Category: Start-ups

Understanding how investors benchmark different kinds of companies is all very confusing.  When I was an entrepreneur, I had no idea how this all worked.  How does a social app such as Snapchat get funded as compared to, say, a developer tools company like New Relic?  Obviously, their milestones and KPIs are very different.

In this post, I’m going to very simplistically dive into some high level categories and talk about how early stage investors consider each.  In my mind, I’ve divided companies into 4 categories. This is not an industry standard — this is just how I personally see things.  However, most early stage investors probably think along similar lines:

1. Super high-tech companies
2. High infrastructure companies
3. Free consumer apps
4. Everything else — aka companies that can make money immediately

There is a lot to say for each category, but there isn’t enough space to do so here.  (Disclaimer: all of this really only applies to software investors).

Super high-tech companies

I think a lot of software companies would like to think they belong in this category, but the reality is that most software products are pretty easy to build.  Even the vast majority of all those “AI” and “big data” and “machine learning” pitches that I see are not in this category.  Open source libraries (such as TensorFlow) make technology more accessible for less-skilled or self-taught developers such as myself to use.  A lot of previously “super high-tech” ideas are no longer that high-tech.

So what is in this category?  Essentially, my definition for companies in this category is that the technology is so difficult to build that only a small subset of people in the world can build it. As a result, this is a constantly moving target.  I suppose the way that I actually benchmark this in my head (just to be perfectly candid here) is by asking myself if a product is something that, as a mediocre self-taught developer, I could personally teach myself to build within a year. If the answer is yes, then it’s not really that high tech.  And it turns out a lot of ideas are just not that high tech.  (There are just a lot of things you can learn these days on YouTube and by Googling…)

Originally posted by genniside

As a result, the most important criteria in this category is the team.  To be more specific, I’m talking about the team’s backgrounds. The team is important in every category, but for super high-tech companies, it is extra important that it is the right team to accomplish the particular idea. Teams that thrive in this category have strong and often niche backgrounds in whatever it is they are doing.  For example, in the self-driving car category, most of the teams that stand out have previously done a PhD in a related topic, participated in the DARPA Grand Challenge for a few years, or have worked for a company (e.g., Google) on a self-driving car or vision-related project.  If you are competing in this category, your team’s resume, or pedigree, is really critical — more so than anything else.  You don’t see a lot of “self-taught” folks in this category.

High infrastructure companies

Traditionally, software investors have loved being in the software industry because the capital costs are low and because you can get something to market quickly.  However, a lot of software investors are now dabbling in fields that don’t necessarily have these characteristics.  Investors are pouring a lot of money into health and fintech companies even though many of these companies have a number of hurdles to overcome.  Getting licenses, FDA approvals, etc. are not trivial, but they are also barriers to entry for would-be competitors.

As a result, for these kinds of businesses, investors often don’t expect that companies can earn revenue right out of the gate because they may not be able to do so legally.  Similar to the super high tech category, investors often look at the backgrounds of the team very closely because understanding clearly what needs to be done is really important.  Has the team worked in the same area prior to starting the company?  Is the company already in the middle of overcoming regulatory hurdles?  Does the team know exactly what they need to do to go into business?  These are some of the most important criteria for investing in seed-stage teams.

Free consumer app companies

In contrast to the last two categories, successful founders of free consumer apps tend to come from any background.  Companies in this category include companies like Twitter, Facebook, Instagram, Pinterest, and Snapchat.  These are all companies that need a TON of users, great retention and engagement, and continued-fast-growth of user adoption in order to make money off of ad revenue later.

If your startup is in this category, you’ll need to craft a story around the following:

• Hypergrowth
• How this hyper growth is happening organically.  Do you have virality built into the product? How do new users find your product without your having to pay money?
• High engagement. Users spend a TON of time on your platform, app, or site. When Facebook first raised their seed round, investors were compelled by just how many hours per day their users were using their platform.
• High retention rate

In fact, the business model matters very a little. Most investors who invest in free consumer apps don’t particularly care about monetization at the early stages.  But you need to be growing FAST.  Really, really fast.  Investors just want you to keep growing quickly and retain and engage these people.  (Of course, you should also be able to articulate at least a high-level plan around future monetization.)

