E347: All Ask Jason – Fundraising #E347



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Jason answers viewer questions and gives advice on fundraising.

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Jason: Hey, everybody. Hey, everybody. It’s This is ThisWeekIn Startups. The program where we learn how to build companies. What do you need to build a company? You need a great idea, you need a great team. But you need fuel. You need money. This is the episode, the All Ask Jason episode where we focus on moolah, cash, hundies, hundies of millions, money. How to raise money. All the questions you have about getting money to fund your startup, we’re going to answer today. Stick with us.

TWiST title sequence.

Jason: Hey, everybody. Hey, everybody. Ah. Hello, everybody. Hello, everybody. It’s been a long time since we’ve done an Ask Jason episode. When we started the show, ThisWeekIn Startups, like four years ago we used to do Ask Jason all the time. What is Ask Jason? It was just people asking me questions. I’ve run a couple of startup companies. You guys know who I am. I am perfect proof that a broken clock is right two times a day. I’ve been an entrepreneur my whole life, 20 years. I watched my dad, as an entrepreneur, suffer through running bars in Brooklyn. Let me tell you something. I grew up in a bar. I learned the business from people who were running numbers, dealing drugs, selling booze, scalping tickets. LIke I was on the streets. I learned business from criminals and legitimate entrepreneurs like my dad. But that’s how I learned entrepreneurship. I know it’s funny. It’s crazy but it’s true. It’s true. I knew the guy who was the bookie. I was fascinated with the bookie in my dad’s bar who was running numbers and how his business worked and the vig. How he made money no matter who won or lost a Giants’ game. Weight. He wasn’t taking one side. He was making money if they won or they lost. I loved that. That’s just like Ebay or PayPal. They make money no matter what, right? Transaction fees. All good. Anyway. It’s a non-sequitur. People tell me they like to know my background and why they should listen to me if at all. Well there’s another reason to listen to me. I built a lot of companies over 20 years. Most, the did OK. But a couple did spectacular. That’s what I learned from my friend, Mark Cuban, who’s invested in two of my companies. Hold on a second I dropped a name. I’ll get it. Alright I got the name back. Mark told me a broken clock is right two times a day. You only need to be right once. That’s the great thing about entrepreneurs. Most fail, 8 out of 10 fail. So if 7, 8 even 9 out of 10 entrepreneurs fail that is incredibly depressing or completely inspiring. Why? Well if 7 out of 10 fail that means you’ve only have to go 3, 4, 5 times swinging at the bat. You’re probably, statistically going to hit your home run. But each swing of the bat might be 6 months, a year, 2 years, 3, years, 4 years, 5 years of your life. A lot of pain, suffering and egeda. That’s why you have to be strategic and you have to think about your startup career, about entrepreneurship. If you’re going to do that 10 swings at the bat thing you actually don’t have enough time left to take 10 swings at the bat. You probably only get 3, 4, 5 before you have kids and mortgages and you’re out of the startup game. Cause it is a young man’s game, young person’s game. Some people disagree with that. But it is true that it’s easier to start a company when you’re younger. There’s a lot of information there to start the show. This show is the show where you learn how to build startup companies. Long way of saying that. We are privileged to have done over 346, this is episode 347. We’ve been privileged to do these 347 episodes and have great, great talent here like Brandice and Kirin, running the show. Demant selling the ads and Jason Krute who is the General Manager of Launch and ThisWeekIn Startups. Have this great team. They get paid salaries. They don’t work for me for free. These microphones don’t pay for themselves either, I got news for you. When we update these cameras, the Sonys, the Panasonics or whatever. It’s going to cost me like 15 dimes. That’s all made possible by our partners on the program. The ads are sold out for 6 months at a clip. I’m very proud of that. One of our partners is ShareFile by Citrix. We use ShareFile here at ThisWeekIn Startups. ShareFile is designed for business. With ShareFile you can send files of almost any size securely. There is the key word in the sentence, securely. Access those files from any computer or mobile device, i.e. your phone or your iPad. We use it here to request files from specific folders from our clients. So when we have ads for the show or collateral or logos we use ShareFile to ask and request our clients to send them to us. They don’t need to have a ShareFile account. We just send them a little link. Boom. They put it into our folder. Then we get an email alert when somebody uploads or downloads those files. So we don’t have to remember to check the folder, we just get an alert. Genius. We can share big, big files. We get the audit trail. We can see what all the users can do on a very granular level. This is what I love about it is we can see when somebody opened a file, etc, etc, etc. You can visit ShareFile.com, click on the radio microphone button and use the promo code TWiST. Right here. See radio listeners in the top right? Click here. Click that button and use the promo code TWiST. ThisWeekIn Startups. No credit card required. 30 day free trial. You can join the ShareFile TWiST Club by first signing up using ShareFile, using the promo code TWiST. After you do that, very simple, you’re going to send us a request a file link toShareFile@Launch.co. Then we are going to send you, through the magic of ShareFile, a secret episode with the 10 best questions ever asked on the program. Thank you to our friends @ShareFile by @Citrix. Everybody thank @ShareFile on their Twitter handle. So as promised… Oh. One more piece of housekeeping. As we hit the 5 minute mark in the show. The Second Annual Launch Education and Kids Event… Festival, whatever. I don’t what we’re calling it… is brought to you by Pearson and SchoolMessenger. It’s June 26-27. It’s almost sold out. It’s at MicroSoft’s campus which is in Mountain View. Which is a really fancy, beautiful, well designed, gorgeous space. I am so privileged to have MicroSoft as a friend for decades. They allow me to use any of their spaces on a global basis, any time I want. What a great, great partnership that is. They’re just like, “We love Launch. We love ThisWeekIn Startups. Anyway we can help?” So I’m like, “Yeah. You can help. Give me a space. I’m going to bring 500 people there, 300 people there.” Whatever it’s going to be. Mitch Kapor is going to do a fireside chat with me. I’ve been waiting to have Mitch on the program and at one of the events. 20 companies will be on stage showing the latest exciting stuff. You can find out more at LaunchEdu.co. Dot CO was a big sponsor of the program early on so we show loyalty to them by using their domain names. If you want to come to that Launch event… If you’re a startup company making a great product or service just email team@Launch.co. If you are a teacher, an educator email team@Launch.co. We’ll get you some information. If you are a potential sponsor email team@Launch.co. There you go. Just team@Launch.co goes to the entire team, everybody who works on the project. So we have a very open… We want everybody involved. We’re like sort of very inclusive.

Jason: Our first question comes from Rich V. I’m going to just do that. Rich V. are you there?

Rich: I’m here.

Jason: OK. So you have a business. It’s workforce management for SMBs, payroll, full service HR, employee incentives, employees loans. All that stuff. It is called Summit. Summit HR &Payroll.com. If people want to check that out. You have a question for me. Go ahead.

Rich: I do. So at Summit we’ve been in business since 2007. We have about $1M in current revenue.

Jason: Great.

Rich: We have the opportunity to create a new sister company based on an australian business model that is coming here and wants to sell us the IP along with support for that business. It requires an upfront investment. So we need about $200K. We’re projecting this business is going to be cash positive by month four. Then year one we’re going to clear about $375K. So what I’m looking for… My question is we’re looking for some advice on what direction we should head as far as that $200K. Should we look at an angel investor, a bridge loan or some other funding sources? Just based on your experience we looking for if going down the right path from the beginning and more so going down a path that we shouldn’t.

Jason: OK. So Summit HR & Payroll, just to recap, has $1M in revenue and you’ve been at it for a year. That’s great. Oh no. You started in 2007. You have an opportunity for $200K to set up a sister company. I guess a sister product. Will it be a separate entity or will it be a separate entity?

