BlackLocus Wins “Best in Show” at Under the Radar

We’ve had a great two days at the Under the Radar Conference in Mountain View, CA.  It’s a commerce-focused event, featuring roughly 30 emerging companies in 5 categories that pitch in competition format to an audience and a panel of judges.  Today I had the opportunity to pitch BlackLocus under the “Measurement” theme to a panel of 3 judges including Liz Gannes, Senior Editor with All Things Digital, Will Lowry, VP AT&T Platform Partners and Mark Silva, SVP Emerging Platforms Anthem Worldwide.  The session was moderated by Rafe Needleman, Editor at Large for CNET News.  To see the 15 minute pitch and Q&A session, click here and go to 3:45 in the video if you want to skip the panel intros.

The good news?  We won the Audience Choice Best in Show award among the 30 companies and the Judges Award for our category!  We also met some leaders in companies that would be extremely valuable partners and most important, we connected with some large, Fortune 200 retailers that are prospective customers.  All in all, a great use of our time and money to participate.

The other good news (disguised as bad news)?  Along with positive exposure and press comes an onslaught of demands that stress the team to deliver on.  It’s a constant battle at this stage, how to prioritize activity and only that activity which has the highest return when there are dozens of things we know need to be done.  And priorities are not always obvious, these decisions require some stakes in the ground but more important, they require measurement, learning and adjustment to turn on a dime as information becomes available from customers and partners.

I’m returning to Austin today and looking forward to debriefing with the team and getting everyone energized about the path ahead of us.  Strap in, its going to get nutty!

Crafting Your Startup Pitch

I participated in a session today during Boulder Startup Week hosted by Jason Mendelson, a Partner in Foundry Group.  The audience was a group of entrepreneurs in various stages of fund raising activity.  Jason had some great advice for the group as a long-time Venture Capitalist who sees over 1,000 pitches per year.  Of the 1,000 he sees, 500 of them are immediately discarded to to bad grammar.  Really?  Of the remaining 500, 300 have an ineffective or even no “Elevator Pitch” – which Jason claims is the most important thing an entrepreneur has to get right to get initial investor attention.

So there you have it, you can be in the top 20% of deals he sees just by 1) mastering the English language and 2) having a concise, well-articulated Elevator Pitch.

What comprises an effective Elevator Pitch?

  1. Proof of a massive problem. What problem are you solving and how big is it?  This should be easy to nail quickly.
  2. How your business solves the massive problem.  What unique solution has been developed or conceived?
  3. Why YOU rock! (as an individual and how you are different than everyone else).  VC’s invest in people, first and foremost, so don’t be shy about why you are the best at what you do and what gives you a special advantage to outlast everyone else.

And all of this communicated before the elevator gets to the 4th floor!

So now that you are in the top 20%, here’s the next set of deliverables to win your prospective VC’s heart and cash.

  1. 5-7 page Executive Summary in written form.  The days of 70-page business plans went out with 8-Track tapes and Betamax.
  2. Product demo or prototype.  Showing your product is ALWAYS the most effective way to get attention.  It shows passion, commitment and enables an investor to share your vision for solving big problems.  It does not, however, eliminate the need for the Executive Summary.
  3. Personal connection.  I thought this was a really interesting and refreshing insight.  In order for Jason to invest, he must build a relationship with the entrepreneur and he expects incredible energy from that relationship, energy that first emanates from the entrepreneur and that increases with each visit as trust is built.  Why?  Because when times get tough, the personal relationship is what gets you through it.  The trust is the fallback for difficult conversations and wrenching decisions.  Personally, I want my VC to act this way, I was super-impressed by this investment philosophy.

Where do most entrepreneurs fall short in their pitches?

  1. Inadequately evaluating or addressing the competitive threat.  Even if there is no one on the planet that is doing exactly the same thing you are doing to solve a particular problem, for you to obtain customers there has to be a compelling reason for them to allocate time to you v. whatever else they could be doing.  Literally, the Internet is your competition in this case.  Don’t ever tell a VC you have no competitors, its the Kiss of Death.
  2. Inadequate attention to Business Model – Both Revenue and Expenses.  The one fundamental truth about Revenue projections?  They are always wrong.  100% of the time they never come true, the business will learn, iterate, pivot and generate revenue in ways that weren’t originally contemplated.  But its OK.  They key is to understand the drivers of revenue – # customers, page views, $/customer – those things that if you can scale, even a few of them, it drives revenue.  Expenses, by contrast, better always be right.  They are controllable and need to be well-thought out.