You’ll want to show that you are making progress on optimizing your free customer acquisition funnel (e.g., growing quickly) and that you are also improving stickiness over time.

The thing about this category is that it’s HARD.  I mean REALLY HARD.  Growing a business is already quite hard, but for free consumer app categories, there are a couple of things to consider:

1. Because you are not monetizing, if you are unable to fundraise, it becomes difficult to keep the boat afloat.

In the beginning, this may not be a problem — you can bootstrap.  However, once you get to, say, a series A or B level and have say 30 people on payroll, if you cannot raise, it’s really difficult to bootstrap a company of that size.

2. The fundraising landscape gets more competitive as you progress.

Generally for all companies, going from the seed to the A to the B rounds is difficult.  The number of series B investors is way smaller than seed investors.  It is even harder for free consumer companies because there are even fewer “free-consumer investors.”  In this category, you are competing with other pure-consumer apps who may be doing something different but are vying for the same consumer attention.  Certainly when it comes to competing for fundraising dollars, you will be benchmarked against other free consumer apps on user base and growth of that engaged user base.

“Everything else” companies

Lastly, there’s everything else.  The vast majority of pitches that I see tend to end up in this category.  These are products that can and should generate revenue right out of the gates in both B2B and consumer ideas.  Obviously, there are a LOT of verticals within this category that are looked at very differently — everything from e-commerce to B2B SaaS to marketplaces.  What specific things investors look for very much depend on the particular vertical and business model, and that is a topic for many more blog posts.  But the one commonality amongst all startups in this category — regardless of vertical — is that most investors would really like startups to start monetizing right out of the gate.

Team backgrounds matter in the “everything else” category but not nearly as much as in the first two categories because anyone can start a business in this category. Instead, execution and traction are often a measure of the team rather than their resumes.

I’ve outlined these categories because it can be rather confusing as an entrepreneur to know what you need to achieve in order to get funding.  On one hand, you may see friends in fintech getting funded when they have zero traction, and on the other hand, if you’re in e-commerce, you may need to hit $1M GMV runrate to capture that same investor’s attention.  It just doesn’t seem to make sense.  Hopefully this post illuminates why investors think along these lines.

What product you should build as an entrepreneur should, in large part, be based on your runway.  For example, very few entrepreneurs could have built Tesla because most entrepreneurs are neither super rich nor able to raise tons and tons of money right out of the gate.  This seems pretty obvious.

Everyday, I see entrepreneurs trying to build products that are way out of the scope of their runway.  For example, if you are trying to build a new type of email marketing tool, you will need to have a completely different approach from what MailChimp does because you will not be able to afford to build out all the features of a full-fledged traditional email marketing system.  It would take years to go head-to-head with their features.  Similarly, if you are looking to build out a CMS, you should not even consider trying to incorporate all the features that Weebly or WordPress have because they have developed features that took years to build.

Now, does this mean that should not build a product in an existing space at all?  No.  But, it means that you need to really think carefully about how to build a simple and quick-to-build product that will compete in an existing space through strong differentiation.  SendGrid (500 Portfolio company) is a great example of that. They didn’t build out (at first) all the typical features of an email marketing solution.  They were an API that sent mail.  That’s it.  No interface, no WYSIWYG features.  And that was enough.  They took one aspect of a traditional email marketing solution and blew it up.  Hubspot, too, in the beginning, was just focused on helping people write content.  Back then, they didn’t have emailing features or a CRM or anything.  This all took years to build.  The initial version of the product was based on the hypothesis that they could build a simple tool that would ride on the new wave of content marketing.  It’s only now that they compete in the traditional marketing automation space.

Don’t use most of your runway on product development

One of the biggest mistakes I see entrepreneurs make is that they spend too much time on product development.  Part of the reason is that the scope of products are often far too complex for the first iteration.  It is much better to take just one feature and blow that out of the water.  Make it super simple and easy to use, and do this within just a fraction of your runway.  If you’re a first-time entrepreneur without much easy access to capital, you should be shooting to get this done in < 2 months.  If you can’t get it done in this time, your scope is probably too big.