Rich: Completely separate entity. Yep.

Jason: Ah. So the management team from Summit HR & Payroll would then work on this entity? Would it be owned by Summit HR & Payroll? Or would it be owned by a new cap table of employees? How does that work?

Rich: It would be owned by a new set. So one of the primary people in Summit would be a 50/50 partner with me in the new entity.

Jason: Alright. So already it’s getting confusing. Because now you have a group of people working on one company, Summit HR & Payroll. Then there’s this New Co… Let’s just call it New Co. for now… that’s going to have similar people working on each project? Correct?

Rich: Only at the beginning. Our goal is to completely separate it out.

Jason: OK. It’s confusing already. Maybe not to you but it would be confusing to an investor. Because now… and I’ve been in this situation myself… where I’ve had multiple businesses and people are like “Well OK. There’s ThisWeekIn Startups and you’ve got Launch over here and you’ve got Inside.com over here. Which business am I invested in again?” I’ve literally had people say to me, “Am I invested in this business or that business?” I like, “Oh by God. This is really problematic for me.” It’s optics. Then people go, “Jason are you spending 95% of your time on Inside and 5% on Launch? How much on ThisWeekIn Startups?” That’s when I started consolidating stuff down. So ThisWeekIn, I shut that company down cause it wasn’t really working to have 20 podcasts. But there were two that were working, Kevin Pollak’s, which is now independent, and ThisWeekIn Startups which is part of Launch. I consolidated two companies into one. Launch which does the event and ThisWeekIn Startups and then I have Inside.com which is big. I still have two cap tables. I’ve been thinking maybe I should put those two companies together just to have one company, Inside.com, to rule them all. Because it is confusing. Then everyday I’ve got two different teams. This is where it gets complicated. You’re going to scare investors. Red flag is basically what I’m saying. So if there’s a way to do this business inside of the existing business and make it a unit, that’s better. Is that a possibility?

Rich: The difficulty with that is that there is an existing investor in Summit that would not be a part of the new entity. I don’t have any equity in Summit either so…

Jason: So it’s a little bit confusing. But let’s just say that you correctly spin it off. Which one are you going to work for?

Rich: I’m going to work for the new entity. I would be 100% full time.

Jason: Yeah. To keep it simple, you’ve got this new entity. You left the other one and you’re going to let those partners run it. You’ve got this new one here. So how do you raise $200K to do this? You can’t use Summit’s revenue, correct? That’s off the books. So you can’t fund it from the profitability of that company.

Rich: Correct.

Jason: OK. So basically what you’re looking at is you’ve got a new company that’s based on a license from an idea from Australia. How do you raise that first $200K? The number one thing you would do is, if you believe in the idea and you have the $200K, you might invest it yourself because you want to own 100% of the revenue. So for me when I start things, since I got a bankroll, if it’s just $100K or $200K absolutely I just want to fund it myself. Because I don’t want to bring investors on until I have something because I don’t want to lose anybody else’s money. Are you in that position where you can front the $200K yourself?

Rich: I’m not.

Jason: OK. That’s typical. So now you’ve gotta take the hat off and put the hat in hand and say, “Hey. I need some money.” How do you get that money? An angel investor is probably the best route or multiple angel investors. The way to find those angel investors, AngelList obviously is a great collection of them. But what type of investors is going to be the question here. Now the original company that wants to license you this idea, are they going to have equity in this New Co. or are they just going to get a licensing fee?

Rich: They’ll have a 25% equity stake. Non A shares.

Jason: OK. So they’ll have some common shares or something like that. How much money do they make? Do they make tens of millions of dollars right now?

Rich: Yeah. In Australia they have about $3M in revenue annually.

Jason: OK. So I think first for them to have a little skin in the game might be a good idea. So I would go to them first and say, “Hey. If you guys are putting in $50K for your 25% or whatever that starts me at first base. So when I go to the next investors they know that I’ve already got 20% or 25% of the round done.” Have you talked to them about that possibility?

Rich: We have. That is a possibility.

Jason: Great. So good. We’re on the same page. So that’s step one. You’re on first base. You’re starting out saying, “Hey. I’ve got 25% of the round closed.” Then I would look for angel investors who have an affinity, they like, they dig you, the vertical you’re in or the solution, right? So how do you align that? Well if they have an affinity for you it’s because you have some preexisting relationship with them. You’ve made the money before, you’ve worked with them, they’re your rich uncle. Anything like that. If they have an affinity for you… Which, when Mark Cuban invested in my company it’s like, “I like Jason. He’s done smart stuff before. We’ve made money before. Yeah. I’ll probably invest in his new company.” Or Matt Kaufman or Sky Dayton or people I’ve worked with before are going to be likely to fund me again. So I always look to those people and bring them the idea first. Do you have those kinds of people in your rolodex that you’ve built credibility up with over the years?

Rich: Nobody’s that’s ever invested in anything. I mean certainly some people to go to for sure that I’ve worked with in business.

Jason: Yeah. So that’s what you want to do is go to those people first and say, “Hey. $10K minimum up to $50K. If you’re interested here’s the vision.” Show them the vision. Now leveling up and being on AngelList and having already $50K of the $200K taken care of it makes that little status bar look like it’s pretty good. You do a convertible note. You can do the documents on AngelList or you can use Y-Combinator. These are like $5K documents. You can use an attorney like Scott Walker. Who will do deferred payment. It might cost $10K to close the round. $5K or $10K. He’ll defer it if and only if you close. So do you have an attorney who’s doing deferred fees?

Rich: We don’t. Currently no.

Jason: OK. So you’re going to want to call Scott Walker or call any law firm and just say… or get a reference from someone and say, “I think I can make this work. Are you willing to do deferred fees because I think this could be very big. Obviously if we do an A round, a real big angel round, I can pay full fair. I need you to take a flyer.” They probably will. Now that shows hustle to future angel investors. You say, “Hey. I’ve got this deferred thing and I’m doing a convertible note.” A convertible note is great because a convertible note is really light weight. You don’t have to make a huge set of docs. It basically just says, “I can raise this money up to a certain max valuation or people get a discount. I think an angel investment who have an affinity for the space. You should research the affinity for the space by… This new idea, the sister company, the New Co., is it in the space of like HR or that kind of space? What kind of space is it in?

Rich: It is. HR, coaching, business coaching for small and medium businesses.

Jason: Great. So what I would be doing is looking for people who have made money in the past doing that or something around that. So if somebody was involved in SMBs, small and medium sized businesses, look for people who 5 or 10 years ago sold a company that focused on small or medium sized businesses. That could be somebody like Business.com which sold into that space. It could be somebody like Yelp. So if somebody worked at an organization, it could be Office Max who knows, if somebody worked in that space they are going to start on 3rd base in terms of understanding your idea because they understand small business already. So you want to do that. What you do is… You’re not going to them to ask for money. You’re going to ask for advice. So what you say is, “I need an advisory board for this startup. This is the crazy idea. Can I get 10 minutes of your time anywhere anytime?” That’s always been my secret. I try to show people in a short email that I have so much passion that I will meet them anywhere anytime with 12 hours notice. Boom. It’s worked so many times for me where I’ve said, “Can I meet you anywhere at anytime. Just email me.” Boy I’ve had people say, “Sure. Meet me on Sunday after my kid’s soccer game.” Literally I’ve had very important people say that kind of stuff to me early in my career. I said, “Great. Let me have your phone number. Here’s my phone number. Text me when you’re ready. I’m going to be sitting at the Starbucks 3 blocks away.” They text me, I come. It’s supposed to be 10 minutes. It turns into 2 hours. It happens all the time to me.

