And, we are back on the SeedFunders’ podcast. Joining me in the studio is, the co-founder of SeedFunders, Dave Chitester. Welcome, sir.
Hey, Joe.
So, a few weeks ago, you were talking about Yogi Berra and some of the sayings that are attributed to him. And, you know, I remember following him when I was collecting baseball stuff. So, I did a little research, and turns out this guy is smarter than the average Berra. And, you know, I think it’d be fun to go through a few of his sayings. And because you’re right, a lot of them can apply to startups. So, if you don’t mind, I’d love to throw a few at you. And see how you apply them to startups.
Okay, sounds like fun. Okay, what do you have?
Well, number one, and I think you used this one in the previous episode. So, I’m going to start with it, “When you come to a fork in the road, take it.”
Yeah, that’s an easy one. And we’re talking there about pivots. When you come to a fork in the road, take it, take the pivot. These startups don’t always succeed in the first idea, or the first way they’re looking at things. And if you look at some of the best startups in the world, they’ve pivoted at some point. So, when you look at a pivot, that is basically you’re going in one direction. And according to lean startup philosophy, you see something, you make some feedback, you get some feedback from clients, and you say, “Well, you know, we ought to move in a different direction.” Maybe the same clients that you want to go after, but you’ve heard what they say, and you want to move in a different direction. So, you make that pivot. So, there’s the fork in the road.
“We made too many wrong mistakes.”
Too many wrong mistakes. Okay, let me think, wrong mistakes. Well, you know, there is such a thing as right mistakes. And again, if you think of Lean Startup philosophy, you want to launch quickly, test the waters, get your product out there, get your minimum viable product out there. And then basically, see what the clients say, and the potential clients. And they’ll give you some direction. And you may want to pivot, like we just talked about the fork in the road, but you might make a mistake. And so, what you want to do is, you’ve made a… You say, “I’ve already made a mistake, now I’m going to change and I’m going to pivot.” So, he’s actually pretty right, you can make wrong mistakes. But you can make right mistakes, if the right mistakes you made are those by following Lean Startup philosophy, and then you pivot, you’re correcting yourself. So, don’t make wrong mistakes, but it’s okay to make right mistakes.
“Pair up in threes.”
“Pair up in threes.” That’s bad math. That’s bad math. And we’ve seen a lot of that in submittals. We’ve seen a lot of financial projections or financial numbers that don’t add up, they don’t make any sense. They don’t add up. The quickest way for an entrepreneur to get rejected from an investment entity is to give numbers that don’t make any sense, or based on wrong assumptions, or don’t add up. Don’t even add up when the columns add up. And I’ve seen that believe it or not, over and over and over. The math doesn’t make sense. That’s what we’re talking about, pair up in three is really, the math doesn’t make sense. We’ve seen that.
“You can observe a lot just by watching.”
You can observe a lot just by watching. Okay, coachability. I’ve talked extensively, I think in previous podcasts about the entrepreneur. At this stage that we invest at SeedFunders, the earliest stage that professional investors are coming in on board, we like to see a coachable entrepreneur. Maybe it’s not as important with later stage investing after the company is gaining traction. But at the stage that we invest in, really, we want to see somebody that’s coachable, somebody that can observe a lot by watching and take advice, and do things like that. So, I think that definitely applies to the coachability that we look for when we’re considering an investment in an entrepreneur.
“No one goes there nowadays, it’s too crowded.”
No one goes there nowadays, it’s too crowded. This is a good one. We’ve talked about this actually. The fact that when there’s an industry that starts to have too many players in it, investors aren’t going to invest anymore. So, you have early investors or early companies like take Uber, and take ride sharing, Uber and Lyft. Then all of a sudden, there’s all kinds of copycats, there’s kind of other ride sharing ideas, pet ride sharing, ride sharing, just all kinds of other ideas. Well, basically, it’s too late, the market is saturated. And so, we’d like to look for original ideas and original things. And basically, that pertains to investors, if they’re not going to go there. If it’s too crowded already, the market is too crowded.
“You don’t have to swing hard to hit a home run. If you’ve got the timing and it’ll go.”
We had a whole podcast on that one, on timing. That is totally applicable to startups. We talked about how important that is. And there’s not much an entrepreneur can do about the timing. Because a lot of those, everything pretty much in timing is outside their control. But what they can do, as we talked about in our podcast is be aware of things that influence your business. And you could slow down or speed up or you can speed up the funding or slow down the funding. Or you could do a lot of things in reacting to things that are outside of your control. And I believe I talked about the timing of a company that was going to do streaming video, online streaming video in I think 2000. And there just wasn’t enough bandwidth available. The technology was not there to be able to support their idea. Two years later, YouTube launched. So, timing is definitely very important. And yeah, you don’t have to swing hard. You just got to have the timing.