There are lots of big problems that small features can solve.  This is often easiest to find in products (of existing dinosaur players) who have built up bloated software.  Craigslist is a good example.

Take one of these large bloated products or companies, and write down a full list of every single feature or thing that the product achieves.  From this list, there are often several features that could be standalone products in themselves.

Find balance between painting your vision and explaining your current product

For all these reasons, I hate it when VCs say, “Is this a feature?”  Yes!  In order for you to have survivability in the beginning, your product really should feel like just a feature.   But it doesn’t have to stay that way.

When you pitch your company, it will be very important to walk a fine line between conveying your vision and how things are today.  Explaining the ins and outs of your current product is going to be un-inspiring, but talking too much about the future will make it seem like you’ve done nothing, or worse yet, an investor will think you’re lying if he/she finds out what your product actually looks like.

When you talk about your vision, you should be explicit in mentioning that this is how you see the future and where you see your company going.  Make sure to tie your pitch back to where you currently are and the steps you need to tackle to fulfill your vision.

Off-topic post today on my own productivity.  Last night, I gave a fireside chat, and a question came up about how I balanced running my startup LaunchBit while having and raising a child.  It wasn’t easy.

More generally speaking, having said child forced me to improve my productivity a TON.  It’s far from optimal, but I track and analyze like crazy so that I can continue to get better.  Here’s how I do it.

My schedule today

Laura Vanderkam, author of I know How She Does It, suggests thinking about your time in week-long blocks of 168 hours rather than 24 hour days.  I love this approach because days are too varied to try to optimize.

This is how I typically spend 168 hours these days (this definitely looked different when I was running LaunchBit):

• Sleep: 50 hours (varies as an insomniac)
• Work: 45 hours
• With my kid: 20 hours
• Commuting: 15 hours
• Household chores / personal hygiene: 10 hours
• Personal branding / side projects: 7 hours
• Gym / pool: 3 hours
• Personal email / informal mentorship: 5 hours
• Socialization / goofing off / wasting time / reading: 13 hours

= 168 hours

A lot of people overestimate how much they actually work.  It just feels like you’re working a lot because you’re checking one-off emails all the time.  When I went to actually map out how much work I was doing, it’s not a lot at all.  I spend 40 hours a week in the office and another 5 either at events, checking email, or preparing for the week.  I may be thinking about work at other times while doing other things, but that doesn’t get counted here.

I strongly believe in short commutes of 20 min or less.  Coincidentally, from work to my home is 15 minutes door-to-door, but my commute ends up being super long because my gym is way out of the way. This is something I’ll rectify in the coming months.  I also included driving time to social activities on the weekend in my commute category.

I go to the gym religiously now even if only for 15 minutes (you can lift or row in 15 minutes).  It helps me with my lifelong insomnia, makes me more productive during the day (and not tired), and makes me need less sleep to be productive.  My biggest regret is is not exercising religiously throughout my 20s.

I get a lot of requests for meetings asking for advice on various things (startups, list building, ads, fundraising, etc) – I ask a lot of people for that too, so thank you to all of my mentors who have helped me grow professionally.  Unfortunately, there are just not enough hours in a week to take all those meetings.  I still do them because I believe in giving back and showing gratitude for all that I’ve taken from others.  One hack that I’ve adopted from people like Noah Kagan is that if I’m out of mentorship slots for a given time period, I ask people to move the conversations to email (or wait for a couple of months to talk over the phone).  I ask people if there are specific questions that I can answer over email.  It turns out that 90% of the time, no one asks anything specific, so I’m not really sure why people wanted to meet?  Although in-person is nice, I firmly believe that you can start building a relationship with people online.  Some of the people I most respect in this industry are people I first had lots of online conversations with before ever meeting them in person.  You don’t need to do coffee meetings all the time – there just isn’t time for that!

Compartmentalization

I compartmentalize a TON:

Multitasking:

I generally don’t believe you can do anything meaningful while multitasking.  Maybe some people can, but I can’t.  I never check FB or Twitter except for texts and IMs while at work.