Rich: Nice.

Jason: So you send that short email. I’ve got an idea in the space. Can I get 10 minutes of your time to get your advice on if I should do it and if there’s an opportunity there? No mention of money. I may need an advisor in the future. If you’ve got 10 minutes to spare I’ll meet you anytime anywhere. You just tell me. That works brilliantly for me. If there were investors in the Australian company they might also be incented to invest in the US company. The way you can phrase that is to say, “Out of respect for the people who invested in the Australian company we’re going to keep one third of the round available to those investors. We want to have mainly US investors but we want to recognize that they contributed to our licensing of this technology and this product.” Now what you’ve done is you’ve turned you asking them into you giving them an opportunity that has a limit. Right? You’ve created scarcity. Which is a big part of raising money, creating scarcity. Is any of this helpful to you Rich?

Rich: Yeah. Absolutely, absolutely. The advisory board I like that idea as well. That’s another thing that we are looking at as well. So I like the 10 minutes of your time kind of thing.

Jason: Here’s the thing. What you’re optimizing for right now is the smartest people who are the most connected, who have the most knowledge in the space. You’re not optimizing for valuation. You’re optimizing for who is the most connected person who has the deepest knowledge in that space and who’s going to provide the most overall value. Don’t optimize early on for valuation. Don’t optimize for money. There’s plenty of time to do that later. Optimize for brains and network. Who going to help you the most. Great call. Thank you Rich. Everybody call check out Summit HR & Payroll.com. Plug there. Next up we have Hendrick. Who is with Vill Inks.

Hendrick: Vilynx.

Jason: Vilynx. This is a terrible name.

Hendrick: I agree.

Jason: Whatever amount of money your raising the first order of business is to get a name for a company that we can pronounce. How long have you been doing Vilynx?

Hendrick: So we’ve been doing Vilynx for almost 2 years now. We launched a site to help people manage their personal videos. With the entire goal of being, “Hey. Let’s get something that people can use.” Then focusing on more of a B2B type play providing our services to sites like a cloud storage type solution or carriers who are trying to provide cloud storage. What we do is we help people manage their personal videos by summarizing them, helping them easily upload and then being able to consume them on any platform, iOS, Android or the TV.

Jason: You know I love this cause I have this problem. I have so many videos. I love the idea of you making all thumbnails for them then letting me easily sort them. I’m looking at your iOS app here right now. Although Vilynx… V Lynx?

Hendrick: Vilynx.

Jason: Terrible name.

Hendrick: I agree.

Jason: Sorry. I don’t mean to harp.

Hendrick: No problem. We’re actually in the middle of going through the whole changing process.

Jason: No problem.

Hendrick: I’d love to get your feedback on it.

Jason: Fake it till you make it is my rule with branding. If you can’t get a great brand just fake it till you make it. So you have a question. Let’s hear it.

Hendrick: Yeah. VCs have gone through a lot of ups and downs with video type startups. Some have been huge successes like YouTube but there’s obviously been a lot of failures out there in terms of video. Right now while the tsunami’s coming in terms of people taking video with their smart phones and Google Glass is coming out and all these other types of applications which are taking advantage of video. There seems to be a little bit of negativity that is still associated with video just with VCs being burned. The question for me is what is the best approach in terms of how to approach VCs to look for a series A investment? Cause we’ve already gone through the seed round last year for almost $500K. Which VCs are the ones which are probably the most open to looking for investments in the video area?

Jason: OK. This is a great question. You’ve raised $500K. You got a product to market.

Hendrick: Yep.

Jason: What has the traction been like? In other words, for the $500K in fuel that you’ve expended how far did the rocket get?

Hendrick: Like I said before we were just trying to get a product out there to see if it grew organically. Our primary focus has actually been on partnerships. So what we’ve done is grow organically and actually grow 7% per week on a weekly basis since October. Purely organic. No advertising. But what we’ve done is actually gotten two partnership deals done. One with the largest mobile carrier in Europe and one with a pretty large cloud storage solution vendor where we’re actually going to be doing revenue sharing type things with their cloud storage solution.

Jason: Got it. So basically somebody puts all these videos in cloud storage and you make it easy to navigate and to organize the videos.

Hendrick: Exactly.

Jason: In the same way that iPhoto does for photos.

Hendrick: Exactly. That’s where people have really bought into it and that’s why we were able to make those two revenue sharing deals.

Jason: OK. It’s very clear that it’s a ridiculous trend going on on video creation and consumption. So good on you for that. Just on my screen here I have… Mobile internet traffic is going through the roof because of video. I can tell you as a YouTube partner and we have a bunch of shows like WellCast and MMA Surge that we are seeing tremendous, tremendous viewership on mobile phones because of LTE, because of iPads, because of the Note 2, because of the iPhone 5. People love to watch short videos on their phones. People love to take video, Vine, etc… So I think you’re in the right space. You’ve done what a lot of consumer products do. Which is they start with a consumer product then they flip to enterprise because the consumer… You’re chances of hitting with a consumer app are 1 in 100. Let me just state that one more time.

Hendrick: I’m supposed to be Instagram but the chances of that happening are very small.

Jason: Correct. It’s 1 in 100 to make a consumer product work. Now, if you get to business to business or to enterprise it’s 1 in 5. Maybe 1 in 10. You’re going to have some level of success. Look, you already have two potential deals because you can listen to clients who have the big paycheck. All you have to do is get one or two a year to say yes and the business looks pretty good, right? Now that doesn’t mean that the business is going to scale infinitely but it’s a sign of a pulse and it means for angel investors you’re not going to go out of business. Or you’re not going to go out of business immediately if you have some of that service revenue. But it also means there could be a cap to your exit because it’s not going to be Instagram, it’s not going to be Facebook but it could be Yammer. It could be DropBox. I mean these are pretty big things, right? It could be Box.net. Or just Box, I guess, they got the dot com now. So I think you’re in the right space. I think going enterprise is a great idea. I don’t know enough about the software. In terms of who is going to be willing to fund that’s a critical question. Who would be willing to fund somebody who enables providers to up sale their users on video management? I think somebody who’s worked carriers or handsets before and had a good outcome is a pretty interesting way to do it. Now, the handset people are also a good way to do it is to go strategic. Samsung has opened an innovation center or they’re working on an innovation center on University Ave. in Palo Alto where the old Barnes and Noble was.

Hendrick: Yeah. I’ve been talking to Brendon Kim. He’s great.

Jason: So, for me, you get Samsung… holy cow. Or even SK Telecom. Talk about another Korean company. You get someone like SK Telecom to come on board or you get Nokia or you get Microsoft or any of those strategics to put a little bit of money in. Although VCs might complain about that. If you get the term sheet from them or you get a quarter million dollars from them that’s going to motivate VCs to get involved. That’s a good way is to play the strategic interest against the VC. So if the VC sees that Samsung’s willing to put $250K in or MicroSoft or Nokia is willing to put a half million in they’re going to go, “Wait a second. If they’re going to put in a half million now to help prove this out, wait, what if we prove it out and then add two zeros and then sell it to them for $50M or $500M or $5B. Which is their druthers. So it’s just like a high stakes poker game, you know. Samsung raises then maybe Sequoia or Kleiner or Excel or somebody else re-raises and says, “Hey. I want to take this pot for myself.” If you don’t understand this poker metaphor I cannot help you.

Hendrick: I love poker.

