I received some unfortunate news that my new startup would not be part of the latest i/o ventures class. We made it to the very last round but did not get over the hump. Given over 350 companies applied, making it to the last round is something to be proud of.
More than anything, though, this blog entry is about my disappointment at the mistakes I made the process that might have made a difference. I had at least one friend say "you can't blog about not getting picked, you'll have the sent of failure". Based on what I believe in, not doing this would be very hypocritical of me. And as for my sent, well, I'm a startup guy. You expect CKOne?
So here's my experience, and my mistakes. Hopefully you can learn from them.
To start, I'd like to take an opportunity to let you know the experience with i/o was a positive one. They've created something pretty special - a good group of forward thinking people, an incredible space and working environment, and a "vibe" that inspires confidence. If you are looking to work with a early stage investor, make sure to add them to your list.
Although there are several partners in the firm, I met with Paul Bragiel, who led the process. I honestly can't say a bad thing about the process or Paul, and enjoyed getting to know him - and not only because he's a soccer fan, which we need more of in this country. We even had to take a programming test, which was both exciting and nerve wracking. I had not done that level of algorithm work in a long time.
In one email exchange, Paul asked me specifically why I wanted to join someone like i/o,why not go at it alone, given my background and past experiences (successes and failures, for the record!). That's worth explaining, I think, as it will also shed some light on why I would write this blog entry.
I'm a huge believer in the startup community. Specifically, I mean places like i/o, 500 Startups, Y-Combinator, and other resources and groups that are more than just investment. Please understand, I have nothing against money (especially if you'd like to write me a check...), and I'm not running a non-profit. At this stage of my entreprenueral career, I'm most interested in getting involved with a group of people with various backgrounds, expierences, failures, successes, and points of view. I think it will continue my growth, and I'd like to think with my past, I have something to offer that community as well.
Specifically, what I don't want is to pretend that I've learned everything with one successful exit, and I can just go off and do this in a corner. I could, but it would not be rewarding or interesting, and I would not learn half as much as engaging in the community.
I've said it before - one successful exit is a point on a graph. When I look back over my career, I want a line. With an upward slope.
I think this comes from the challenges of my last Startup. Creating, growing, and eventually, successfully selling Health Hero to Bosch took a very long time. We were VC backed by more traditional VC funds. Although I had a great experience with our VCs overall, we were not part of a community per se, and I really don't believe the startup world was even that interested in community back then. We struggled to even meet or work with other portfolio companies. Going through the bubble-bursting in Silicon Valley made that more evident. There were days you literally felt like the only companies that were alive.
So, I'm writing this today to try to share some of the mistakes that I made in the process with i/o. You are quite a hypocrite if you say you want to be part of the community and want to give back, but then as soon as something negative happens, keep it to yourself. Someone else can learn from this, I'm sure of it. So, here are three things I should have done better in the process.
Here, I did one smart thing and a few bad things.
The smart thing was to monitor the partners, and as soon as they opened up some time on ohours.org, I jumped on it and drove up to the city for a twenty minute meeting. This was not just so I could re-hash my pitch in person - in fact, I didn't do that - but to get to know the people (can I work with them?) the space (can I be productive here?) and get the overall vibe of the environment. At least from my side, I hit it off with Paul, and left feeling pretty good about i/o, the people, and the working environment. And the coffee. There was honestly no better ratio of 2.5 hours of traffic to 20 minute meeting. It was totally worth it.
You need to be monitoring the people you want to invest in you, just like they will be monitoring you. Get to know as much as you can about them early and often, and any chance they present, such as ohours.org, take it.
Now, here's where I screwed up. After that meeting, I got very quiet. I really did not want to be annoying or badgering, so I only responded to emails and requests for information. I didn't reach out. This is particularly bad because I was reaching out to other people who had been in the space I am tackling, and their feedback helped me refine (pivot?) the idea to make it much more solid.
