Wize Thoughts

Between my activities with DreamIt Ventures and my investments as an Angel investor I will by the summer have a stake in more than 30 startup companies. As I described in my prior blog post, when finding the right investment it is a necessity to have a really great idea and a really great founder or team. And as part of that I like to try to understand who I am investing in; what kind of person are they. Will they listen? Accept suggestions? Work hard? Do whatever it takes to succeed and/or survive?

One way I learned years ago to understand people was on the golf course. Before I became a dad and became active in DreamIt and WizeHive I had time to golf.   And, after selling my first business, I golfed a lot for a few years. Mostly with friends, but sometimes with business associates. I found that you could really learn a lot about a person on the course in 4 hours when you played golf with them.

How did they react to a poor shot? Did they stomp and hiss or take it in stride? When they were on the green were they aware of everyone else and where their balls were…or did they step all over your putting line? How did they treat the others in the group? Did they enthusiastically compliment someone when they made a great shot? If you had a small wager, how did that affect their play?

My young daughter was off from school this week and being a reformed ice hockey player I took her ice skating one day. Back in the fall we went 4 or 5 times in a month during which time she used rental skates and got progressively braver and was skating without my help. Then over the holidays someone bought her new skates. When we went skating in February she kept falling because her toe pick kept hitting the ice and for the first time ever she wanted to leave early. She also made excuses why she shouldn’t go skating again until I pushed her a bit this week.

When we took the ice this time she held firmly onto my hand for the first 30 minutes or so, which is not her normal independent way of doing things. Slowly I loosened my grip so I was barely holding her hand and after a while I pointed out she could probably skate by herself. So she tried…fell a few times…tried some more and by the end of the session was quite proud of her new found skating ability. So much so that since we were the last two on the ice she wanted me to skate in opposite directions and meet her at the other side before we left the ice.

It made me think a little that any activity gives you a good sense of a person and you should find ways to do them with someone before becoming a partner with them or an investor in them. Take ice skating. When they fall, do they get right back up? Do they hover near the boards or do they race out into the middle and take their chances? Are they cautious about other people skating around them? I find that all these little things add up and can tell you quite a bit about someone – much more than you can learn about them while sitting at a conference room table.

After reading through a few hundred DreamIt applications this weekend it occurred to me that there was a fairly simple and repetitive process I went through while reviewing the applications – and that my approach might provide some valuable insight to those applying to DreamIt or programs like DreamIt.

My approach may be different then that of my partners at DreamIt and may be very different from the approach taken by the folks at YCombinator or TechStars.    Nevertheless, I think having insight into one decision makers thought process would be helpful (or potentially scary).

Let me also share that when you have hours, not days, to run through hundreds of applications your first pass lasts no longer than a couple of minutes.

So…what do I do?

The first thing I look at is the first couple of sentences of the idea.   This typically allows me to mentally categorize this into one of 4 categories:  (1) Not a fit at all for DreamIt (someone opening a restaurant), (2) this doesn’t look unique or scalable (we are creating an online social network for {fill in the blank}), (3) this looks unique and interesting but I don’t quite grasp it in a few seconds or (4) Wow! I get it and it sounds cool.    Probably  one in ten hit category 1, maybe one in twenty hit category 4 and the rest are somewhere in between.

For all of those but the Category 1  I next jump down to the people.   For those that are in Category 2,  I am looking for a reason to justify keeping the application alive.   Suppose I see an idea that I think is good but on first pass does not look unique.  Suppose further that I see 3 or 4 really strong people listed in the application.   Great backgrounds, great schools, prior successes.    In this case I will most likely go back to the idea and try to figure out what they see that I don’t.   So a great team keeps the ball in play and may allow the application to get to my next stage.   On the other hand, if I see an application submitted by one person or two with little or no relevant background that application gets moved into the “no” pile.