Jason: There you go. So you get the idea. Someone’s coming over the top, 3 bet.

Hendrick: So essentially you’re doing a game theory type analysis here where we’re trying to leverage one off the other. That makes perfect sense.

Jason: Yeah. I think the strategics are going to be very interested in this. So you could get a couple of strategics buzzing. Then they’re going to start thinking about buying you, etc… That conversation is going to start. Then when you go to the VCs you say, “Listen. We could sell this business today. We could raise money from strategics. I have a big vision. I believe that there is going to be an entire software suite in the cloud for managing and handling video. We’d like it to work across all of these different systems. We are good at product. You can see we built a 7 out of 10. Our new product is an 8 out of 10. We’re going to get to a 9 and 10 out of 10 because we have the team to do it. A lot of the risk has been taken out because we already have a team. The $500K in jet fuel that we burned, it’s gone, is actually a good thing cause we got a team that that can build 7 or 8 product. You can rate it yourself. We’ve got an office space. We’ve got two clients, we know what the market likes and we’ve got a little bit of growth. So with your money we’re going to take the 7 out of 10 and we’re going to quickly get it to an 8 out of 10. Then we’re going to really grind it out to get to a 8 and a half, 9 out of 10 in terms of a product. Then we’re going to scale the revenue. It’s a good story. It’s a really good story without getting into the product too much. So that would be my approach. Get the strategics on board then go to the VCs. Now, there’s also the possibility of going straight to the VCs and showing them the vision and where it’s going. The challenge is when you have a product in the market today… You’ve heard about the series A crunch.

Hendrick: Exactly.

Jason: Which is there’s many small startups vying for a small number of slots in the venture capital world, right? So AngelList and OpenAngel Forum and the Launch Conference and Y-Combinator and Tech Stars and Founder’s Institute have made it so easy to start. But you need to get that A round. That’s hard because the VCs have so much to choose from. What they’re going to choose is traction. You may not have consumer traction right now even at 7% week over week. So then you’re going to have to choose if you really want to get a VC. Do you want to prove enterprise traction or do you want to prove consumer traction? That’s a question.

Hendrick: I mean, right now, we’re counting on the enterprise traction to essentially get some VCs interested in what we’re doing. Because if I could name the names I would but they’re pretty big. Like I said, one of the largest ones in Europe and a pretty big cloud storage vendor here in the San Francisco area.

Jason: Did you get any of them closed or are they close to closing?

Hendrick: No they’re closed.

Jason: Well that’s great.

Hendrick: We’re working on the integration stuff now. It’s going to be Q3 before we launch but we’re working on the integration stuff right now.

Jason: Yeah. So I think that you’re golden. I think what you probably want to do is show that you have a pipeline and you have identified 15 more targets that you could get next year. So you can go 2 to 17 or 2 to 10 let’s say and that you can show that revenue ramp. You can look at revenue ramps of enterprise companies. Whatever, ZenDesk, Evernote, Yammer, etc… It’s all the same. You know, $3M, $7M, $21M, $50M. It’s almost like clockwork. So you should really start looking at that revenue ramp. Again, with our previous caller, asking for advice from people who’ve been to the enterprise show in video or not is a good idea. I would be looking at Brad from UStream who’s made a really great service business. I would ping Brad. You can tell him I sent you. You were on the show. You can send him a link to the show. But Brad from UStream has a great consumer… has an OK consumer business but I think, I suspect, that the business is really the enterprise side. LiveStream as well has a great business. TriCaster, maybe not anymore but it did in that space. I would start curating that list of CEOs and founders. Maybe even co-founders who are no longer there to, again, be advisors. Ask them for advice. Ask for advice you get money. Ask for money you get advice. So go out get those people as your constituents. You are optimizing for attention. Do you have an advisory board set up of these kind of people yet?

Hendrick: Not of the key people in that particular area. We did bring on an advisor board with some other key skills that we needed for the original part of the product.

Jason: I was just thinking about who are the dye people who are going to level you up, make you a better CEO/founder. Start given them a quarter point or 35 basis points or 50 basis points, 10 basis points. Whatever it takes. I don’t know the valuation. But if you get a couple of those on board and you say, “We’re going to have a couple of those on board.” You say, “We’re going to have quarterly in-person meeting.” So basically it’s 4 lunches a year or it’s 2 in-person lunches and 2 phone calls. One on one phone calls and two group lunches. People want to be involved in something that’s growing and that’s fun. It sounds like you have that Hendrick.

Hendrick: Thank you.

Jason: Congratulations. Good job.

Hendrick: I appreciate the advice. That’s good.

Jason: Any follow up questions? OK. Alright. Listen. What you’re seeing here on this program is the power of GoTo Meeting. Meeting is Believing. Go check out GoToMeeting.com and you will be able to host your own online meetings with co-workers, clients, on the go, in their offices or at home. Launch and join meetings from anywhere using your computer, smart phone or tablet. I’ve done it. I’ve had multiple lines going. I do this all the time upstairs here at my office in Culver City. Where I’ll have my big screen TV logged in and I’ll have my iPad logged in. I might show something on my iPad or I might be using my iPad for video and pulling something up on the desktop. Anyway. You can have multiple people logged in and it works flawlessly. The number one thing I need in meeting software is reliability because I want my meetings to start on time and I want them to be technically flawless. How many times have you been on a meeting and it’s not working and people don’t know how to make it work. Well you know what? I’ve never had that experience with GoTo Meeting. Unless somebody forgets to bring a headset or something like that. Even that’s pretty surmountable now with the decent cameras that come with most computers and a decent microphone that is built in. But even still there is no excuse for a meeting to start late. There’s no excuse for technical problems. That’s why I’ve used GoTo Meeting for years. I’m very lucky to have them as a partner on the program. You can screen share amongst people. Just the other day I was showing somebody Inside.com, who I was maybe going to acqui-hire their company. I was like, “OK. You show me your work.” I handed them the presentation. They finished. I said, “Let me take back the presentation. Now I’m going to show you my mock ups under FriendDA. Don’t tell anybody what I’m doing with Inside.com.” I show them. They’re like, “Oh my God. That’s incredible. When can we come? We’re going to fly in. We want you to acqui-hire our team. We want to work on this together.” I did like 4 or 5 meetings around this acqui-hire kind of thing that I’ve been thinking about doing for Inside. You know, to triple the size of my team on the tech side. I did it all through GoTo Meeting and it worked flawlessly. It costs like… It’s so affordable. New features: you can present on your iPad. Not just attend. You can present on your iPad. That’s just awesome. That’s another thing about software as a service. When somebody’s as focused as GoTo Meeting is on meetings they do all the little things that they think they might launch. They just launch them. You don’t have to like pester them and say like, “Oh. Could you get HD going? I have an HD camera now.” It’s like they just tell you, “The HD is done. It’s done.” So visit GoTo Meeting, click on the try it free button and use the promo code TWiST. That’s right. Go to GoTo Meeting, click the try it free button and you know what to do. Use the promo code TWiST. GoTo Meeting HD Faces. Meeting is believing. I love this product. Get a free 30 day trial.GoToMeeting.com. Thank @gotomeeting. A lot of you out there have been using the product based on my recommendation. I do appreciate that. OK. Now we’re going to do another interesting couple of questions here. Kirin, you have some sort of a game. This is sort of a game. Explain the game.

Alright Jason. So for our special fundraising episode…

Jason: Wow. I like that Kirin voice.

Do you like that? Isn’t that lovely?

Jason: Look at that radio voice.


Jason: Now you’re getting into the NPR voice.

I am.

