Day 36: An Investor's Perspective, Beer with Books and Family !
This was a day of several firsts, and many longstanding discussions coming to conclusions.
I'd spent several hours researching and building relations over email with Bagby and its co-founder Juan Sanchez. I'd found them on my own while the entire team was on vacation. All measures of emotional sunk cost would tell you that I would expect to be the one to now take this budding business friendship to its formal beginnings. In fact, after much back-and-forth on timings, it finally seemed like Thursday morning was a clear possibility. But then I'd already booked out the 9:30 AM morning slot for meeting Chuck Vallurupalli. And that seemed like the only convenient time slot for most of us (the early morning). So I was going to take the firt major step towards what I'd studied in John Ullman's online leadership course- trust. No need to micromanage. I handed over the discussion to Nicole and Laurence.
While I haven't seen Nicole in action yet, I have watched Laurence win over people- in spite of his distracting ‘ummms’ and occasional lack of eye contact. He's good at this. And I've admitted to myself that he probably handles the in-person charisma effect more effortlessly than I do. So as always, play to your strengths. I can research people and write compelling letters to get them on board. Laurence isn't all too gifted on that front. He can then compel them with his in-person presence. Same applies vice-versa. Why go for the aspects of work that we're ‘good' at, while we can harness our top-notch excellent skills. So in spite of how emotionally tied I was to this deal, I decided to let go and hand it over to Laurence. I see myself making similar decisions several times in the coming months. And I would later find out that night, so would Laurence. Trust is the one human value that trumps all economic ones, for scalablity to be possible.
Of course, it takes a certain level of preparation to juggle CEO responsibilities. Impulse isn't your best friend. I had planned to walk in calm and collected to the morning meeting with Chuck. Just the previous night, I'd added a card to our Trello list on cutting down on mentor meetings (again, something that I'd get more perspective on later in the evening, courtesy David Dewane). The card read that we would now cut down on new mentor meetings, and focus on customers now. So Chuck, and tomorrow, Brigitte would be our last scheduled meetups. Why had I signed up to meet Chuck again? It had been an entire week and I wasn't necessarily sure any more. Rationally, my idea was more tied to understanding product-market fit. As per our Booth class on Wednesday, customer discovery was going to become key, and probably critical to the entire journey with SNVC. So I may not have known that at the time of the booking, but it had worked out as important in the end. Probably worth ducking out on the call with Bagby. I for some reason had some gut instinct telling me I should meet. Was it Linkedin? Don't know.
Like with any meeting, I wanted to go in fully prepared. So I sat down on Linkedin and went through Chuck's background. Booth MBA- great, adds to commitment towards follow-ups. Had actually been an advisor to startups at several accelerators, including St Louis. Somewhere along this Chuck research process, I began to think more of such high-level advisors. And I thought of the name that Starr had told us long before we'd even been selected- Erik Severinghaus. She'd said she'd introduce us. And on multiple occasions. That hadn't worked out yet. For whatever reason. Repeating the same thing and expecting different results is... yep. you get it, Einstein. So even with the time constraint of a 9:30 meeting, and my usual hours of research and writing (like for Juan), I decided to crank out and send this one as fast as I could.
To be completely honest, I didn't even know what we were looking for with this guy. I guess it's the same with entrepreneurship as a whole- you've sometimes got to trust your own instincts and have faith that the answer will emerge in the process. So with the Linkedin Connect request, I began to hammer away at the keys. How would I get his email address, show our references and my work on reading his back story, share a bit about us and the backstory all within the constraints of a Linkedin outreach message? After fifteen minutes of expansions and cuts, here's what I had.
“Got your reference from Starr Marcello- our coach for the Social New Venture Challenge at Booth. I admire your Everest wins and Kipling quotes. Similar to the themes in your articles, our team works on smartphone de-addiction and presence. Would love to email overview & discuss innovations” Sent.
In normal circumstances, maybe this bit of impulse wouldn't hurt. But I had a meeting to attend with Chuck at 9:30, and we were closing in on 9 AM already. I'd probably have to be one of the unwashed masses and go without a shower. What my friend Sudarshan used to warn me against in Bangalore. Worse, unshaven. I had all my Dollar Shave Club items tucked into the front pocket of my decrepit bag. So I could get there early (15 minutes early for every appointment- something I'm still working on nailing)- and shave AT the Polsky centre in the bathroom instead of shave and then go huffing and puffing, rushing down 53rd street at the last minute. Little did I know that that was exactly what would happen.
I was about to leave, when I started looking for my keys. One of the drawbacks of planning on the fly is that it consumes your mind space and gets in the way of presence. I had picked up my keys while thinking about Chuck and Erik, and couldnt find them now. Darn, could I risk leaving the house without them? I began to dig through aforementioned front pouch. And I got into a sticky situation. The shaving cream tube collapsed under pressure. An overstuffed decrepit bag can have that effect. Now all the glorious goo was all over the items I'd stuffed in. What was I going to do, throw it all away? So I scooped up the bits from the top lid and laved them over my patchy nice-try beard. Then fished out another blade- the one I had from India. Went ahead with the darn shave right there. Tossed out all the victims of the tube coming in its pants- more like coming in my pants. And there, right at the bottom- miraculously dry- were my keys. But I was going to have to make a run for it- in my swanky meeting shoes. Then get onto the Divvy bike and walk the remainder.