Finally, how does the entrepreneur find investors and get their attention, particularly VC investors?

Jason’s advice, as someone who is regularly spammed by entrepreneurs who blast out wildly to VC “lists” having done little to no research on the VC’s investment criteria –  do your research in a targeted way and wrestle ONE VC to the ground first.  Get personal, find common ground, ensure they invest in your sector, follow the directions above and generate interest and dialogue.  Once you have one that is responsive, cross-reference what other firms your one firm has co-invested with in the past, which are in the same sector or stage of development from an investment standpoint and create some competition for your stock.  Just don’t delay a deal by trying to create an auction!

And my favorite quote of the day.  Asked how long an entrepreneur should expect funding to take, from “first date to wedding”.  Jason’s answer?  “It depends how hot you are”.  Quick on his feet, very quick.

Why Most Startups Need a “Business Guy”

I read an intriguing blog post titled “What the Hell Does a “Business Guy” Do? by serial entrepreneur Rob Walling.  The basic premise of his post is that the only compelling reason a “technical founder” should bring on a “business founder” (BF) as a partner is if that BF has “successful marketing experience”.  While I agree that marketing, specifically customer acquisition, is probably the most important and difficult problem to solve in a startup’s early days, I believe there are other important aspects of both building a team and a foundation for scaling the business that technical founders (in my experience) don’t always possess.

Of course I’m biased, because I represent the BF that Rob discusses.  Having been on the ground floor of 3 startups as the lead business and operations person, there are a few consistent areas of value that I’ve seen critical to early stage success, in addition to the marketing/customer acquisition skills Rob mentioned.

I would define these areas of value in the context of what I believe a BF profile must look like.  In my opinion, a credible BF needs to have demonstrated operational success in a startup environment, from early product development through financing, rapid growth and scale, including:

  • has been through multiple early product fails and iterations
  • has a high tolerance for ambiguity, chaos and daily priority changes
  • can contribute immediately in at least one critical business functional role at the outset – Marketing or Biz Dev ideally
  • has navigated a financing from external investors
  • has built a cohesive, uber-talented team that are the best at what they do AND that share similar culture sensibilities and work ethic (this is hard to do)
  • has successfully acquired and scaled customers, partners and revenue
  • has established metrics for tracking business success and a way to reliably measure and adjust
  • has battle scars, fail stories and an ability to articulate why the same fails won’t happen again.

So, this BF is not just a strategist or marketer, but a true partner to the entrepreneur who has a unique ability to take the entrepreneur’s vision and build a real business out of it.  The importance of this experience should not be underestimated.  True visionary entrepreneurs typically have an “anything’s possible” belief system and won’t be deterred.  Balancing that perspective with someone who can implement and tolerate that kind of ambiguity and chaos is paramount.

If the technical co-founder has experience in all these areas, then yes, I agree with Rob that partnering with a non-technical founder may just represent unnecessary equity dilution, but I’d venture there are lot’s of new businesses being created right now by super-developers without these important experiences under their belts.

Some might argue that all of these skills don’t have to be wrapped up in one person and that they don’t have to all be present at the earliest stages of a company’s development.  It ultimately comes down to the skills and experiences of the original founder, but having a BF partner who has been through the “business building” process successfully can ensure the correct sequencing of process, people and technology and let the entrepreneur focus on high value creation – strategy, product and funding.

What do you think?

Building a Consumer Brand, For (Nearly) Free

Three years ago when we were just starting TrueCar, one of the biggest challenges we faced once the beta version of the product was built was how would we generate consumer awareness, credibility and ultimately drive traffic to the website?  It’s the challenge any consumer-facing web property has to overcome – inexpensive customer acquisition – unless you are one of the lucky few (Twitter, Facebook, YouTube) that has an exponential viral coefficient.

And it’s not just about driving traffic to your website, but also converting that traffic to do what you want them to do – buy something, view something, tell their friends, etc.  Building credibility into the brand is critical to not only attracting who you want to your property, but converting them to action.

