The best video of 2014.
I recently said my pitch meeting with one particular Austin Ventures partner was my worst ever, and it's true. My investor Kenneth Cho whose first startup Spredfast is backed by AV added, "It would be great insight for entrepreneurs for you to share your experience and why you thought it was a bad experience."
So here goes...[note: there are many others who likely have much more valid experiences with AV to share, but I figured the actively-fundraising startup founder's perspective was of merit, as well. I plan to share more about good pitch experiences I've had at a latter date.]
Over the past two years, my main role has been as Localeur’s chief fundraiser. We’ve raised $1.2 million, which is nothing compared to the $49 million Series A round HomeAway raised a decade ago (led by AV) or the $5.9 billion (yes, billion) Uber has raised since 2010, but I guess I’m OK at fundraising since we haven’t run out of runway yet and we’re still growing (already 200% since December 2014). So I wouldn’t consider myself a stud fundraiser, and I’m actually OK with that because a lot of startups are great at fundraising but terrible at creating a valuable brand, building a scalable product, putting together a talented team, and developing a passionate community around their mission which are all things Localeur is truly starting to perform stronger and stronger at than fundraising in my eyes.
My own experience with AV is somewhat limited having both worked for a startup they funded (Bazaarvoice, before and after their 2012 IPO) and, more recently, as someone who pitched AV directly in 2013 immediately before and after we launched Localeur at SXSW that year. I never thought AV would do our deal, but I had to pitch them. If you're in Austin and you have a startup, chances are you had to pitch them too or at least tell your angel investors you planned to or they would think you weren't trying hard enough.
When you’re the founder of an Austin startup like I am, you have no real choice but to pitch Austin Ventures for a few clear reasons despite several rumblings you may hear from fellow founders that may mention they aren't necessarily the best firm to secure funding from (all this added with the fact that I knew the chances of them backing an early-stage consumer startup with a minority CEO were slim based on their limited track record with such deals). So why did I pitch AV?
1. They invest more money in local startups than any other firm in the state.
2. Chase and I worked at Bazaarvoice, so we had to consider AV a potential suitor for an idea we are pursuing immediately after leaving a company they helped take public that is also focused on user-generated content, albeit on the enterprise side.
3. The most successful travel technology IPO in the last 5 years is HomeAway, which also happens to be an Austin-based company backed by AV.
4. Every angel investor or VC in America will ask you if you pitched AV and what they thought of your startup despite their limited run of seed- and Series A stage consumer tech investments since the recession.
First I met with some non-partner staffers, who held sourcing based, business development roles for the firm. The meetings were mostly for discovery purposes pre-launch, but what I remember most from these meetings is their inability to identify even a single partner willing to even take 15 minutes to meet with us. Not Ken DeAngelis, not Joe Aragona, not Mike Dodd, not Tom Ball (who I now serve on the KLRU board with and seems to be a very friendly, thoughtful guy, too bad I didn't pitch him!), not anyone. I wasn't sure if it was for a lack of effort or interest.
By the time we did get a meeting with one particular partner at AV, it quickly became obvious that this meeting was more of a courtesy to his acquaintance (one of our angel investors) than a real meeting to discuss potential investment and partnership.
To this day, I’m not sure if this particular AV partner actually listened to more than 10 words from us about Localeur before he interrupted us and proceeded to lay out a detailed rollup / acquisition strategy for all the other startups we should try to merge with or secure funds to acquire so his idea for what we should be working on could be made reality. The funny thing about this particular meeting, too, is that I brought Chase with me which has turned out to be pretty rare on the fundraising trail as he’s been in fewer than 1 in 10 of my pitch meetings so he can spend most of his time and energy focusing on moving our product forward while I do the fundraising road show. Perhaps that was a mistake on my part to bring him to this meeting since I've had better results working independently, but I figured the hometown firm would benefit from meeting us both (and not pigeon-holing us as a startup with "that Black guy".)
A good pitch meeting looks a lot like a good interview looks like: you share common interests and experiences, you learn more about what they've been up to and what you've been up to, and you get a sense of mutual interest rather than one person having control or power over the other. A bad pitch is the opposite. Now I've been in plenty of both, and I try my best to learn from each pitch meeting the way I've learned in every job interview I've ever had or conducted, but this particular meeting with this AV partner was the absolute worst meeting I've had since we started Localeur. The main reason is simply for the fact that the guy truly didn't listen to a word we said. He literally spit out a million thoughts that seemed to have nothing to do with what we were doing, our mission, our product or our vision.
