Continue Reading]]> This is a bittersweet post to write.  I love Seattle.  I love the people.  I love the scenery.  I love the startup scene and the underdog mentality.  I’ve actually written data-driven posts trying to justify this entrepreneur’s choice to live here.  I’ve cheered on as Glenn Kelman valiantly defended our soggy brand of entrepreneurship.  I actually kinda love the weather.  But over and over again, very smart people tell me that the best thing for my company is to move it to the Valley (see this & this).  The logic is pretty compelling.  Being a founder requires a mix of determination and flexibility.  As I wade into my next company and as I hear stories from my friends down south, I think now is a time to be flexible.  So we’re going to go try the Valley on for size.

As I’ve started to tell people, I’ve had plenty of Seattle folks tell me that I don’t need to go to the Valley to succeed.  Empirically, they are right.  There are obviously successes in Seattle both big and small.  But here’s how I look at it.  Startups are like a big formula.   Maybe it’s “(10 * market) + (7 * product) + (5 * team) + (3 * distribution) + (3 * fundraising) + (10 * blind-ass luck)”.  I suspect that it’s different for each startup.  But I firmly believe that having strong relationships in the Valley adds a meaningful multiplier to important parts of that formula (especially on the fundraising side of things– more on that in a minute).

There are some great investors in Seattle.  We’ll be working with a few (hi guys!).  But as I look forward in my company’s future, I know we’ll be raising more money.  I believe (I hope!) that we’ll be raising based on a “line“.  Whatever trajectory we’re on, it’s nigh-impossible to argue with this fact– any fundraising effort is easier, faster, and more likely to close with better terms in the Valley.  The key there for me is faster.  Fundraising is expensive.  It saps attention from your product and it takes time/money.  The other key is “more likely”.  I’m pretty confident that I can raise money anywhere in today’s market.  But I don’t know where the market is going to be in 12-24 months.  I *DO* know, that if the market goes south, my odds will be strongest in the Valley.  And, while I don’t want to be a “douchey deal optimizer”, the best Seattle terms I’ve heard of are merely adequate in the Valley…  And terms that are good in the Valley are virtually unheard of in Seattle.

Of course, you can raise remotely.  A flight south is a few hundred bucks and kills the better part of a day.  But it’s hard to build relationships when you only fly down once every month or two.

Blind-ass luck is worth talking about, too.  While you can’t force luck, you can increase your “luck surface area”– do low-cost things that increase your shot at something fortuitous happening.  The obvious example here is: be nice.  Help other people and you increase the chance that they run across an opportunity that they drop in your lap.

While it’s not entirely low-cost to move to the Valley, I think it dramatically increases our luck surface-area.  Reporters and bloggers are constantly sniffing around in the Valley.  Well-armed/high-imagination bizdev folks wander around looking for creative deals to strike.  There are investors and portfolio companies wandering around at every event/party.  There are world-class startup geeks in the Valley on every corner (of course, there are a thousand startups all vying for the same talent, too).

A final consideration is optimism.  I’ve often said that startups only die from 1 thing.  They run out of optimism. They no longer believe in the opportunity (or they believe in a different one).  You can run out of money, but if you believe, you’ll find a way to soldier on.  You’ll raise money, max your credit cards, eat ramen, or otherwise do whatever it takes.  Strangely, I think it’s easier to keep your optimism tank full in the Valley…  In the church of startups (with miracles on display for every sermon), you can’t help but believe.

It’s going to be an interesting ride.  Some of my favorite entrepreneurs from Seattle have blazed a trail southward and, despite their apparent love for Seattle, they haven’t felt compelled to return.  I’m going to head south with an open mind and see how it goes.

Continue Reading]]> I don’t know a ton of important people. But as a founder of a venture-backed startup with some amazing investors and advisors, I do know a few.

With Nivi and Naval preaching the gospel of social proof (can I get an “amen”?!) and with fundraising posts and articles espousing the importance of introductions, it’s no surprise that about once a week someone asks me to introduce them to someone else. It’s especially common around Y Combinator Demo Day, where YC groups shift from pure product mania to fundraising mode. I’m pretty sure that YC tells new crops of startups to ask for introductions from the funded companies from previous sessions.

What does surprise me is how people ask for these introductions. Here’s pretty much how they usually read:

“Hey Tony. I’m [insert name] from [company name]. We’re starting our fundraising effort and I was wondering if you’d introduce me to [insert RescueTime investor/advisor].”

I usually will make the introduction, but the person asking for it is certainly not making the most of the opportunity (and asking me to spend my social capital by doing so). So after making a mess of these introductions in varied ways, here is my suggested checklist for making an introduction (it’s pretty much my reply when I get a request like the one above):

• Write the introduction for me. Seriously. You know more about your story than I do. You know the things to say that will make someone light up. I don’t. I might flub it. I can personalize it (“Hey [insert investor name]- hope your trip to [offensively exotic location] was fun. Welcome back! Listen, I wanted to introduce you to…”), but you should make the pitch. Bonus: this saves me a few minutes of writing, which is kind and thoughtful of you!
• Don’t bury the lede. What’s the thing that will get an investor excited? Be concise, but talk about social proof, traction, growth, size of the market, how badass your team is, mainstream press coverage, other investors who are on board, and user passion/joy. Choose whatever distinguishes your startup from the sea of startups that investors read about every single day. Unless your product is revolutionary, spend more time talking about your market (“we’re helping companies in the billion dollar widget maker market sell doodads”) and your team than your product (“we’ve got an ajaxy shopping cart!”). If they investor blogs or has EVER talked about their investment strategy, hopefully you’ve read how they think and tune your pitch to match that.
• Heap on the social proof, man! Getting an email intro from a near-stranger (me) is about the weakest social proof you can get (but it’s better than nothing). Tell us how many other investors you have soft-circled. Give us a link to a list of all of the blog posts praising you. Or all of the users tweeting about you. We’re herd animals. If the investor feels like the herd is leaving him behind, that’s a good thing.
• Think about why it’s an opportunity for investors. If I’m writing to an investor about a company that looks like a credible opportunity, that’s me doing them a favor. If you don’t have any bullet points that many you look like a great opportunity, that’s me doing you a favor and adding noise to their already overflowing inbox.
• Keep it short. All of the above stuff could mean a lot of content. You’ve got to pick and choose what to send and hope it’s enough bait for the investor to dig in and learn more.
• Bonus points: track it. When we were talking to investors, we created custom (private) pages for each investor we were courting giving them a ton more to dig through and get excited about if they wanted. The emails were short and sweet with a “want to learn more” link at the end. We used Google analytics to track which people clicked through and which individual pages they clicked on so we could know what to focus our discussions on when we met them.

All that said, if you’ve got a great investment opportunity (with a launched product and some happy users), don’t be shy about dropping me a line if I can help (with introductions or advice).

(post scriptum: If you are in the market for introductions, you should check out VentureHacks’ StartupList!)

(post post scriptum: If you’d like to learn more about making good introductions, Chris Fralic just wrote an outstanding post for the “connector” – The Art of the Introduction)