For a Category 3 application (looks interesting but I don’t quite get it) I’m again looking at the people to guide me.  A good team will most likely allow them to at least get to the next stage.  I’m going to err on the side of assuming that even if I don’t get the idea after my first quick read – there might be gem in there somewhere…I just need to uncover it.    A one person team or a 2 or 3 person team with no relevant experience will most likely cause me to read the idea one more time just to make sure before I’m not missing something good before I move it to the “no” pile.   

For Category 4 applications and those from Category 2 or 3 has made it to the next stage I will now take more time to digest the application.   I already have decided there is a nugget of a good idea here and that there is a good enough team to support the idea.   Now I want to dig in deeper.    How much do I really like the idea?  How competitive is the market?   Is there a unique twist they have put on the idea?   Do they have a prototype demo?  Do they have a functioning web site, and better yet one with increasing traffic?

I try to access and weigh all of those factors to decide whether to recommend to my partners that we interview these candidates.   As my partner Steve Barsh would probably write, I am now also looking to understand assumptions and risks.    The risk with a great team and a great idea but with no demo is they have not proven they can build the product yet.   Meanwhile, a good team with a good idea that has a functioning product (web site, for instance), and can show traffic growth and happy customers, has eliminated some significant risks.

So…what is my advice if you are looking to DreamIt or one of the other programs for seed stage funding?

First, think through your idea.   Make sure you are able to explain it clearly and that there is something unique and special about it.    You may only have a few sentences to catch someone’s attention.   Second, at the very least put a prototype or mockup together to help the reader visualize what you are thinking about.   Third, make sure you have a great team. 

As an example, I had three entrepreneurs reach out to me in December or January (before our applications were open) and explain their idea.    In each case it was one non technology guy with a web services idea.   I told each of them to user PowerPoint, Photoshop or anyone of a number of online tools (Balsamiq for instance) to create a mockup or if possible a working demo.   I also told each of them find a developer or technology team.   Now, just a few days before we make our final selections, lets look at what happened.   One of them created a great prototype and built a team consisting of two new technology guys.   I already liked his background and his idea and among other things it showed me his ability to listen and displayed his tenacity and drive.    The other two?  Neither have made any progress in finding even one technology person to add to their team and neither have fully answered some of the business questions I initially posed.   And neither of them will be in DreamIt this year.

I was at the gym today trying to do anything but my workout and I looked out the window and saw a trash truck which had on its side “Accurate Trash Removal.” And I began to wonder why someone would name their company Accurate Trash Removal. Was it because they always went to the right house or business to pick up the trash instead of the wrong one? Or, was it that they never missed throwing the bags in the trash bin in the truck?

Which led me to thinking about names. Would they have a better business if they were called “Reliable Trash Removal” or “We’ll Haul Away Anything Trash Removal” or even “Quiet Trash Removal”? What I want is for my trash removal company to come when they say they are going to come, to take anything I put out, and to do it quietly. To me those names would invoke an image that would help them sell. But accurate?

I’ve done quite a bit of research on names as we figured out what to name DreamIt and WizeHive.   For instance, something I noticed is other than a few big players like Amazon or Microsoft is it a coincidence that almost all big web properties are 2 syllables:  Yahoo, Google, Facebook, Myspace, and so on?   In follow-up blog posts I will share some of my research and findings.

I’m writing this while at my monthly RobinHood Ventures meeting listening to a funding pitch.

The slides look nice, the product looks nice and they are describing how they can get to $30M in revenue in just a few years.  But after 10 minutes I still have no idea what they sell.   What I know is that in some way they are enabling the delivery of very 3D rich presentation.  Is this a software or Saas play where they sell or license the tool? Or, are they a service business that creates the content? So I raise my hand and say “Maybe I zoned out…but what do you sell and to who?” They answer but don’t really answer and  I still have no idea. Another person raises his hand and asks the question another way. They again answer but I again have no idea what they sell and who their buyer is.
In my book they are done. Their inability to answer a simple question killed my confidence. I zoned out and did some work the rest of the presentation. If they can’t clearly and simply answer that question I’m just not interested.