BUT, I will combine things that don’t need loads of thought. For example, the other day, one of my good friends was in town. I wanted to see her, and I also needed to go shopping.  Boom: my friend and I went shopping.

30 min meetings:

I set meeting blocks for 30 minutes.  You can always fill up an hour-long block, but I’ve found that if everyone is prepared, you can usually cram everything that would’ve taken an hour into 20-30 minutes.

Manager vs Maker schedule:

Paul Graham has a great article on maker vs manager schedules.  The gist of that article is that it’s very difficult to task-switch.  You can’t take a meeting and then immediately go into building stuff productively to then be interrupted for another meeting later.

For that reason, I cram all my meetings back-to-back.  A typical Monday for me has 10-12 meetings back-to-back all day.  It’s not easy, but it frees up time the rest of the week.

The rest of the week, Tues-Fri, I have 4 hour “no-meeting” blocks so that I can take action on decisions from meetings or other work (either strategic or operational) that need to be cranked out.

When I was running LaunchBit, I did something similar.  Instead of taking meetings with entrepreneurs, those meetings were with potential clients.  It was important for me to do all those meetings back-to-back while also having large blocks of time to tackle meaningful projects.

Tools I use

These are some of my favorite tools to help me keep my productivity high.

Inbox Pause (by 500 Portfolio company Baydin):

I’ve adopted Tony Hsieh’s Yesterbox system, which basically means that I don’t read emails that arrive today.  Inbox Pause holds these emails and delivers them to me tomorrow.  With Inbox Pause, I’m able to get off the hamster wheel of email.  I only have to respond to yesterday’s emails, and I can bulk process them.  I end up archiving about 50% of them in one-fell swoop instead of one at a time.  Then I hammer out quick responses to about 40% of them.  I can usually do this in an hour.  The remaining 10% need a lot more work. They could be blog post edits, something to read, introductions, a doc of some sort to create, something to seriously think about, etc.  This 10% could take 1-2 hours a day.  I will peek once or twice a day at the folder that holds all the emails that came in today to see if anything is urgent.  The majority of emails usually can wait a day, and that’s OK.

In the tech industry, we have this weird notion that every email is urgent and needs a response RIGHT NOW.  When I was at Google, it was common to see lots of email conversations fly back and forth at midnight or 1am. Many of them were not urgent issues.  I think what is really happening is that there is this underlying culture of, “You should email a ton all the time so that everyone sees that you are doing work.”  It’s the modern facetime.  We should measure success by results, not by time.

Calendly:

This helps me schedule meetings automagically.  I used to have lots of back and forth emails about scheduling.  Now, I just use Calendly and let other people schedule a time that works for them and that fits my open slots on my calendar.

Canned Responses in Gmail:

For emails that I tend to send over and over, (e.g. why a company is too early to raise money now) I have created a templated response via Gmail’s Canned Responses feature.  Super useful and a free add-on.

Reducing phone usage & being present

Being present is hard for a lot of entrepreneurs, especially with your phone always buzzing.  I’ve found over the years that checking my phone frequently is actually completely inefficient unless there’s an emergency.  Answering emails in one fell swoop (see above) is a way better use of time than answering emails on a one-off basis on my phone.  Taking action on your phone is probably the least productive thing you can do even though it seems like your phone should make things more productive.

Even if I’m on the go, I like to use my phone to tether to my computer and hammer out work or process email in bulk.

Optimizing productivity

I think it’s too much work to create weekly logs as recommended in the I Know How She Does It book, but I try to keep a sense of how many hours I’m spending in different areas so I know what to change.  For example, I’m already working on changing my commute situation, which should probably cut my commute time in half, freeing up a few hours.

Like everything else, you can’t really get better without measuring first.  So, while there’s a lot that I could improve in my schedule, mapping out my time is a really helpful first step for me.

What do you do stay productive and balance your life?

 

Cover photo by rawpixel on Unsplash

My colleague at 500 Startups pinged me last night with a pitch deck from one of our portfolio companies gearing up to raise a post-seed round.

Gawd it was TERRIBLE.  And embarrassing because they are one of our companies.