Five minutes later, I hit another shocker- no bikes at the Ellis AVenue station! Pulled out my phone (how un FWFP of me)- and found 8 minutes left. Run, Lola, Run. Ach, these shoes were killing me. And in a gesture of equality, I seemed to be killing the shoes too. At God-knows-when, I swiped the card, rushed into Polsky North, hit the elevator button and then just dashed up the stairwell anyway and waved a peremptory hello to CIndy at the front desk as I raced ahead into the Kimbark Meeting room. And... no one there! Or in any of the neighbouring rooms. Trying to look like the cool, high stamina- guy who didn't lose his breath over 5 minute torrid dashes or leaping up oversize industrial steps, I walked over to Cindy and told her what was up. ‘Oh are you meeting Chuck?’ ‘Yes.’ (suppressed wheezing) ‘You’re going to love him. You're on time, don't worry. I think he's stepped out to get a coffee. You go back and take a seat now, he should be right in." Such a darling Cindy is! Of course, I wasn't going to be unbiased about Chuck any more (now that Cindy had primed me with a positive reference). I walked back into Kimbark. Barely 10 seconds later, in walked Chuck.
Now this whole game of Anglicized names has been quite amusing. Like Laurence's Mother would later remind me in the evening, I never had to rely on an anglicized version of my name in London. Only here. But maybe that's because my priorities are different, and I'm now less attached to these placeholder names. So ‘Abe’ seems fairly American for an Indian brown buy. But ‘Chuck' is about as American as they come. And this Chuck, at first glance was ALSO physically as Indian as they came. About 5'7', dark complexioned with bright white eyes, plump and with the surprising combined effect of overall affability. ‘Hi, I’m Chuck', he said, with an accent that seemed fresh off a New Delhi to New York flight. Ok, so this changed things a bit. I wouldn't have to play the Abe game. In fact, it was probably in my favour to build a connection with him on our shared Indian nationality and culture. I introduced myself as Abhishek from Bangalore (when he asked me later where I was from)
I thanked him for going through our slides, and informed him why it was so damn long.'We had to submit it as an assignment in the last course' Chuck within no time had pulled out a felt-tip pen and begun to sketch his ideas out on the whiteboard.
I agreed there was no real advantage to that process of procuring phones. I realize I need to speak slower, and with less of a quick intake of breath. Anywhere ande everywhere, especially where first impressions are so key. He didn't seem to care. He said the costs were too high, and the margins so low. This was fine for a school project, fine, but for a company, would have to go further ahead ‘This is fundable (pointing at the Moment App), your model is not venture fundable'- 'Thank you!' I blurted, realizing I'd never been this grateful for being shot down. ‘Evaluate all this- do you have DIFFERENTIATION?’ If you don’t have differentiation, people won't come to you OR you'll have to fight hard to get their attention" ‘Patanjali is an outlier’- You can't plan to be an outlier ‘Diifferentiation is going to be more than on-off switch’ He referred to the other affiliate models we had in mind. 'All of that can add-up to be a differentiation. Start with one where there is a higher chance
‘The problem you’re attacking is a modern-day problem. I think it can work'
As investor, these are the red flags: 1) Costs high, margins low- getting smart phones and getting them back at slightly higher costs 2) Product Market fit measured for investor in terms of how many customers keep coming back for more over time. But we currently have high cost of acquisition of customers, and no mechanism for retention 3) No Intellectual Property- we don't really own anything- everything becomes just coordination of other people's products. Not a positive for long-term success. Also, easy for other competitor to enter and take over I told him about idea of working on a brand that is low-tech, rather than with downloading more apps. He said that a brand as a differentiator is possible- gave example of Baba Ramdev's Patanjali in India offering the same things that were already being sold by other brands. But it took almost 10 years for that branding to take root. Brand alone cannot be secret sauce in such a short time-frame.
Lauded us for aiming at 100 customers. If we get that, we are already ahead of 99% of startups. Use the 100 centurions to get the following information: 1) Hard evidence that there is indeed a problem (so videos and quant evaluations would help). If we reacg 2) Ask them to use Moment, and figure out where the shortcomings lie with their approach/ offering (basically, treat them as a competitor)
As investor, evaluation based on the: Factors Outside Control: 1) Understand of Problem- Can you convince me it's a real problem- research to prove it- 100 people with before and after would be helpful 2) Good Market- Depends on te trade-off between two axes- the need for a solution that is strongly felt, and the satisfaction levels within the existing offering. Gave the examples of Yellow Cabs vs Uber We need to therefore check where the existing solutions fail- that is more impotant for proving that a market exists. There some to be market for detox, but needs evidence to prove the disappointments with existing offerings. 3) Good Team- a) Hard Skills- Marketing to millennials, Working with Smartphones b) SOft skills- Committed to entrepreneurship, won't quit at first failure (5-10 years+ Are all team members going in same direction, if any indicaton if all not on same page (unity)- same goal- then will not invest. So worth checking for the team where we see ourselves
Factors in control of team: 4) Solution (comes last, as it can change)- have control and can tweak over time. Most likely will have to adapt solution anyway
Interesting! That's certainly not the way I would have seen things. He smiled. 'Same target market, problem is same, market is same, I don't think it's a huge leap.' He continued his advice. 'One bit of research is to take the competitor's offering yourself and evaluate where it falls short. So sign up for Moment and understand it from the inside.'
He believed that detox was a real problem and likely to become a successful business. If two people stayed on in team, this had great long term potential.