Specifically, I did reach out to one of the contributors to the TechStars book "Do More Faster" who failed in this space. Their feedback was like listening to someone coming back from a horrible, painful war - "I'm never going back there". I felt guilty even bringing it up with him - however, once I framed the core idea, they liked it. We just wrapped it in the wrong description, the wrong process. The problem was, I never communicated this to i/o. I never said "hey, this is what we learned in the month and a half since we applied."
It's fair for i/o to think I might not see how hard the original idea was going to be in a fragmented market,or that others had failed in this space; I'm a guy that hit my head against the healthcare market for a long time. And, of course, that was some of the feedback I got at the end.
I needed to be communicating along the way - not over communicating, but letting people know where we were. I'm going to continue to struggle with "not being annoying", but I could have done this a lot better. Also, what if they loved the original idea and we started to change a bit? I need to communicate more, push myself harder.
For the record, I'm not naming the person from "Do More Faster" only because I did not ask their permission, but their feedback was really helpful.
Visualization of Winning is good, but....
I grew up playing sports and played soccer at a very high level including through my college years, which meant you got more than a little sports psychology along the way. I tend to come from that school of "visualizing success" - I see myself scoring the goal or making the play. The problem is, sometimes it can be all consuming, and I became a little too fixated on being part of i/o. I didn't reach out to other firms, and I did not apply to the YC class (The YC application for this summer was due two weeks before the final word from i/o), because once we made the final round, I was visualizing scoring that goal, and knew this is what I wanted. Stupid mistake.
It's not going to kill me or the company, but I should have assumed the worst (visualize the best, assume the worst). That's lesson number one of any startup. I honestly think this one embarrasses me the most, as this was where I excelled getting Health Hero through the bubble bursting. I lost my edge here.
Know your (potential) Investors
I've talked about this before so I'll try to be brief (insert joke about me and brevity here). It's critically important to know your potential investors, what they are interested in, what their backgrounds are, what else they've invested in. You need to be reading CrunchBase, blogs, and profiles of the people you want to work with. At the Launch Conference, I specifically targeted Tom McInerney during the startup speed mentoring sessions because he had a connection to i/o; this is good.
However, neither Tom or i/o has a specific interest (based on past experience or past investment) in the general area I'm targeting. It's a bit like taking a healthcare company to Kevin Rose, or a online gaming company to RockHealth. This doesn't mean Tom, i/o, or Kevin (all people I'd love to work with) won't invest outside their comfort area, but most angels and seed funds want to invest where they feel they can help.
It's up to me, as the founder, to help paint that picture, and put it in context. I didn't do a good enough job of putting the idea in context for a group of people that literally hear at least a thousand pitches a year.
So I hope that is helpful to someone, and talking about this minor setback does not taint me with the sent of failure (I prefer "the musk of experience", for the record).
I strong urge you to check out i/o, TechStars, and 500Startups and other mentor/community driven seed funds and to give back to your community, and share your mistakes. Feel free to send this to people that might be going through an application process like i/o. We'll all be better for it.
Update: There's a really nice post about the TechStars community I just ran across, and wanted to add it here. From Highway 12 Ventures, here's "Contribution, Community, Mentorship"
Update #2: Humbled that someone in Brazil linked to this entry and wrote about the importance of hearing "no". I used Google Translate to ensure it doesn't say "This guy is a moron". At least, I hope Google got it right...http://empreendersaude.com.br/2011/04/04/por-que-receber-um-nao-pode-ser-melhor-que-receber-um-sim/
Update #3: This post was referred to by the Nokia forums, a blog post by another individual who got to then end with i/o ventures but didn't get over the hump either. It's very interesting, I'm fascinated by the African market, the role/size of Nokia, and even SMS. Something tells me there is a lot of value to understanding that more, it's not all iPhones and Android like here in Silicon Valley. The post: http://blogs.forum.nokia.com/blog/simon-botes-forum-nokia-blog/2011/04/02/startup-lessons-from-africa