Jason: Today on All Things Considered we go to a gun control specialist in South Central who is teaching students how to mediate their problem. It’s like… Keep going.

I thought it would be fun if we had a question from someone you might know and someone you know answering that question. We’re going to compare answers. Our first case is Sarah Lacy of PandoDaily.

Jason: OK.

She was talking with Drew Houston of DropBox.

Jason: OK. He launched at the first year of Launch Festival.

That’s right.

Jason: A good friend of mine. Sequoia company.

Yes. Sarah had a question for Drew. We’re going to cue that up right now.

Jason: Alright. Here we go.

Sarah Lacy: What has been your philosophy of raising money and how important the valuation is?

Jason: OK. So philosophy of raising money. I know Drew. How important is the valuation? OK. I got to handicap this one. I’m going to think out loud. This is not what I do at a poker game. At a poker game I’m processing this stuff in my head. So this is on stage being asked by Sarah Lacy. So that contributes to his answer. Cause if it was just me and him shooting the sugar at a bar at an Allen Company Conference at midnight that’s a different answer than on stage with Sarah Lacy. I’m not saying that Drew is not going to be completely honest but what people say on stage and what people say after 2 or 3 Macallan 18s with two ice cubes… Open them up. It’s quite delicious… is gonna be different. So based on the fact that this is public I think that he’s going to say that you don’t optimize for valuation. You want to have the best investors who have a proven track record, who are in it for the long term and who you want to spend time with. That’s what I think he would say. I think that’s true. But I also think that any self-respecting entrepreneur wants to get the best valuation they can. So his answer… I have not seen this… might be something along the lines of, “Well of course you want to get the best valuation you can but you don’t want to over optimize for valuation you want to optimize for having the best investor who is going to provide the most value and who is in it for the long term.” Play the answer. I like this game.

Drew Houston: We didn’t actually need money. So we were already profitable. We wanted a reasonably high valuation for sure but at the same time you don’t want to go overboard cause you can see what happens when people go overboard. You might be able to persuade some people to give you a number up here but if your business only deserves like here eventually chances are you’ll have to account for that one way or another. Even if you were to like make it through and grow into the valuation you’re still taking a big risk. Like if you need money in the future or these other things. You don’t want the value of your company to decrease cause that can bring all this thrashing like, “Oh my God. Is our company doing OK?” and these things. That’s actually pretty straight forward. It’s a negotiation like anything else. How do you get a high valuation. Just build something good.

Jason: OK. I didn’t exactly nail that one. I think he made a good point. I don’t think I nailed that at all. But I think he made a good point. You don’t want to oversell because if you get caught in that valuation trap it could become a problem. So I think it was a good answer on his part.

Kirin: Also he said make a good product.

Jason: Yeah. I mean that’s the key to everything. You can sell the promise of something. I’ve done that, right? It’s pretty widely known that I got a $100M valuation before I even launched Mahalo. People are like, “This is a brilliant idea. If this works it’s a multi-billion dollar idea.” It didn’t work so that put me in the position of like OK what now? What now is I got a lot of money in the bank and I can try a bunch of different ideas. Listen. I think it’s all going to work out fine with Inside.com. I’ve got plenty of runway. But it does… Even today when I want to go raise money and people are like Inside is a great idea and I’d put money in. I’m like, “No. I can’t really raise money from you because I have got to spend another year catching up to the $100M valuation. Because maybe my company’s worth $50M right now. Or my idea and my execution today is worth $30M, $40M, $50M. I need another year to catch up. So there are people who I’d love to have invest but I really can’t take their money right now. So there is something to that. But it’s not as dire as he makes it out to be, I don’t think. Cause it’s not like having a boat load of cash and not having diluted yourself is a bad thing. I’m sitting here feeling pretty smart. I’m still in a good position. I got multiple swings at the bat and I get to play for the long term. So… This is a fun game. I like it. Also this makes me like up my game. Go ahead Kirin give us another one.

Kirin: Alright.

Jason: I like this game.

Kirin: Next up we have Kevin Rose…

Jason: Oh. Good friend of mine.

Kirin: … asking Ben Horowitz of Andreessen Horowitz a question.

Jason: Oh. Another friend of mine.

Kevin Rose: Any first time kind of pitch mistakes people make where they’re not getting to the product, they’re putting too much data upfront, projecting too far out?

Jason: Hmm. Pitch mistakes is the question here. Right Kirin?

Kirin: That’s correct. What are some common first time pitch mistakes?

Jason: Well. You got Kevin answering the question.

Kirin: Ben answering.

Jason: I know but Kevin gave a couple of examples there that are good examples. Like… So pitch mistakes people make. I gotta think about Ben. Cause Ben is… Let’s think this through. Ben is at Andreessen Horowitz. He is a serial CEO who is Marc Andreessen’s partner on the cloud startup they did and they sold. He went through some really dark days. He raised a spectacular amount of money for Andreessen Horowitz and for startups before that. But he also starts with gangster rap at the start of every blog post he does so he is a little aggressive and blunt. So he’s going to give a blunt answer. I think, for me, not getting to the product is a cardinal sin, right? Cause I think like the product speaks. So I think that he’s going to agree with Kevin on that. Kevin sort of said that. Like you gotta show the product and the product’s got to be great. So going in when you just have an idea… He might sort of mentioned that sort of… Something along the vein of, you know, make sure you have a great product when you go in there. Number two, I think he’s going to mention understanding your market and your customer really well because that shows a thoroughness. I know Mark Cuban cares about that as well. He wants to make sure you have your ducks in a row. I think Ben is sort of like that. I know I’m sort of like that. If I ask you questions about potential competitors or people who are doing what you’re doing and you don’t know them… So if I was asking you about… Let’s say I was asking you about SpaceMonkey. I’m asking SpaceMonkey… I’m taking a pitch from SpaceMonkey. I say, “Well how does this relate to what DropBox is doing and BitTorrent is doing with their cloud storage?” He says, “Well I’m not aware of DropBox or that BitTorrent has something.” It’s like, “What! You don’t know your own market?” Or, “How many customers does DropBox have?” So I think number one he’s going to say don’t go with an idea. I think he’s going to mention something about having a really tight product. Really leading with product. Number two, I think, understanding your market and your customer really well is going to be his other theme. I’m going to just take a flyer here on number three. I think not dissing competitors or people who are already successful and like talking about everything that’s wrong with that product and not showing enough passion. I’ll say that as my fourth. Go Kirin. Let’s see what he said.

Ben Horowitz: Yeah. Well to me that big thing on pitches… The big mistake people make is they try to appeal to much to the venture capitalist. That’ll drive us crazy because it’s a little bit of sign of anti-courage. I’ll be like, “Well, if everything you told me before is true then isn’t this like a plan to fail because like if you look at the market size and you look at the product and when it’s going to hit and so forth, like if all that is true then this plan is like a tenth the size of what it should be.” They’re like, “Yeah. But we thought you wanted to hear this because VCs like conservatism.” I’m like, “Well the fact that you care what I like makes me not like you.” So that’s like the biggest mistake. Now that might not be a mistake with some other VCs but for me, because courage is such an important thing, anything that shows a lack of conviction or courage or belief in what you’re doing is what always ends up worrying me.

Jason: Hmm. I missed that as well.

Kirin: Hey, Jason. This is a tough game. You gotta up it for the next time.

Jason: Well you know I think it’s a tough game because these answers are like personal preference, right? So that’s his thing. He doesn’t like people pitching to him kind of a thing.

Kirin: Courage though. He’s very particular. He wants people to be courageous. Stand by what you believe.