“If you can’t imitate him, don’t copy him.”
Okay, I don’t know what the difference is Yogi between imitate or copy. But this is definitely talking again, what I talked about, original ideas. Investors are looking for original ideas, not copycats, not imitations, not somebody is trying to do something better or more involved. And we see this all the time when somebody says, “Well, I’m competing with Facebook, but I’m going to do it differently.” Well, if there was a market that are doing it differently, Facebook is going to do it. You aren’t going to compete with Facebook. You aren’t going to compete with Facebook. You aren’t going to compete with Uber. You aren’t going to compete with the established players in the industry. So, we’re looking for original ideas. We’re not looking for imitations or copies. So, investors want to see original ideas.
“We’re lost. But we’re making good time.”
That’s a good one. We’re lost, but we’re making good time. Okay, founders always provide stats to us say they’re launched, and they’re going out there. And they have their KPIs key performance indicators. And they had given us the KPIs. I met this KPI. And here’s this stat, and here’s how much progress. But if they don’t know where they’re going, the stats are meaningless. They can tell us that they have this revenue, what does that mean? Does that mean you’re getting new clients? There’s a lot more behind the issues than making good time. If you’re lost, and you don’t know where you’re going. But your stats look good to you, they might not look good to investors, because really, they see that you’re lost, and you’re just putting together some numbers that look good, that show that you’re making good time, but you really don’t have a direction. And they really don’t mean much.
“It ain’t over till it’s over.”
That’s a pretty famous one. That to me, pertains to startup industry to perseverance. You got to stick with it, you can’t give up. At some point, you’re going to have to give up if you’re really not going to be successful. But really, to get started to get launched. To start generating revenue, you’ve got to have the perseverance. You can’t just give up and say it’s over, if it’s not. So you’ve got to do everything you can to persevere and not give up and say it’s over until really you realize, at some point, it really is over.
“I always thought the record would stand until it was broken.”
The record would stand until it was broken. Okay, competition. You might look at certain industries and you see some competition, there might be somebody, an entrenched player, but if you have a better idea, somebody at some point is going to have a better idea, even for any established company. So, somebody is going to break the record, at some point, nothing is forever. So yeah, the record is going to stand, there’s always going to be industry leaders, but until somebody else comes along, they’re going to hold the record, and they’re going to be the ACE or the number one company, but it can be broken. And at some point, somebody can come along and break the records, which will stand until they break it.
“Love is the most important thing in the world. But baseball is pretty good, too.”
That’s definitely about passion. You can see the passion, love and passion and baseball is pretty good, too. You can see the passion that Yogi has for baseball is his passion. And that’s what you need. Again, another cornerstone of my pyramid, the four bases of my pyramid of success. Perseverance, as we just talked about is one and passion is another one. You’ve got to have the passion to really do it and really be into it. And really understand that it’s going to consume you. It’s really got to be the passion that you have. And that’s what Yogi is talking about with baseball was his passion. If you’re going to be an entrepreneur, and launch a company, and expect to be successful, you got to have that passion. You’ve really got to be into it.
“It gets late, early out here.”
I think again, it pertains to competition, you may think you’re the only one out there. And we’ve seen a lot of submittals first to market, “We’re going to be the first to market.” And we’ve already seen three, four submittals doing the same thing. So, you may think you’re early, but you may be late, because somebody else is always out there, somebody else could be getting the jump on you. So, when you think it’s early, but it’s really late. So, it does in the industry in the startup industry, it can get late early, and you’ll be out of the market. If you don’t realize that and realize who your competitors are and where they stand. This is probably one of the most surprising things to me. We’ve had a number, a significant number of submittals where people say, “I’m going to be the first to market,” or “I’m going to be the only one to do this.” And an internet search, a simple internet search will show that there’s already players out there. The one example I might have given before is somebody had an Apple app to manage homeowners’ associations. And he said, “First to market,” and I said, “Wow, I thought there would be that.” And I did an internet search. I found a ranking system. One of these websites that ranks software, they ranked 47 different systems to manage homeowners’ associations. So first to market is really pretty much a fallacy a lot of the time. So, it does get late early if you don’t recognize that there’s competition out there.
Speaking of getting late. I think it’s hot dog o’clock. So instead of taking this podcast in the extra innings, how about we make it a doubleheader and pick up next week?
Okay, that sounds good to me.