During our first few years, we spent no money on advertising and yet had become the #1 share-of-media over our top two competitors combined, were receiving over 1,200 monthly media mentions, were performing nearly 100 monthly media interviews and had been featured multiple times in publications and web properties such as Wall Street Journal, Fortune, Automotive News, CNN, Consumer Reports, NY Times, USA Today and others.  We grew our web traffic from zero to nearly 1M UV’s with no advertising spend.  For more content around our media attention, click here.

So how did we generate brand awareness, credibility and consumer traffic to TrueCar in the early days where cash was scarce?  Initially, it was through a comprehensive industry and consumer public relations effort until we had a credible reputation and the ability to convert and monetize traffic, then we migrated to a paid marketing strategy once we could guarantee a positive ROI.  It’s the first, initial effort of public relations to develop credibility and awareness that I’d like to address in this post.  Why PR first before advertising?  2 primary reasons:  Credibility and Cost.

Credibility.  Advertising by its nature is about self-promotion.  It’s a pitch no matter how you slice it.  Effective media coverage through PR however is about positioning your company as the expert in its field so that the media “filterers” (journalists, editors) are the one’s communicating directly to their readership.  There’s a level of separation that makes the company’s message more credible.

Cost.  Advertising is expensive.  Just ask General Motors who spends in excess of $2B per year on advertising.  A well-executed PR program’s most significant costs are the people that execute the strategy.  There is no comparison between the two on cost alone.

With that as the backdrop, what did we do at TrueCar to develop and execute a successful and low cost PR capability?

1. Determine What Credibility Means in the Context of the Brand Strategy.  For us, it was convincing the auto industry, through data analytics and unique insights, that TrueCar was the “go to” company for what’s happening in Auto for all things pricing.  Tough to do in a world where 80-year old brands have a foothold already in pricing.

2. Formulate a PR strategy that Focuses on Attaining this Credibility.  Our industry strategy for TrueCar was to become the most transparent, trusted and credible source of auto pricing data and auto industry trends, so we targeted publications, social media and influencers in the industry where the topic of vehicle pricing was at the forefront.  And, our consumer strategy was closely aligned on transparency, accuracy and (hopefully) boosted by the industry credibility that we were after.

3. Find the single most influential, credible industry analyst or personality and hire them.  This is the most important takeaway and I don’t know why more startups don’t persist here, especially in cases where industry credibility is correlated to successfully penetrating the consumer market, as is the case with Automotive.  There’s a fallacy that this person, given their stature, is “out of reach” or too expensive to engage.  While that might be true for some, you’d be surprised how energizing it can be for someone who has “done it all” in their industry to have the opportunity to do it again, to leverage their skills and relationships to have a massive impact on a new and emerging brand.   We wanted to first build our Industry credibility, then expand into our consumer strategy, so that’s where we started.  The right candidates have deep media relationships, are performing high volumes of media interviews, have an online social media presence and are viewed as credible industry ambassadors, not spin doctors.  Those folks are out there for every industry, and we hired the best in Automotive.  Jesse Toprak has been the leading Automotive Analyst for 15 years and has performed over 10,000 media interviews during that period.  He was on auto-pilot at his previous role, and was motivated by the challenge of starting from scratch to build our brand around credibility.  No shortage of risk for him personally, but the aspirational fit was there for both of us.

4. Rally the organization around the PR strategy and commit people resources.  Executing a successful PR strategy, one that will be compelling to your target media, requires unique insights that others in the industry are not providing.  That requires lots of data, analysis and product and technology support.  Additionally, because your PR team is externally facing and presumably are experts on trends, they can be important in actually driving product strategy and features.  All of this requires a commitment across the organization to dedicate resources to enable PR – online, offline, social media, daily blogging, outreach, interviews – the list goes on.  Let me be clear, this is hard to do during the early stages where seemingly every person in the company is over-worked and focused exclusively on developing core features and functionality, not crunching data that the PR team can go talk to reporters about.

5. Determine and Track Key Metrics, Measure Results and Adjust.  Some of our key metrics for PR activity include #interviews, #media mentions, #press releases, total consumer reach, unique visitors by media publication, social media followers, UV conversion (to sale) and Revenue.  Key metrics must be tracked!  Which implies there is an ability to actually attribute performance to PR versus some other activity such as viral, marketing, SEO, etc.  We set up unique campaign URL’s in our business intelligence software to track each media campaign separately.

What techniques have you used to build your brand in the early days?

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