Jason: I can understand that. Conviction, passion. I get that. You know there’s many things you could do wrong in a pitch. But I like the game. I like the game.

Kirin: We have one more. It’s actually a question on Quora this time.

Jason: Oh, OK. Here we go.

Kirin: So we’re going to show you a question.

Jason: OK. Show me the question. Are you going to read it or am I going to read it?

Kirin: I’ll read it for you.

Jason: OK.

Kirin: When negotiating a VC…

Jason: More NPR voice.

Kirin: When negotiating a VC/PE investment into your business, under what circumstances could it make sense to disclose to the prospective investor your expected valuation?

Jason: OK. When negotiating to a venture capitalist or PE, private equity, investment into your business, under what circumstances could it make sense to disclose to the prospective investor your expected valuation? Hmm. I wouldn’t put that in a pitch. I think that that’s a discussion that happens in person when the person has decided that they want to invest. So you wait. It shouldn’t be in a prospective.

Kirin: Well they’re talking about negotiating. It assumes that there’s some kind of conversation happening.

Jason: Right. So number one, I don’t think you put that in some kind of pitch document. I think what you want to get is you ask the investor or the investor tells you they’re interested. So you could query the investor, “Are you interested in pursuing this opportunity? We think that you would be a great partner.” They say yes or no. If they say maybe, they need more proof points then you’re just going to say, “OK. We’ll come back to you.” If they say maybe, say, “What would you need to see in order for this to work? What do you think is the next milestone for us? Maybe we’ll come back in 6 months with that milestone completed. We’ll come back whenever that milestone’s completed.” So you want to get a definitive yes/no. If it’s a maybe what is the maybe? Like what’s going on here with the maybe?” But most professional people are very quick. Like Andreessen Horowitz or Sequoia, they’re going to give you a quick yes or no. Now, when they say yes I don’t like negotiating with myself. So I would say, “What do you think is a fair valuation for where we’re at?” If they’re savvy they’re going to say, “What do you think because we want you to feel comfortable with it.” In which case I would take whatever I think and I would add 25% to it or 50% to it and try a little higher. I think that happens after they’ve really critically said that they’re interested and you’ve said what do you think would be the proper valuation and they’ve said very clearly that they don’t want to put that out there. Now, you could also get term sheets from other people. So if you had 5 people interested you could say, “We’re looking for people to give us a term sheet. So we would like you, if you are sincerely interested, to make us an offer.” Now if you have 4 or 5 people interested then you could run that auction style. Now if you don’t, you don’t have the leverage. In which case you could say to the person, after they’ve said we’re interested in what you want, you could say, “I think $12M is a reasonable valuation. $3M for 30% of the business.” Whatever it is. $4M for a third of the business. Whatever it is that makes you comfortable. $3M for 25% of the business. Whatever it is. That’s how I would negotiate it. Is that a good answer?

Kirin: Well let’s see what the top-rated answer is right now on Quora.

Jason: OK.

Kirin: It’s a pretty long one. “You typically tell them right away, in the first meeting, how much money you are raising. It is then easy for them to back out from that number what you expect your valuation to be. For example, you might tell them you wait to raise about $5M- they then know you are expecting a post-money valuation of around $15M-$25M given that most early rounds are structured such that the investors can own anywhere from 20-35%.”

Jason: Yeah. That’s a good answer. I think starting with the amount of money is a good idea.

Kirin: It continues. “The negotiation then begins. VCs are sensitive to what % of the company they can own. So you often end up negotiating both the valuation and the amount of the raise – if the valuation goes up, investors will push to put more in so they can maintain their % ownership.”

Jason: Yeah. I mean basically they all want to own 30%. Which is what I said. They’re going to want a third. They’re optimizing for that. I think being reasonable… There’s a lot market data out there that didn’t used to be. I mean you can really figure this out by looking at what’s been announced, what’s on CrunchBase, what’s on VentureSource. There’s a bunch of people out there. You can just talk to other entrepreneurs and look in the space. The VCs know what valuations the other companies went at. So you’ll know. OK. Next.

Kirin: OK. So we had told everyone that they could call into the show.

Jason: OK. We’re going to do live office hours now.

Kirin: Right.

Jason: This could be any question. These questions may or not be included in the tail end of this episode or other episodes. Correct?

Kirin: Correct.

Jason: Got it.

Kirin: So as it turns out people were more comfortable asking questions in the chat room than they were calling in.

Jason: OK.

Kirin: So I have a great one for you from David Preston. David is the CEO of Blazing Point Solutions. That’s blazingpoint.com if you want to take a look.

Jason: I’m going to blazingpointsolutions.com?

Kirin: blazingpoint.com.

Jason: Oh. blazingpoint. OK. I’m pulling that up. What’s the question. Do you have the question written out. Do we have a slide for that or are we just going to read it?

Kirin: He just gave it to me over the chat room.

Jason: OK. Go ahead.

Kirin: So he asks, “What is the best way to attract or approach potential investors if your startup is not one of the typical startup hot bed locations?”

Jason: Oh. Move. Next question. No honestly that’s like I live in a town where there’s no pretty girls. How do I get a pretty girl? You move to New York where all the pretty girls are or Los Angeles. If you want to be taken seriously be in a serious city that is entrepreneur friendly where the VCs are, where they don’t have to take a flight. If they do have to take a flight you have to keep it to an hour. This is what people in Europe have learned over and over and over again. The chances of building a great company in Europe is a tenth of that in the United States, in the 2 or 3 or 4 major cities where you can do this. Which is the Bay Area, New York, Boston, Los Angeles, Austin in that order.

Kirin: Chicago?

Jason: No.

Kirin: Except for Groupon.

Jason: Chicago… maybe. I don’t know. I think it’s hard in Chicago. Nobody’s flying to Chicago, right? So basically there’s only a handful of investors there. They’re going to be kind of dorky. The investors there are going to be grinding you down on valuation. They’re going to be not bold. They’re going to be playing on their heels. They’re going to be playing not to win. Whereas if you’re in Boston, New York, LA or San Francisco Bay Area, you know, the aggressiveness of the investment community is going to be higher because they’ve had better returns. So in New York and the Bay Area you’re going to see spectacular returns. In Boston and Los Angeles you’ve seen solid returns. In Chicago you’ve seen no returns. So people are cash rich right now. Wherever the big exits are, wherever those big companies are, that’s where the money is going to be. The VCs you know, like any good gambler, if they have a big stack of chips because they have won a bunch of pots they’re going to want to redeploy that capital. They’re going to want to make more money. Marc Andreessen and Ben Horowitz have made a ton of money. Then they launched a VC firm, it’s like a billion and a half dollar fund. Then they bought Skype and they invested all that. They’re like, “Let’s raise more billions of dollars and more billions of dollars.” Now they’re hiring 100 people to do marketing and PR and human resources. It’s never enough. If you’re a winner like Andreessen Horowitz or Sequoia or Benchmark or Excel or Chamath at Social Capital Partners or Charles River, these people are relentless. They’re not going to stop. They made money. They’re going to keep going. They like it. They’re in it. They like the action. Now, if you’re in another city where you haven’t made money and you’re kind of like, “I might not be able to raise my fund.” You’re going to just get into that loser conservative mindset. That loser conservative mindset is what I think of when I think of Chicago. No offense. You have to take your career seriously. You have to take your career seriously. Now, if you’re a baller and you’ve got much success and Andrew Mason’s in Chicago, yeah, people are going to fly to him. He’s Andrew Mason. He created Groupon. His next idea is going to be good too. So sure they’re going to come there. Or if you’re Jason Calacanis in Los Angeles, sure, maybe Roelof will take the flight down here maybe he won’t. But even with me I had to lobby Sequoia to invest in a company down here. They had GameSpy down here and they had Green Dot. They had a bunch of others. Even for somebody with my reputation it’s hard.