Unfortunately, their deck was representative of what I see in about 99% of email pitch decks I receive.

What was wrong?

I couldn’t understand the key components of this business in < 10 seconds.

The disconnect between entrepreneurs and investors around pitch decks is that entrepreneurs often think that investors will spend a few minutes looking at their decks.  In reality, I’ll spend 10 seconds, at best, on an email deck because all I want to know is whether I should schedule a meeting.

This is why I say over and over: you need multiple pitch decks. You’re selling different things at different stages of the fundraising process (e.g., selling the idea of just doing a pitch meeting with an investor vs selling the opportunity to move forward and invest in your company).

All I really want to know in 10 seconds can be summarized like this:

• Team: what are the notable accomplishments and domain expertise of the founders?

• Problem: what is the big problem you’re solving?

• Solution: how are you solving it? If you’re in a competitive space, how is it differentiated and 10x better than alternatives?

• Traction: what are the key performance indicators and how do they track over time? Please don’t include 10 KPIs – the definition of “key” is just that. Only 1 or 2 key indicators are important.  This could be your monthly revenue.  It could be DAUs.  It could be number of email subscribers. Or whatever.  Be selective here. Also, be sure to own up to your traction.  A lot of early teams try to hide it.  I always ask what the traction is even if it’s not included in the deck before taking a meeting. There is no reason to leave it out.

• Market: I personally care less about this in an email deck because I know I will need to think and digest what the “true market” is only after taking a meeting.  However, other VCs see this as very important in qualifying whether or not to take a meeting.  When you do market sizing, make sure to show visually what niche you’re starting in and what the peripheral larger markets are.

That’s it.  Simple text.  Big font.  Black font with white backgrounds makes for faster reading.  Bullet points and not paragraphs also make readability better.  If a bullet point is too difficult, show it graphically.

After you create an email deck, the best way to test whether you’ve done a good job is to show it to someone – anyone – who knows nothing about your business for 10 seconds.  Then, have him/her rattle off information about the five points above and see what was missed.  If he/she cannot do this exercise well, you know that you need to go back to the drawing board.

You have just 10 seconds to get an investor meeting – make your email deck count.

Dear elizy: I started a company in school with two co-founders.  Let’s call them Ada and Bob.  Ada is my professor. We are using her lab, and the company is based on her research, though the IP is assigned to the company.  Bob and I were her students and will be graduating this year.  We plan to incorporate and work on this company full time, while Ada will work on it part-time, as she is a full-time tenured professor.

We are trying to decide how much equity to allocate to each person.  I would like to split the equity equally, since it seems only fair.  But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool.  She argues that we are using her facilities and years of her research / work / experience, so therefore, she must get more!

But, we’re going to be doing all the work!  What would investors think of either arrangement? What would you suggest we do?

– Lab Woes in Austin

Dear Lab Woes: Unfortunately, this happens quite frequently with research that gets spun into companies.

I do you think your professor should get some recognition as a contributor, but since she will not be working on the company full-time, 33%-50% is WAY TOO MUCH.  Often professors overestimate their scientific contributions.  Honestly, what you have right now is a project, not a company.  You have to productize the research, build partnerships, sell to customers, etc. – presumably none of which you have done pre-incorporation.  Although there are no set numbers, your professor should be considered an active advisor or a co-founder who has left rather than a full-time co-founder.

First off, whatever you decide, you should implement vesting. At time of writing this post, standard vesting practices in Silicon Valley are 4 year vesting with a 1 year cliff.  This means that you earn your stock ownership linearly over a period of 4 years.  After 1 year, you earn 25%, and thereafter, you earn the remaining stock on a monthly basis.  If you leave before the completion of the first year, you own zero stock.  These days, I’ve sometimes seen 3 year vesting with a 1 year cliff, which would also be OK.  You definitely want everyone to earn his/her stock.

Secondly, even if you are OK with either of the arrangements you have proposed, it is a major red flag to investors to have much of the cap table locked up with dead-beat co-founders, professors, or advisors who are not working day-to-day on the company.  You will have tremendous difficulty raising money with this kind of cap table, and investors will make you restructure it.  To have so much stock locked up that could otherwise be allocated to serious contributors (including future employees and co-founders) is a bad sign.  In a startup, you don’t have many things to entice people to work for your company, and stock is one of those few things.

