By Carissa Ganelli (Founder & CEO, Commerce Drivers) Why would a mobile commerce startup founder title a blog post, “The Dinosaurs”? Am I referring to the Steven Spielberg, “Jurassic Park”-type dinosaur? No.
I’m referring to very successful business people who have a wealth of traditional business and maybe even startup experience but know very little about tech startups. They exude confidence in their advice and recommendations because they’ve built successful businesses. The dinosaur part comes into play when they try to apply rules from the past to today’s tech startup environment.
Here’s what I’ve learned from Dinosaurs. They have some good advice that you should heed. They also have a bunch of outdated or inaccurate info that you would do well to ignore. Where to draw the line is up to your good judgment.
The good advice:
- Cash is important to a startup. The number one reason startups fail is due to running out of cash.
- You might need a demo (not a video) to show the PowerPoint-phobic how the product would work in real life and to show your product is beyond the idea stage.
- Your pitch deck should be around 15 pages. You need to provide a good overview of the concept with supporting facts like market size, barriers to entry, and deal terms to whet the investors’ appetite. Investors can request more detailed information from you if they are interested in pursuing it further.
Not such good advice:
- You must do a friends a family round before anyone will invest in your business
- You should fold up shop because you’re older than 24 and aren’t engineers from CalTech. In fact, it’s a myth that most entrepreneurs are young. TechCrunch asked “Is There A Peak Age for Entrepreneurship?”, reporting that only 11% of entrepreneurs are 24 or under. Phew, there’s still hope for me.
- You need a video if you’re in any field other than TV/film production.
My partner, Jeff, and I have two offices: one at the library and the other at the local Starbucks. We met Dinosaur #1 at Starbucks. We’d seen him there talking loudly on his mobile phone on a few occasions. This time, Jeff struck up a conversation. After discussing his grandchildren, where his ancestors came from in Italy, and how he started a blockbuster national bank -- he really did start a bank -- he told us that the most important thing an entrepreneur needs is cash. Really? Gee, whiz, I thought I’d get by on just my smile. He then tells us to raise capital we need to show that we’ve made a substantial investment in the business and we’ll need to get money from friends and family. The old Friends and Family round? As Jeff says, “My friends and family are three kids under the age of 6 along with Visa and MasterCard.”
Thankfully, a friends and family round is no longer a requirement for tech startups with incubators and angels willing to invest in just an idea. I’m not saying it’s easy to get funding, just that a friends and family round is no longer a requirement.
Dinosaur #2 sold the company he founded to a gigantic multi-media publishing behemoth for $690 million. As soon as I started my pitch he interrupted and said that we need a video. Huh? A video? What kind of video? His brilliant idea was to produce a video where we could show a time clock ticking away to show it takes consumers 3.5 minutes to purchase something from their mobile phones now but only 30 seconds to purchase with our express purchase platform. A video? A countdown clock? What investor is going to sit through a 4 minute video? What is this the ESPN highlight reel? He was also full of encouraging comments and advice such as, “No offense, but you two are not 24 year-old CalTech engineers.” “You are just two guys with business cards.”
I didn’t bother pointing out that I’m not a guy at all. My personal favorite: when he asked us how much we’ve invested of our own money and we quoted a five figure number he responded, “So you’ve invested dick.” Yup, he really said “dick”. Okay, maybe that doesn’t make him a Dinosaur -– just offensive. He then proceeded to tell us that he doesn’t know much about mobile but a guy who works for him named Ed “is 29 and knows everything there is to know about mobile. Ed lives on his mobile phone. If Ed thinks you’ve got a good idea then we’ll talk again.”
Dinosaur #3 was a former VC who’s started his own SaaS company and put in $600k of his own money. He started the meeting by saying that he had no experience with smartphones or mobile commerce so he wouldn’t comment at all on the validity of the product. Instead he would provide feedback on the other aspects of the plan. To prove his point, he pulled out his Blackberry that’s had a cracked screen for over a year. He told us our plan was too long and we needed to keep it to 15-20 pages.
When would a tech entrepreneur ever even cross paths with Dinosaurs?
It’s more common than you would think. Especially if you’re located anywhere other than Sand Hill Road. We may not run into them at the sexy incubator or at Startup Weekend but we’ve run into them at the library and Starbucks (the Great Equalizer) as well as through our network.
It’s not an “if” you meet a Dinosaur but a “when.” So, it’s best to be prepared.
About the guest blogger: Carissa Ganelli is the Founder and CEO of Commerce Drivers. Their first product, LightningBuy, is a mobile commerce platform. Carissa has wanted to be an entrepreneur her entire life. After graduating from Bryn Mawr College, she took a wrong turn towards corporate life earning her marketing stripes at Time, Inc. before getting an MBA at Kellogg. LightningBuy has to be successful because she has no Plan B for her career. Follow her startup on Twitter at @LightningBuy.