck. Pretty much the same thing. Bloom is kind of like a higher level if you're good at, if you're good at presenting and you really want to impress people that you took time. There's a reciprocation here.

Oh my God, the person took the time to make me a custom video where they walk me through the deck and they address me by knowing who I am and they've heard me on podcast and they've read one of my medium posts. Man, that's just like huge VC bait.

You're a fan of theirs. You know, when I get emails, oh, I'm a big fan. I loved all in episode 55. Your Chris Sock interview was great. This tweet really spoke to me. I am now building this startup that does X, Y, and Z. It's perfect for your syndicate because we're at $25,000 a month in reoccurring revenue. And I heard you say that on a podcast. Boom. Now, think about this. Every time you do one of these looms, it's another

rep. It's you getting another swing at bat. So if you did 10 of these a day for 10 or 15 minutes, I think it's a pretty good use of time. You're going to get pretty darn good at it. And you get feedback. So you send 10, nobody, one person replies, what do they say in the reply? oh, really like the loom, but you didn't talk anything about your customers. Okay, now you know, when you do the next 10, start with your three best customers. You want to lead with what's strongest in these things as well. So if your product's really strong, leave with that. If your traction's really strong, lead with that.

If your team is really strong, lead with that. Oh, yeah, we're three engineers out of Facebook, Amazon, and Google. We actually worked together recently at Coinbase, and now we're starting our own Dow platform. You're like, whoa, look at that resume. You just derisks the whole thing for me. You guys know what you're doing. You gals know what you're doing. Fantastic.

So think that through. And then once you've done the loom, you're trying to get a Zoom. This is so low risk for people. Hey, can we do a quick Zoom? I'm available seven days a week from 4 a.m. and 24 hours a day. You tell me when you're available. And here is a link on my calendar to 30 minutes, 45 minutes or an hour, whatever works best for you. And now you're showing like, oh, wow, you'll do this in 20 minutes, 30 minutes or 40 minutes.

wow, you really respect my time. So that's a power move. When somebody's like, I just need 10 minutes, I'll bring you through the deck and answer any questions you have. It's like, oh, great. You don't need to have lunch with me. You don't need two hours. Like, we can get through this pretty quickly and see if there's a match.

So the loom gets them on the hook. The Zoom builds that rapport and answers any question. And then maybe you'll get in the room with them if you're local or maybe they'll come fly and see you now that COVID's ending. So I think that's going to be the new process. Loom Zoom room. Got it. Item 86 on our list.

You want to nail that. first meeting. You really want to be super, super tight and you want to be prepared. So most people will say start with venture firms that you don't care about as much, or investors who are not your top ones. So you can spend two weeks pitching people who aren't your ideal customers. You get those reps in, you get the feedback, and then you move on to your top targets. A little tip there. Start with the people you're not really concerned with winning them as a business. And then, you know, the people you really want to win as investors and partners you can put in week two or three. Best practice. Have two decks with you. Hey, Jason, want to be respectful of time? I have a five to

10 minute deck. It's 10 slides. And then I have it in as an appendices if you want to drill down into anything. And then I have a 15, 20 minute deck. That's 30 slides. And, you know, 10 of those slides really go into our go-to-market strategy and five of them go into the total addressable market as we see it. I'm not sure which one you want to do today. And then now you've come across again as being super considered. Not sure how much you know about shipping. We're flexport. We want to talk to you about our product and our service. We can do the 20 minute, 25 minute one, which has a primer on the shipping industry, or we can do the quick 15, the quick five to 12 minute one if you're, and we'll just tell you about our business and our performance. This just puts you on a higher level. You're really

thinking about the other side of the table as opposed to yourself in the meeting. I do this as an investor. When they ask me, I say, what's best for you? Would you like to do 10 minutes of presentation, 10 minutes of questions, I've already reviewed the deck. You just want to talk for 10 minutes, 20 minutes. What works best for you? Well, I really want to show you the product. Okay, great. Show me the product. And that's a nice back and forth. And I like that back and forth, because I like to see how gracious the founder is and their EQ, right? Not IQ, but EQ, like how emotionally intelligent are they, not just how intelligent they are. And you can always tell them, I can send you the appendices, I can send you the deck afterwards. You can go deeper dive in it. You got to be high energy. You got to be super positive. You got to really get people excited about what you're doing. You want to be prepared to answer questions concisely. What's your revenue?

Last month, we had $27,000 in reoccurring revenue. For 2021, our yearly revenue will be $470,000 on target. Short answers. Concise. Why? Listen to their question. Give them the answer. Now they can ask you another question.