You will all be diluted considerably, so even if you are OK with 20-33% stake now, that is not what you will actually end up with if you raise a few rounds of funding.  You need to make sure that you are incentivized enough to work on this business full-time.

What would I suggest?  If you treat Ada as a former co-founder or active advisor, you’re really looking at, say, the 2-15% range.

• 15% would be incredibly generous!
• Super active, hands-on advisors are typically granted < 5%.
• Non-active advisors are typically granted < 1%.
• Former co-founders who have contributed about 1-2 years of vesting typically end up with ~10-15% equity since they didn’t vest their full potential.

An active former co-founder has contributed to the product, sales, BD, or something substantial to the company on a day-to-day basis for at least a year.  To me, it sounds like your professor is much more akin to an active advisor.

This will be a terribly difficult conversation, and you may need to move labs immediately.  But, if you want to raise money from investors, you really need to address this.  Additionally, you may also be able to use this fact as a forcing function for change.

Good luck!

It’s super annoying when investors say your market size is small.  So, you do all this extra research – you look for Gartner’s excerpts and articles about projected market sizes, etc. – and you come back with research to argue that your market is much bigger.

Unfortunately, it’s ineffective.  The investor passes. And you walk away thinking he/she’s a dimwit.  This could be true, but it’s important to understand what is really happening here.

First, stop with the research.  It won’t help.

Here are the actual reasons why an investor passes when he/she says your market is small:

1. You are “in-between” multiple markets and are seemingly not addressing ANY market. 

Market trends change a lot, and sometimes a new market appears in between two existing ones.  However, because your company is early, investors don’t yet know if that market between markets will exist.

A good example of this is 500 Startups-backed Intercom.

When I first met them (when I was an entrepreneur), in the back of my mind, I was thinking, “Gosh, what are they actually addressing?  It’s a weird mix of customer service and marketing and sales.”

It turns out that a few years later, marketers were looking to build tighter rapport with their customers, and this tighter rapport really is a weird mix of marketing, sales, and customer service.  Now the company is doing really well! But when they first started, this was not clear at all.

In a situation like this, I commonly see entrepreneurs try to increase their market size by computing and adding the market sizes of all adjacent markets (e.g., the market size of marketing automation plus sales automation, and customer service software).

In fact, what you really need to do is the opposite.  Pick just one market – say, marketing automation – and talk about the trend towards personalized marketing.  What helps with this is to go squarely head-to-head with an existing dinosaur product and say that you are going to overthrow that incumbent because of a, b, and c reasons.  For example, Marketo sucks because you need to spend 10 days learning their software only to spam non-personalized emails at your customers; we solve this by making 2-way communication easy within products themselves, which is the way of the future.

2. Your product / business does not sound differentiated enough / the investor doesn’t know anything about the space to discern differentiation.

Companies in certain verticals tend to have this problem more (e.g., ad tech, security tech, fashion, etc.).  Just as I, as a software investor, know nothing about solar panels or pharmaceuticals, not all software investors know most verticals well enough to understand what you’re talking about.

If you don’t need specialized knowledge to be able to see your company’s differentiator, then you need to practice and test your messaging on lots of people.

However, if you do need specialized knowledge to understand your differentiator, then you need to find the right investors to talk with.

A good rule of thumb here is that if you cannot visually show your differentiator to a random person on the street, you need a specialized investor.

In the old days (i.e., 5 years ago or earlier), it was difficult to know which investors to approach because portfolios were not always online and there wasn’t a search engine for investors.  These days, AngelList can help you filter investors by category and look for investors in your space.

Now, the really hard part is if you are addressing a category that just doesn’t have that many investors.  Fashion and beauty, for example, is one that doesn’t have a lot of investors, though this is something we are actively changing at 500 Startups.  One of the best ways to navigate this is to talk to lots of entrepreneurs in your space who are further along than you.  Ask them for intros to their investors.  Ask them to meet other specific people in your space.  This may be a lot of work, but it is absolutely necessary.  Form tighter/deeper relationships in your space.

