Category Archives: Start-up living

Thoughts, experiences and musings on the broad subject of start-up companies

Experiencing the start-up slam dunk from both sides of the hoop

The tall guys lope out onto the court and warm up a bit.

It starts out a lot like the “bad” day I wrote about some time ago.  I call a venture capital analyst on whom I had performed a Lazarus job (his firm had said no but I revived him through copious applications of  enthusiasm, progress news and boyish charm).  It starts off well, until my now finely tuned “BUT  Detector” begins gently purring, then softly wailing.

Note – a “BUT Detector” is a vital tool to the entrepreneur.  This device allows you to sit placidly through extended outpourings of flattery in the full knowledge that the word “BUT” is coming.

Example:  “We are completely overwhelmed that with only the meager resources of an average kitchen drawer and using funds limited to the change recovered from the back of the couch, you have been able to achieve a repeatable form of cold fusion AND the cure to cancer, BUT we are not going to invest because…”

The  “I think you have a good idea and one of the very best plans I have ever read, but we can’t invest in you because we have already invested in 3 B2B vertical markets” is enough to brighten my day.  Especially since the guy seems very keen on what we are doing and wants to keep in touch and has even invites me to come into the office some time to “chew the fat”.   Believes in marketplaces enough to be taking representatives from two of their 3 marketplace companies to the NetMarketmakers conference in California.  Honestly, I do understand – they want to give other VCs the chance to share the opportunities.  OK, that’s fair. Hmmm.

Then I call the analyst for a German VC who had spent 5 (count ’em, FIVE) hours in our office mostly talking at ME about all sorts of things but not really learning about me, the company or what we are doing.  He has read the plan, says he spent most of the intervening week thinking about nothing else.  “Really excellent plan – one of the best I’ve ever encountered”, he declares.

The BUT Detector shrieks like the referee’s whistle.

“But we can’t invest in you because (a) you don’t have they key board members on side and (b) our fund is running out of money”.   That is a little like asking the prettiest girl in school out on a date and having her reply that she would LOVE to go with you, but unfortunately (and despite clearly being at the peak of good health), she has a terminal disease and expects to be dead by Friday night, though if she should survive, perhaps another time.  A serious conversation killer.

There I am, staring upwards through the hoop as the slam-dunk comes through.

I do, however, have to say that from start to less-than-perfect end, the “but we are not going to investment” decision process took just under two weeks.  If only everyone would decide so quickly, I could save a mess of space in the “In Progress” section of my file drawer.

I bury myself in work and it was soon 9 pm.  Time to go home.  But first,  I try again the phone number for a guy I hope to contact.   He is the founder and former president of a mega trans-European logistics company.  He and two members of his board walked out of their company a couple of weeks ago.  One of them is referred to in the press as “an industry golden-boy”.

I push my heart back down my throat (hard to talk with it in my mouth) and dial.

Mr. Former President answers.   I make the ‘this is a thumbnail sketch of what we are doing, is this the sort of thing that might be of interest to you?’ opening, and he replies, “It might be, but I expect I am too expensive for you”.  With a newly developing sense of cavalier sureness,  I pose the question, “Would I be correct in thinking that in your previous position, you justified your doubtless substantial salary on the value you brought to the company?”  He replies in the affirmative.  I continue, “So why should it be any different with this company?”  He is suddenly more interested.  I talk.  He talks.  He agrees that it would be a good idea to explore this one further.

He is coming in to meet with us on Thursday.  Who knows – we might just be about to pull in the “deep industry knowledge” and street cred we need to get funded.  Maybe parachute in a whole team of golden boys!

Suddenly, I am looking downward through the hoop as the ball goes through.

The crowd is going wild – the noise is deafening.  Of course it could just be the “BUT Detector” learning to make a new sound, but just for now, it sounds pretty fine.

* I wrote this in late 1999, when I was fundraising and CEO-hunting for a logistics start-up, Translogistica. Ultimately, Mr Former President didn’t join us, but he introduced us to the “Golden Boy”, who almost-but-didn’t-quite join us but did actually parachute in a team of golden boys and girl who became employees 2,3 and 4 (I was employee number 1).

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Start-up Competition – The Bogey Man Called Today

The bogey man called today. The guy you hope isn’t there, though you know he really is but if you just believe hard enough, you may be able to make it back to Kansas (and if you are REALLY lucky, you can make it there without the yappie little dog).

The guy who called wanted to know what we were doing, because he and his team sound like they are doing what we are doing – creating a logistics internet marketplace.  He talked the swaggering talk about the heavy hitters on the team, the $3 mil VC round they are about to close, and the “fact” that they are in the “number 3 position in the UK” in this space. He bragged about their focus and the “fact” that they were already getting quotes from software houses and had signed up some big-name clients. He spoke of their total commitment to the idea that if they can’t be the number one or two in the UK, they would pack up and quit. That said, the founders were not logistics heavies, and the team has no technical expertise.

So he wanted to know what we were doing. Giving away far less than he did, I made it clear that we have a different geographical perspective, that we have a cool design that will transcend many of the barriers to entry posed by the realities of the internet in Europe, and that we have some heavy hitters on board as well as a growing band of line staff with all the right stuff.  In short, I matched his swagger and I raised him with a brag or two.