Kirin: So David is based in Charlotte, North Carolina.

Jason: Oh God Almighty.

Kirin: Any thoughts on that location.

Jason: Oh God Almighty. Where?

Kirin: Charlotte, North Carolina.

Jason: That’s like somewhere between Florida and New York.

Kirin: Charlotte is the headquarters for Bank of America.

Jason: What? Who cares?

Kirin: Who cares? OK.

Jason: Bank of America overcharging me for ATM fees? Nobody cares about Bank of America. Nobody cares about North Carolina, South Carolina, Atlanta. None of those places matter in terms of startups. Get out of Dodge. I had this discussion with Rob May from Backupify. He went to Boston. He was not getting taken seriously with Backupify. He went to Boston and people threw money at him. His idea with a bunch of dopey investors wherever he was in the south… I can’t remember if it was Atlanta or… I can’t remember. Somebody look it up. All of a sudden he’s in Boston and he’s hot sugar. Actually Boulder is an example of a place where like it actually works. Next question. Good question I like it.

Kirin: Alright. The other question I have from the chat room. Another person who would prefer for me to ask it. His screen name is Jack Jamison 3.

Jason: OK.

Kirin: He hasn’t told me what company he’s from.

Jason: No problem.

Kirin: Are you leery about a CEO that is not leading the discussion/doing most of the pitch. Would that prevent you from investing in company where the CEO is not great at presentation type activity?

Jason: Yeah. That’s a big red flag for me. I mean listen. I understand that introverts are changing the world and there are introverts out there who have a lot to contribute. But not being able to passionately present your idea and being sort of like Asperger’s about it maybe is sort of what they’re getting at. Or being nervous. I mean you have to get past that. You have to be able to, in a small setting or a big setting get on stage and say, “Hey. We’re going to changed the world and here’s how.” It’s not easy for everybody but trust me I know people like this. They might be a little introverted socially but when they get on that stage and they start talking about their product and what they want to make to change the world they light up. They become extroverts all of a sudden. They can’t shut up about their product. But then they become quiet and considered when they are in the boardroom. That’s OK. But you need to… at least when you’re talking about you’re product… you need to be able to muster some passion. If you can’t get in there and you’re socially awkward you need to get over it. That’s something you’ve got to address. What that’s going to signal to me is when you have trouble at your company and you need to lead your company… If you can’t lead your company in a VC discussion or an angel pitch how are you going to lead them with the press? How are you going to lead them when somebody has a problem at the office and you’ve got one group of people who disagree with another group of people and they’re both brilliant and they’re both right. It happens sometimes, right? Like two different groups disagree about how to get to America. One says we should go east one says we should go west and the truth is you can go both ways. You can go one way and you wind up in California, one way and you wind up in Massachusetts. Both ways work. You know. It’s a challenge.

Kirin: So does it mean that person shouldn’t be CEO?

Jason: Yeah. I mean you could say that. You could say that. Sure. They could become like a Chief Product Officer or something. They could hire a professional CEO who can get out there and crush it. But I think you can get over that. I think you just have to get a good coach. Maybe you gotta get a therapist if there’s like some defect where there’s something that happened in your childhood that made you scared of speaking in front of people. But it is something that is very surmountable. I would encourage… We’ve seen it in the Launch Festival and TechCrunch50 before that for 6 years. We’d have some people who come in and they were awkward. In fact Drew from DropBox was not… I’m not going to say he was awkward but he wasn’t a great presenter. By the time he got on stage he was a solid presenter. Today he’s great. He’s awesome. I just saw him on stage. He’s just eloquent and he’s a great leader. He’s got a great team. Everybody respects him. But when he started, I remember, coaching him where he couldn’t put together his vision in a very coherent way at the start. But in just a couple of weeks, just a couple of practices with Sequoia and Roelof and other people he was just aces. Man, now he’s a juggernaut. Drew’s a perfect example of somebody who started and maybe wasn’t exactly a great presenter and now he’s tremendous.

Kirin: So your advice is to find a coach?

Jason: Absolutely. Find a coach and focus in on that issue. I like to… I mean in my own personal career I look at what I’m weakest at. I make a list sometimes. I’ve done it many times. This is what I’m great at. This is what I’m good at. This is what I’m OK at. This is what I’m bad at. Whatever I’m bad at I take it and I say, “You know what? I’m going to focus on that for a little while.” Just try to make that something I’m good at, right? Maybe I’m not good at design or marketing. Maybe I’m not good at whatever the case may be, coaching people whatever. Getting ideas out of people. That was something that I was not good at. It was always my idea. Here’s my ideas. Go. Then I said, “You know what? Let me try to get some ideation going inside my companies.” I started doing ideation sessions with people. I read up on ideation. I hosted ideation sessions. I made people feel like their ideas mattered and that their ideas were as important as mine. In some cases they’re not but at least I made people feel that way. You know what? In some cases they were better than mine. In a lot of cases they were better than mine. Nobody’s got that market cornered on ideas. Not that ideas are all that important anyway. Execution’s what matters. The point is you have to examine yourself and be massively self-aware as an entrepreneur. Then take that self-awareness and put it to work. I’m going to get Jerry Colonna as a coach. I’m a very successful guy. I’m like, “You know what? These people are all going to Jerry Cologne and getting coached. I feel like I’m at a disadvantage. Why don’t I have a coach? I need a coach.” So I’m like, “Jerry maybe you should coach me.” He’s like, “Well maybe you should coach me.” I’m like, “Coach me.” He said, “OK. I’ll coach you.” Maybe Jerry’s going to coach me. He’s in a different city but… I would love to have a coach. The problem is I need to have a coach who is somebody I really respect. You know like somebody I feel like I could learn a lot from. I don’t know.

Kirin: Well you just said Jerry. I assume you could learn from him.

Jason: Oh. Absolutely Jerry. Yeah. But it’s very hard. I don’t know how you qualify a coach. I’ll be totally honest. A lot of the people that I meet at like events who take out their business cards are like, “Hi. I’m a coach.” I’m like, “You’re a loser. I could just tell from talking to you for 10 minutes. You’re not anybody who should be giving advice.” They’re failed entrepreneurs. A lot of times I see people who are failed entrepreneurs become coaches or they start accelerators.

Kirin: So if you’re looking for a coach?

Jason: You need to examine the track record. You need to talk to and figure out who else they’re coaching. Cause when I saw who Jerry Colonna was coaching I was like, “Oh. He’s coaching winners.” Those winners are staying with him year after year. Or like Mark Pincus was publicly talking about he had a coach, this woman who is just extraordinary. Then like 3 or 4 other people used her as a coach. She comes in and she just talks you through stuff. So when I see like Mark Pincus or Jerry Colonna is coaching this other person. I said, “OK. The clients speak.” Who are the clients? If it’s a person who’s a failed entrepreneur giving coaching advice to a failed entrepreneur or a struggling entrepreneur that is the blind leading the blind. They’re just going to go off a cliff. I’ve seen this in accelerators. There are some accelerators… I tell people, “Before you give 6% away make sure you check the track record. If you look at Paul Graham’s track record or David Cohen’s track record these guys are winners. Easily give them 6% of your company. But if you’re going to another accelerator, I’m not going to start naming names, and you look at the track record and the track record is like this person hasn’t done anything interesting in 20 years and when they did something interesting it might have been some IPO leverage buyout with Michael Milken or Boesky or something. Like… it doesn’t really count, not applicable. You have to investigate the people you’re going to engage for advice. Alright. This has been a great program. No more questions? I could take one more.