3) An investor doesn’t have conviction in you/your team.  

Lastly, a market size is “too small” is unfortunately often an explanation of what an investor thinks about you/your team.

This is especially true if you’re in a crowded market.  If you’re in a crowded market, you not only need to convey the point above well, but you also need to convince people that you’re a really solid leader.  Unfortunately, because of pattern matching, a lot of talented leaders who do not fit a typical mold really struggle with convincing investors of this.

Entrepreneurs who are introverts, of non-majority races, women, etc. tend to not fit these patterns and have to go above and beyond to convince an investor that they can win in a crowded market and that they have the right leadership abilities to win.

Keep in mind that “win” in an investor’s mind is not selling for $30M.  An investor is hoping its winners do 100x+ (obviously, this doesn’t happen most of the time, but this is what investors are looking for).  They are thinking about how you will become a $100m-$10B company, and at the seed level, the only thing they have to believe is if you and/or your team is the right person or people to get to this stage.

I’ve previously written about how to write cold-emails and why to cold-email people like Steve Ballmer.  But, how do you find Steve Ballmer’s contact information?

1) Use Rapportive

Cristina Cordova, who does Business Development at Stripe, writes about using Rapportive to guess a person’s email address.  Having tried this trick a number of times, it’s quite effective.

Ok, so let’s use this method with Steve Ballmer.  After a bit of quick guessing.  Steve_Ballmer@microsoft.com, steve@microsoft.com, etc, I hit gold.  But, let’s say this method didn’t work.

2) Message via LinkedIn 

Even using the free version of LinkedIn, you can often message people without being a first connection with them.  If you know who you want to email, check out his/her LinkedIn profile.  Find the groups he/she has joined.  Join those groups.  You can very often message people who are in the same group.

Even better is if a mutual contact feels comfortable introducing you over email or via LinkedIn.

Applying this technique to find Steve Ballmer’s email address, it appears he has 0 contacts on LinkedIn, so we have no known friends in common.  And, he does not belong to any groups.  So this method was a bust this time.

3) Search through online alumni networks

If you attended a school that has an online alumni directory, you can easily find contact information of alums.  Didn’t attend Harvard or Yale?  Beg and plead with a friend to help you look through his/her account.

Applying this technique to Steve Ballmer, who attended both Harvard and Stanford, I was able to find an email address and a phone number for him (not shown on screen).

But, let’s say we didn’t.  Moving on…

4) Search on Google

When in doubt, guess on Google.  These days, email addresses of high-level people, can be found on the web.  High-level people will often give presentations and post their slides on the internet.  It’s common to post contact information on the last slide.

But, beyond that, if a company has ever had a problem or an issue (all companies do), high level executives will often post their email address in forums asking unhappy or confused customers to email them.

You can use the same technique that Cristina uses with Rapportive to guess email addresses on Google.  Let’s guess Steve Ballmer’s email address.

You can see that he gave out his email address to the public at a Microsoft event on 2007.

So, 3 of 4 of these methods have successfully given us Steve Ballmer’s email address.  But, what if we still couldn’t figure it out?  You may argue that Steve Ballmer has a much greater web presence than perhaps an executive at a non-tech company.  This leads me to my last point.

If all else fails, guess

If we could not find Steve Ballmer’s address, I would try to look for other employees who work at Microsoft to see if there are patterns in the structure of their email addresses.  A lot of companies use a standard pattern such as firstname.lastname@company.com or firstname_lastname@company.com or firstname@company.com etc.  I would then take my best guess and send an email to that address.

But, I would NOT email 7 different guesses like this:

This cold-email I received looked so desperate!  If you guess incorrectly and it bounces, you can try again with a different guess.  And, even if your email goes to the wrong person, it can still make its way to the right person.  I once guessed an email address incorrectly, and recipient replied to me and included the right person I wanted to reach on that email.

What methods do you use to find email addresses of people you want to reach?