Here is my take on the first few slides of a presentation: First, explain to me what the problem is you are solving or the pain you are trying to eliminate. Then tell me what you plan on selling and to whom. Then everything else will flow from there..the details…your background…etc. But first and foremost I want to know what problem you are solving and whose pain you are eliminating (or whose life you will enhance.)   I often find that putting it in the perspective of a story…how you came up with the idea, what was your motivation – helps.   When I talk about WizeHive  I always start by explaining my own frustration in finding a tool and why I eventually had one built (and was my first post on the WizeHive blog).   I then follow that up with the fact that we have built an online application to solve the problem and discuss who I think will want it.   I then migrate into the features and benefits.

I know that on TechCrunch last fall they shared some best presentation ideas which I thought was very good and this thinking is similar to what you can find on Guy Kawasaki’s blog post where he suggests the first slide is “Problem” and the 2nd slide is “your soluition”.

For the most part I dislike meetings.     Not just any meeting  - but large meetings, with 10 or 20 or more people.  I just find them inefficient.     You often get going on a topic and you reach a point where the same point is often being made by multiple people, just using different words.

In a blog post today, Fred Wilson discusses how they used Twitter during a recent summit/meeting they had.   I think it is fascinating how they used it and I can see how it could really help.    People could immediately add comments, reactions, etc. to the conversation without having to wait their turn and without taking up valuable time.

Since I’m in the mix right of reviewing applications for DreamIt it also got me wondering whether there was software out there that could even improve on Twitter in this scenario.   For instance, I recall watching a few of the debates that they had real time monitoring of people’s reactions to the candidates.    

Suppose during a large meeting or summit or conference attendees  could do a combination of things as they listened.     They could react (approve, disapprove), they could comment, they could offer support in some manner, etc.  all of which was being displayed in real time from the participants on a large screen.     

I have some concerns…  Would people listen to who was speaking?   What people get too distracted with too much stimulous?     Or, would people who sometimes drift off, check their email, etc. because they are getting board be even more inclined to participate?

Interesting question.   It is definately something I want to pursue and test.

When I sold my first company I considered writing a book about starting up and running a young company – but I  never got there.    Since then I’ve considered starting a blog at least 100 times but  I was afraid of starting a blog and then not getting around to posting on a regular basis.

So what changed?   I’m not sure really…but I think it’s this:  I run into young entrepreneurs every day through DreamIt, WizeHive and my other activities – and it is startling (maybe surprising) to me how much knowledge I’ve accumulated over the years.    Despite my busy schedule I think the right thing to do at this point is share as much of this knowledge as possible.

And, I think I can share information from a unique perspective.    

As an active investor and partner in DreamIt Ventures  I often sit on “that side” of the table as I evaluate hundreds of ideas and business plans each year.   While I’ve made my share of mistakes, I have a pretty good idea of what works and doesn’t and I know I can help people with their ideas, strategy, funding, pitch and so on.

On the other hand, as a hands-on partner in my own web based startup,  WizeHive , I am living through the normal startup process and I’m intentionally trying to do it on a shoestring in part to understand what it takes to do this in todays environement.   I’ve used crowd sourcing sites to develop our logo, dug into CSS code when something had to be fixed (it had been a very long time since I did any development), created my own wireframes and design, worked with someone to create our marketing plan, and I scour the web daily for information about what our competitors are up to.

Of course, I’ve also got plenty of war stories given my 20 years or so being an entreprenuer and an investor and having done programming, sales, marketing, hiring, firing, fund raising, web site designing, acquiring and so on.    And, I think I can share this information in a very clear, simple manner.

My goal is to post at least a few times a week and hopefully once a day…but we’ll see what time permits.   I hope you enjoy the blog and get some useful informtion from it.