Like most founders, though, I doubted myself after the meeting (and I hated wasting Chase's time since I try to put him in a better position to focus on our product). Thoughts after the meeting included whether or not I did a good enough job of commanding the meeting in this hotel lobby or if I should have dismissed the meeting altogether preferring to wait until we racked up some better growth metrics or if I should have brought Chase or not or if it was a self-fulfilling prophecy of my concern about being a minority CEO/founder negatively impacting their interest in funding us. These are all thoughts I've had and had again and things I've tried to learn from to get better at fundraising. In fact, we've recently posted our best growth ever, month over month over month, and much of it is the result of more focus on the content and product (including hiring our first two engineers) and less focus on everything else, especially things I can't control (like being Black), now that our investors have positioned us to do so .
So even though this particular meeting with AV was not a wildly successful one, I do think I learned a lot from it because it's helped me hone my skills as a founder and CEO pitching our mission, vision and metrics to potential investors and realizing how to better focus my energies on things I can control versus those I cannot.
As for AV though, I'm sure many of their partners will chalk up this post of mine to sour grapes for them not backing Localeur. Perhaps. These guys are millionaires and who are they to listen to some lowly startup founder. Maybe they'll just ignore it like they've clearly ignored the call for greater diversity in their partnership ranks to include more females and ethnic minorities. That's fine, too. I'm not trying to help AV understand anything with this post because they won’t necessarily be around much longer by the looks of it, but I am trying to help fellow entrepreneurs and, also, investors who may be considering filling in some of the anticipated funding gaps left behind by AV. There are plenty of smart founders, great ideas and solid businesses to be built in Austin and almost all of them will need venture funding so there's going to be a big need for someone(s) to fill the funding and advisory roles.
To counterpoint the Fortune writer Primack's conclusion that "As for what all this means for Austin’s entrepreneurial ecosystem, probably not too much," I would argue that it means a hell of a lot because the last decade of Austin’s technology scene has been propped up by two things directly related to AV, especially with the lack of notable success at Dell Austin’s ‘90s tech darling:
First, Austin Ventures was the primary and, seemingly, only prominent source of venture capital for local startups like HomeAway ($49mm Series A in 2005), RetailMeNot ($28.5mm Series A in 2009), Bazaarvoice ($4mm Series A in 2006), SpiceWorks ($5mm Series A in 2006), MapMyFitness ($5mm Series A in 2010), and Spredfast ($1.6mm Series A in 2010). That means it's quite possible one or more of these companies would not have had nearly the success without this local VC backing. Perhaps they would have run out of money chasing Silicon Valley leads or they would have moved away from Austin altogether once they did secure funding out of state. We'll never know.
Second, the companies Austin Ventures has backed have already produced the next wave of entrepreneurs and executives leading today’s fast-growing startups from WP Engine, whose CEO is Heather Brunner, the former Chief Operating Officer for Bazaarvoice (and a Localeur investor), to People Pattern, whose founder/CEO Ken Cho was also co-founder and former CEO of Spredfast (he’s also a Localeur investor). Some of the top client services, operations, marketing and technical leaders in Austin have worked at companies backed by AV including folks like HomeAway VP of Engineering Jon Loyens (who worked at Trilogy and Bazaarvoice previously) and Sam Decker who was Bazaarvoice’s first Chief Marketing Officer before co-founding MassRelevance which recently merged with Spredfast. The startups these folks are advising, creating, investing in and leading make up the future of Austin’s technology success story. Localeur is just one of many in this line of tech offshoots thanks to the funds AV put into local startups. That much we all have to agree on.
So where do we go from here? Well, life remains the same for Localeur. We didn't need AV to get us here and we didn't bet on them being a part of our equation going forward. But what about aspiring entrepreneurs?
Here's my two cents:
There’s a reason LPs didn't bite on AV's most recent fundraising attempts and why so many fast-growing tech companies in Austin - even those with founders and CEOs who previously partnered with AV on past businesses - don’t currently count Austin Ventures as an investor, and it has a lot more to do with Austin Ventures’ reputation on the street with entrepreneurs than their reputation with Limited Partners.
I think it all has to do with the new reality for VCs, and entrepreneurs should look for VCs who understand this new reality.
1.Start with passion. I know the AV guys probably love their jobs, but since they don’t have blogs and books like the other prominent VCs in the US do (Brad Feld, Fred Wilson, Paul Graham, Mark Suster, Ben Horowitz, etc.) or even the upstart guys like Hunter Walk, you seldom hear their passion for what they do.
2. Be founder friendly. AV has helped a ton of Austin’s best tech companies get their starts, but over the years they lost their reputation as one that truly partnered with founder/CEOs.