He asked whether there might be scope for merging efforts and increasing rate of movement to market. I said, maybe. But he seemed almost as concerned about us (beneath the swagger) as we are about him. I said I would discuss it with my colleagues and we might well talk later in the week.

When I discussed it with my colleagues, they rolled with the punches and said, after some thought, discussion and consideration, “Stuff it – let’s fight ’em. Tom, don’t talk to them at all”. Being deep down a practical soul, I applauded their resolve, but said of course I would talk to them. The bogey man clearly liked to talk about his company and their plans and achievements, so I WILL talk with him, find out what I can and then defer for the time being. If we are still struggling to get money in 6-8 weeks or so, we may open the dialogue. But since they don’t ACTUALLY have the money yet, his claim that they are “about to close the funding deal” may have no more substance than me claiming that we have several VCs clamouring to talk to us.  Which we have, but talk, as the saying goes, is cheap.

So. Another player enters the radar. If they stick to the plan described to me, we have a sound opportunity to mop the continent with them. Assuming that we get the money, of course. Otherwise, we just mop the floor with our business plan. There are few prizes for third or fourth best, so we better do better.

Competitors are out there – some under the radar, some above it.  We are trying to treat them with great respect – learn about them and listen to them.  Of course we are afraid of them – but fear is the thing that makes you keep going as fast and hard as you can.  They may actually be better than you – but if you get their target customer first, they have to take YOUR customer away, which is always harder.  And if you are doing it right, you may actually be better than them.

We know we are…

* I wrote this in mid 1999, whilst trying to launch a B2B internet logistics marketplace, Translogistica. A few months later, or in internet terms – a lifetime, both my company and the bogey man’s got funding. We ended up doing quite different things and ironically, as neither company exists today, it is difficult to say which “did it right” or even “did it better”.  What am I saying – of course we did it better!

David has a Good day with the investor Goliaths

Yesterday was what we in the game of seeking investment call a ‘Good’ day.  It wasn’t a ‘Great’ day, in that we didn’t wake up to that glorious golden sunrise to be told that the Venture Caps have deemed there is life After Limbo and here is a cheque to feed the starving masses and thou shalt go forth and make it multiply.

It was only a ‘Good’ day.

On a ‘Good’ day, a potential investor tells you that you have a great idea and the business model is viable, the value proposition clear, the path to market sufficiently well-defined, the market sizing credible, the revenue targets impressive and the sum being sought eminently reasonable (nay, even a bit conservative and you should credibly ask for more). They tell you that this is exactly the type of space in which they want to be and that there is a gap in their portfolio that this would fill admirably and that their industry analysts have had a look and see the light.

But this is only a ‘Good’ day.

On a ‘Good’ day, the potential investor tells you that they are not going to back you. They tell you that although they would love to get behind a project like this, they don’t have sufficient confidence in your management team, and think you may lack a bit of focus in your marketing strategy. Because by now you can quote the plan and cite page numbers from memory (and add massive value by way of additional information carefully pruned from your tenth draft of the plan and held back for just such a discussion), you expand on your plans with conviction and flourish, stand firmly before the Goliath with only your words as  stones and a business plan as a sling. The interest of the investor is re-awakened. You impress them with the forcefulness with which you stand your ground. You see the clouds beginning to break…

But this is only a ‘Good’ day.

Your plan demonstrates that you have the right team to form the company, design the product and drive the development of an offering that will satisfy the requirements of a demanding and discerning customer base. Your plan spells out that you have maturely examined your abilities, understand your limitations, and intend to recruit the power team necessary to grow the fledgling company to the world-dominating, market-saturating leviathan of which the investor dreams. Your plan even shows that there is ample allowance of time and money to make this quite practical.

On a ‘Good’ day, you convert a flat and somber “No thanks” into a jovial potential investor who has agreed to send you the names of some power-managers who you could attempt to attract, with the caveat that of course they will be told in advance that the potential investor has declined to back you. You find them saying enthusiastically that if you can somehow get your product built and some customers on board, they would be interested, even enthusiastic, about funding the expansion phase. They, and the other largely silent voices at the end of the hollow sounding speaker-phone, wish you the best and implore you to contact them as soon as you get your first injection of funding.

On a ‘Good’ day, you put the phone down knowing you have fought the good fight and have only lost the battle and not the war. You have turned an adversary back into a potential ally.

But then you look in the mirror and suddenly recall the wonderful Monte Python scene – with severed arms and legs you are shouting at your opponent, “Come on, its only a flesh wound. Come back – I’ll bite your legs off!”.

Gradually it sinks in that a ‘Good’ day is really an awful lot like a ‘Not so Good’ day.

At the end of a ‘Good’ day, we in the game of seeking investment carefully brush our teeth. We know that tomorrow may be another ‘Good’ day, and even if all we have left is good strong teeth, maybe, just maybe, we will be able to bite their legs off  next time and convince the next Goliath that we actually have the rocks to get the job done.

We know that if we keep our teeth strong and an even stronger heart, tomorrow just might be a ‘Great’ day.

* This was written in 1999 when I was seeking funding for a B2B start-up, Translogistica. We did eventually have a Really Great Day and were funded by Warburg Pincus. And, yes, I do now recognise the mixed literary metaphors of Goliath and the Monty Python Black Knight, but I didn’t back then.