In my last post, I talked about how to write an email requesting an investor intro, but I didn’t talk about whom you should ask.

tl;dr – in order, the strongest referrals to investors come from:

1. Portfolio founders who have raised recently from that investor (i.e. not enough bad stuff has happened at their company to make the investor disillusioned w/ the entrepreneur) OR past portfolio founders who have made the investor money
2. Investors in your company
3. Personal connections
4. Other investors / founders / former colleagues of theirs (note: exercise caution here)

When I was raising money for LaunchBit and I wanted to reach investor John Doe, I used LinkedIn to see who knew him.  Very often, I was a 2nd degree connection to John Doe through a number of people including:

• Investor Billy Bob – someone I’d just pitched; jury still out on whether he’d fund LaunchBit
• Entrepreneur Sarah Smith – someone I’d known for years who is really nice
• Entrepreneur Erlich Bachmann – a well-known entrepreneur whom I’d met once at a startup party
• Investor Christine Tsai – an investor in LaunchBit whom I’d known for years and even worked together with at Google
• Entrepreneur Jane Do – an entrepreneur whom I’d met a couple times before at various startup circles and had just raised money from John Doe

Who is best to ask for a referral?

Obviously, this situation wasn’t super ideal.  In an ideal world, my best friend would be a super successful entrepreneur who would know John Doe and could make an intro, but when you’re asking for potentially hundreds of investor intros – yes hundreds (more on that later), this is not going to be the case a lot of the time.

The seemingly obvious person here is Christine Tsai because she’s known me for quite a while and also invested in LaunchBit.  I could ask her.  You certainly should leverage existing investors.  So, I’d ask Christine.

Investor Christine

But, Christine is also an investor and pings potential co-investors all the time about deals, so what is the weight of her recommendation?  In fact, to a certain extent, it’s her job to sell her companies to downstream investors…so will LaunchBit stand out to John Doe amidst all her other referrals?

I should probably also get a second intro in parallel in case Christine takes a long time to do this intro AND as a way to stand out once her email hits John’s inbox.  If he sees a couple of people mentioning my company, that would remind him about us.

Investor Billy Bob

I definitely shouldn’t pick Billy Bob.  Even though I’ve talked with him most recently, I don’t know yet what he thinks about LaunchBit.  I don’t know if he’d be an advocate, and I’m not sure if he’d recommend us.  In fact, if he and John Doe were to discuss the deal, they could both end up talking each other out of it, as often happens when investors get together.  Ideally, they should come to their own independent conclusions about my company.

Entrepreneur Sarah

I could ping Sarah, since she’s always been super helpful and nice to me.  But, I should find out first how she knows John.  Did she pitch John and did he say no to her company?  Just because John and Sarah are connected via LinkedIn, I’m not sure what John thinks of Sarah, so a recommendation from her may or may not be a positive signal.

Entrepreneur Erlich

I haven’t talked with Erlich in years and only met him once at a party.  Like Sarah, I don’t know what John thinks of Erlich and vice-versa.  Since Erlich is successful, chances are that John respects him professionally on some level.  However, I’ll need to pitch Erlich and sell Erlich first on LaunchBit before talking with John, and since it’s been years since I’ve spoken with him, that might be tough.  Erlich is probably not my first go-to person after Christine if I have a choice, but he could be a last resort.

Entrepreneur Jane

Finally, there’s Jane, who just raised money from John.  Based on that signal alone, I know that John thinks highly of Jane and is still really excited about her business.  Like Erlich, I would need to sell Jane first on LaunchBit so that she could sell John on meeting with me.  Note: you are always selling – even if someone isn’t an investor!  They can often help you sell your company to investors or other great contacts.  Even though Jane isn’t famous, she’s a much better person to get a referral from over Erlich because I already know that John not only respects Jane for her work, he’s so committed that he invested in her work.

Conclusion

In this situation, I would ping Christine and in parallel, also ping Jane to discuss with her briefly about whether she thinks it makes sense for me to connect with John about LaunchBit and whether she can help me with that introduction.

Getting investor intros is a game of hustle that often takes a long time.  Approach the best people who can help sell your company and whom an investor thinks highly of.  Approach multiple people.  And always be selling – even to people who are not investors.