It's like ping pong, boom. You're hitting the ball back and forth. They ask a question. You answer the question in as much time as they took to ask, the question. That's ideal. Back and forth in a volley. They asked a question. It took two or three sentences. You answered it in under two or three sentences, maybe in one. Now, wow, Chris back and forth is going. They're going to be able to ask you more questions. Don't waste their time. Don't filibuster. Don't make excuses. Just concise answers. Own your traction.

And we actually record people answering questions. We categorize questions in our accelerator and we try to figure out like how long are you taking to answer this question and was that ideal you took 70 seconds to answer this question and the question was tell me about your team okay that might be appropriate the question was how many employees do you have how many team members you currently have you took 70 seconds like maybe that should take seven seconds we currently have five full-time employees and three contractors boom great tell me about your contractors what are you outsourcing right now tell me about your next two hires now the investor can ask you more questions and get into that nice rhythm like in a tennis volley or a ping pong volley that we've all been able to

experience in our lives. Before the meeting ends, you want to make sure you have clear action items and next steps. You know, and just asking outright, do you think you want to invest in this round? Would you like to go to diligence? What's the next step for you? Would you like us to present at your partnership? Would you like a couple days to think about it? You really want to take ownership of this moment in time when the meeting's wrapping up.

Is there any other questions I can answer for you? Would you like to move into diligence? Do you want to do another meeting? Would you like to talk to some customers? Would you like to meet the team? You know, we really would love to have you in this round. So just be forward like that. You're our dream investor, Jason.

We'd like you to lead the round. Would you be interested in that? Have you thought about, would you like to put a term sheet in? Just be there. Be concise like that. That is a sign of like confidence. That means you're going to do that when you're hiring somebody or closing a customer. That's great for us to see as a VC.

You want to be forward. You want to be just let's consummate here. Let's do it. Let's be in business. If in fact you want to be in business together. And you should know that going into the meeting, that this is your target. You do want to be in business with them.

Okay. Checklist item number 87, can you nail the post meeting follow up? Again, you have to follow up. Do not sit there and be passive. Be positive. Think about things that maybe weren't clear in the meeting or that you stumbled on that you might be able to provide more clarity on. Oh, you had asked me about our hiring roadmap, talk to the team.

We actually spent some time thinking about that. And we made this notion page. Here's the Notion page. If you click on it, you can see our year one, year two, and year three hiring plans. Wow. Or you had some great piece of feedback. You asked us about competitors. And if we were aware of this one, we weren't.

We actually looked at it. Here's the key differentiator. They're not doing SMB. They're only doing large enterprises. We're starting in SMB. We might go into their market, but we don't think they're going to go downstream for us. Thanks for tipping us off. Never lie, never bend the truth.

And you want to create a sense of urgency here. So, hey, we have two term sheets. We're wondering if you'd like to submit a term sheet. We're going to try to make a decision this Friday. We're asking everybody to have their term sheets in on Friday. And maybe including exciting updates. Hey, we met three weeks ago. We'd love to hear back from you.

Wanted to let you know, we closed two more enterprise customers, one for $2,000 a month, and one is paying us actually $40,000 upfront for the year. Now, $15,000 of that is consulting services, but it is our largest reoccurring revenue at $25K a year. So really excited about that. deal with Sony. That kind of stuff, man, it shows you're making progress even during the fundraising process. Item number 88, do you know how to diligence your potential investors? Yes, you, the founder, should be diligenceing your investors. Very simple. Your diligence just means researching. And you want to do backdoor dark references. What does that mean? You're going around the

back door. You're not telling him you're doing a reference. You look, you see who they've invested in, and you just email the founders. Hey, I'm thinking about having Jason on my cap table. What do you think of Jason? Boom. You email 100 folks. You're going to get 99 great answers. There might be one or two people I didn't see eye to eye with.

That's okay. If somebody didn't see eye to eye to them and they're just like, hey, yeah, Jason and I didn't vibe. Okay, that's fine too. You're going to have that, but you at least want to know that. And then you can come to me and say, hey, you know, I talked to somebody. They said, yeah, you left the board. It wasn't going to say, yeah, you know, we didn't see eye to eye on the future

of the company. So we left the board. We gave them back to the board. see, we sold our shares back. It's like, okay, great, didn't work out. Does anybody expect this always to work out in our industry? Of course not. So this is a great way for you to really understand what is going on.