Kirin: That’s all we got.

Jason: Alright. Very good. This has been a great episode. Kirin, feel free to chop these up and put them at the end of the interviews I did last week with some of the Launch companies, etc… If they need to fill in 10 minutes.

Kirin: OK. Great.

Jason: Alright. It’s been great answering questions and discussing startup success. I like the game a lot, Kirin. That was good. Very well produced. Oh. By the way. We need a… I’m looking possibly to have an executive producer for the show who has 5 years or more in radio to do things like Kirin just did with this wonderful game we played that is entertaining for you, the audience, and informative. We need a little bit more thought and production. We have the quality of the production down. Brandice has locked that down. We’ve got great guests. We’ve got a decent host. We’ve got fantastic sponsors. It’s a bit of a machine right now to be totally honest. What we do need though is somebody who can teach us, right? Talking about leveling up. We don’t know what the hell we’re doing here. We’re making this ish up as we go. I learned this new term ish. You know this Kirin?

Kirin: I did not.

Jason: Ish is another way of saying sh… sugar.

Kirin: Oh. Very clever.

Jason: It’s big in the hip hop community. Anyway. I read media takeout and they would say, “What is this ish?” Anyway, this ish… We want to make this ish better.

Kirin: We will make this ish better.

Jason: We want to make this ish better. Let me tell you. That ish that you did, Kirin, with the play a clip and I try to intercept the answer. That made me look really stupid which I think is really entertaining for the audience.

Kirin: You still said some interesting things. They had value.

Jason: I added value but I do think that those kind of games that put me on the spot people like that. It’s interesting.

Kirin: Sure.

Jason: Cause they like to see their hero knocked down a little bit. Or they like to see me competitive or trying to figure something out. I love stuff like that. I love games.

Kirin: You love to get into somebody’s head.

Jason: I like that. I always liked Guess The Fake Startup, right? We haven’t done that in a while. The Ask Jason’s are great. So if you know somebody who has produced for 5 years or more in talk radio specifically… So I don’t want…

Kirin: You don’t want a TV news producer?

Jason: I don’t think I want a TV news… TV news is like a race to stupidity. Paris Hilton and Lindsey Lohan nonsense and stupidity. We don’t want that. What I want is somebody who worked on the Stern show or Rush Limbaugh or…

Kirin: NPR?

Jason: … NPR, PRI or Young Turks or somebody who really gets working with an audience that is passionate and preparing them to get… Creating packages and content and contests and games and information that is entertaining and educational. That’s what we’re looking for. If it’s you or if you know somebody tell them, “Quit your job. Come work for J Cal.” That’s it.

Kirin: Based in LA.

Jason: Based in LA only. Culver City which is a great life. Unless your in Boulder which is frankly a better life. It’s like people go New York, LA, Arizona, Boulder, Kaui. That’s the order of checking out in your life. You can actually tell how much relaxation and joy and like quality of life you want to have.

Kirin: You’re only on step two.

Jason: We’re on step two Kirin. Actually you took a little detour. You went to the…

Kirin: I went to Europe.

Jason: You were in Amsterdam, right? Where were you? Amsterdam.

Kirin: That’s correct. I was in Amsterdam.

Jason: Well that’s actually… Amsterdam is the equivalent of Boulder. There’s the same amount of weed being smoked there. Alright. Listen. This has been a great episode. Thanks to me and my great answers and Kirin and her great production. Brandice and her flawless production. I love you Brandice. You do such a great job. Demant, great job on selling the ads. Krute, thank you very much. Ben who is watching the front door right now. Very good. Ben don’t make me… I walked in on Ben. He’s such a good kid. He was checking out ESPN. Poor guy. That’s the worse when your boss comes by and your reading Reddit. He’s reading it and I said, “Ben, don’t make my one impression of you that you’re sitting around when I’m paying you and you’re reading sports all day.” He looked at like… I said, “I’m joking. I’m joking. I check the sports scores too.” Alright. We’ll see you all next time on ThisWeekIn Startups. Bye-bye.

Special thanks to the members of the TWiST Backchannel Program!

Executive Producers


Associate Producers

  • Brad Pineau
  • Kat Ganesan
  • Nicholas Christian
  • Mau Frontier
  • Kyle Braatz
  • Serena Ehrlich
  • JD
  • Alex Lotoczko
  • James Kennedy
  • Benoit Curdy
  • Asher Nevins
  • Mike Kaltschnee
  • William Doom
  • David Lee
  • Jake Kerber
  • Sarp Coskun
  • Giuseppe Taibi
  • Tyrone Rubin
  • Keno Vigil
  • Paul Peters
  • Jamal Waring
  • Nick Ostroff
  • Alex Binkley
  • John MP Knox
  • Bryan McCormick
  • Marcos Trinidad
  • Allen Cordrey
  • Daniel Mich
  • Joshua Rosen
  • Grant Carlile
  • James Smith
  • Christopher Rill
  • Elliot Myhre
  • Nihon Giga
  • Nathan Gielis
  • Greg Meadows
  • Rick Cartwright
  • Jacques Struwig
  • Robert Ward
  • Adam Gering
  • Shelley Gaskin
  • Jim Shute


  • Ryan Hoover
  • Michael Cranston
  • Josiah Thomas
  • João Fernandes
  • Petrus Theron
  • Michael Wild
  • Dale Emmons
  • Tim de Jardine
  • Alejandro Vasquez
  • Milan Babuskov
  • Chris Rowe
  • Nelson Melo
  • James Dawson
  • Toddy Mladenov
  • Daniel Torres
  • Chris Macke
  • Piotr Zuralski
  • Armand Konan
  • Brian Vogel
  • Paul D
  • Jennifer Sun
  • David Kolb
  • Sue Marrone
  • Eugene Granovksy
  • Will Blackton
  • Ryan Dodds
  • Brett Arp
  • Jason Cresswell
  • Edwin Orange
  • Daniel Bradley
  • Shawn Daniel
  • Priidu Kull
  • Patrick Desroches
  • Alex Lam
  • Paul Secor
  • Ryan Urabe
  • Madhu R.
  • Paul Ardeleanu
  • Ian Thomas
  • Manny Alarcon
  • Charlie Osmond
  • Christopher Smitley
  • Roshan H.
  • Barcy Cordrey
  • Matt Beaubien
  • Matthew Smith
  • Oscar Bueno
  • Tim Hoyt
  • Ian Gerstel
  • Taphon Maddison
  • John Bradley
  • Luigi Armogida
  • Dave Ferrara
  • Janus Lindau
  • Chris Mancil
  • TR Ludwig
  • Giles Thomas
  • Jason Cartwright
  • Michael Del Borrello
  • Joshua Rosen
  • David Karlberg
  • Marcus Schappi
  • Justin Furniss
  • Mike Hauck
  • Jess Bachman
  • Isaac Hill
  • Robert Haydock
  • Dan Sfera
  • Flaviu Simihaian
  • Kiko Cherman
  • Chandra Siva
  • Kasper Andkjaer
  • Zach Woodward
  • Chris Galasso
  • Chad Olsen
  • Michael Grabham
  • John Shiple
  • Gregory Hoffman
  • Chris Rickard
  • Eskil Steenberg
  • Jay Moran
  • Karim Sarkis
  • Michael Davidovich
  • Petru Marchidan
  • Sam Drzymala


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