Some investors, they just write checks their hands off. You might be looking for an investor like that. Other ones are super, super deeply involved. Other ones, you know, can be just a huge negative experience. You might remember we had Ryan a callback on the program, and he had detailed his nightmare VC experience with Chris. Shapiro from Collaboration Fund. We invited Craig to go on this podcast.

He declined, or I should say, didn't even respond. And I heard from the back channel, Ryan was upset that I asked him about this experience. Even though I told him, I was going to ask him about when he was going to be on the podcast. Anyway, it's worth watching episode 1141 on this podcast when Ryan callback was on talking about this nightmare experience with a VC because he went into detail in this blog post. Didn't mention the person's name. Everybody in the industry knew. Everybody tweeted, hey, it's this person.

And, you know, people, it's not too hard to figure out. who was on the board. Long story short, it's a good episode to watch because you can see what happens when it goes bad. It can be pretty ugly. And it doesn't mean that that, you know, Craig Shapiro from the Collaboration Fund hasn't learned from this or there's two sides, every, there's really three sides every story. There's Ryan's, there's Craig's, and then there's reality. And so Roshaman, right? There's many different sides and versions of the truth. And you can take that all into account, right? Sometimes people don't find. That's okay. Okay, item number 89, you want to send a great investor update. Really right concise monthly updates. You can put

people on your monthly update for non-investors, investors who have yet to invest. And you put them on a BCC or you do like a mail merge. You know, like, hey, Jason, it was great meeting with you. Wanted to give you an update on the business. Things are going great. We grew 17% this month. And there's a chart at the top. Wow. When I see that chart and it starts trending and I'm like, I made a mistake or, oh, these folks have proven me wrong or the concerns I had did not turn out to be true. Great. I can invest at a higher price. perhaps, or give them a term sheet for their Series A or Series B, if I passed on the Cedar Series A. That is a great way to continue to re-engage investors who you spent the time to do

one or two meetings with. You might as well see if maybe next year or the year after or maybe your next startup in four or five years they want to invest in. Remember, people invest in lines, not dots, but if you make a bunch of dots over time, it might form a line, right? And that's what you're looking for. You're building credibility with the investment community. and the investment community is building credibility with the entrepreneurial community over time. And then your reputation kind of results in your matching and your performance. Finally, item number 90, understand all the SEC rules and regulations around fundraising. When you're raising 506B, that's the most common way.

You don't talk about it publicly because then it puts you into this solicitation rules. The 506C, you can raise in public, but you have to confirm those investors are accredited by reviewing accreditation documents. like W-2s or letters from the Warriors accountants, that can be cumbersome or not. 50 usually costs more money because it takes more time and folks usually hire a service to verify that accreditation. I think a sure fund management, which we're investors in and they do our back end, we'll do that for you. You really only want to invest money from people who understand the risk.

That means accredited investors and people who are willing to lose the money. If you take 50K from your friends, your family, is it going to ruin the relationship or do they have $50 million dollars in 50K? They're totally fine with supporting you. and that's no big deal for you. That's like one night of poker for them. Okay, fine. But if that's like they're a third of their retirement account,

you don't want to take that money, right? You don't want to be responsible for that. Maybe you take five, you know, which would be 3 or 4% of their retirement account and they really want to support you. Okay, fine. But think it through. You got to be really careful with accredited investors

here in the United States, and you need to have a great law firm advising you and you need to do your research about this. But basically, you take money from accredited investors and you avoid this problem, or you use a platform like Republic Seat Invest, those are the two trusted one, at least ones I trust.

I don't trust the other ones, to be totally honest. You know, if you're going to do that route, then you can talk publicly about it, but there's a whole different set of rules for that. So make sure if you are going to be public, you understand the rules.

It does that complication. I'm not saying don't do it, but it does add a lot of complication. If you do it privately, you do it privately, easy, breezy, that's what your lawyers are going to tell you to do. Why wouldn't you do it privately if you can close it privately?

And that's kind of what screwed up about the accreditation laws, at least today when we're taping this in 2021. Maybe in 2022, to 2020, you'll be able to do this publicly and accreditation will come in the form of a license, not just how much money

you have in your bank account. Okay, that wraps up episode nine. On episode 10, we're going to do the catch-up episode and we're going to cover all the things we missed in the checklist. If you have things you think we missed,

email producers at this week and start-ups.com and tell us what you think should be on the checklist. Hopefully, some super fans and stands and people who just are fans of the podcast will tell us what we missed. Okay. We'll see you all next time

on this weekend startups. Bye, bye. Thank you.