3. Authenticity and transparency matter. More than ever. You can’t say you’re stage-agnostic on your website then do upteen late-stage deals and a few early deals. Be upfront with what your focus is and what you want to see. I'm so thankful to the VCs who've told me upfront they didn't want to meet me because Localeur wasn't in their sweet spot or investment criteria.
4. Diversity matters, too. It truly felt like AV was one of the last firms in the country to publicly and operationally acknowledge women and ethnic minorities can be terrific founders, partners and executive too.
I guess it's too late for AV now, but I'm gonna keep going, Localeur is going to keep going, and so is Austin's tech scene. There are higher heights to reach and there will most certainly be even better partners to help startups like Localeur and entrepreneurs like Chase and I reach them.
I know a lot of people don't like Kanye for his antics at awards shows. I get it. But what I do appreciate about him more than anything else, and one thing that truly inspires me, is that he's not afraid to put his dreams out there, pursue his dreams publicly, and - more often than not, be it music or fashion - make his dreams come true.
I'm a big fan of people who are not only able to reach their goals, but to pursue them openly in front of others because that's often much harder than moving in silence because you're inviting the critics into your journey which men like Martin Luther King, Muhammad Ali, and Steve Prefontaine seemed to do. MLK was killed for his dream. Ali was nearly imprisoned for his beliefs. Prefontaine died before getting another shot at the Olympic gold medal. But their legacies are meaningful to this day because they strived for goals in public. Those who risk loss and embarrassment or open themselves to naysayers and doubters are to be applauded in my book because they have overcome the fear of failure.
Kanye's music label is called G.O.O.D. Music for "Getting Out Our Dreams" and it's well-suited for what he's doing and done for guys like John Legend, Kid Cudi, Big Sean and countless others in the music (and now fashion) industry who you may not even know if not for Kanye. I have a healthy respect for that and everyone else should too even if you don't respect his tactics.
Final point, we're talking about a man in a segment of the music industry - rap - where the other "greats" were either drug dealers responsible for significant pain in urban communities or they were killed in part because of public rivalries they started or they continue to promote violence and other illicit activities through their lyrics. Last I checked Kanye wasn't rapping about robbing or killing anyone. I'll take a guy who can't behave himself at an awards show any day over that. That's my two cents.
What strikes me as so interesting about the people who seem to despise Kanye West is that he follows a line of music industry greats who themselves raised severe questions of character during their peak years from Miles Davis and his drug addiction (and severe asshole tendencies to the point where other jazz greats loathed him) and Michael Jackson and his interest in young boys to Madonna and her sexual provocations (spawning a whole generation of over-sexed clones) and Dr. Dre and his promotion of the gang lifestyle both as a member of N.W.A. and with his legendary work with Snoop Dogg and Tupac, culminating in the latter’s murder in 1996. I just can’t possibly see arrogance and a desire to be the awards-show cop as greater than those apparent transgressions against culture/others.
I understand if his arrogance turns people off, but I’d argue his music is too good to completely “turn off” to him unless you don’t fully appreciate his music. There are a lot of morons in the world, and many of them are elected officials with a responsibility to not be idiots; where does Kanye stand in terms of civic duty?
An earlier comparison to MLK wasn’t meant to be one of equals, but one in which inspiration, for me at least, comes from the same idea of publicly sharing goals to ask others to hop on the bus with you and support. Ali himself was called arrogant for many many many years and only became truly beloved by all (and not just boxing fans, young and black folks) later in life when the Vietnam War became extremely unpopular and the onset of Parkinson’s. Kanye West is a great producer, but I don’t know if it’s fair to say he can’t also be a respected musical artist or fashion creator, too, because he offended Taylor Swift or Beck, some other multi-millionaire musicians. If we’re all judged by the dumbest thing we’ve ever said or done, we'll probably all be damned. Case in point, I respect Clint Eastwood a ton as an actor, but I also respect him even more as a multi-millionaire actor who became an acclaimed movie director. And Clint Eastwood thought it was a good idea to talk to a chair during a national political convention. Remember that? Well when you have the #1 movie in America as he has recently with American Sniper people tend to disregard your temporary bout with idiocy because brilliance comes with a price. With Kanye, I totally think the price is worth it. Maybe the toll is too high for you, though? If so, I'd recommend you go back and listen to My Beautiful Dark Twisted Fantasy or buy a pair of Air Yeezys on eBay.
When you travel, you learn.
It’s really that simple. My business is an amplification of that truth. Travel was never a big part of my family life growing up. You can try to psychoanalyze me to help explain why I’ve co-founded Localeur, but it goes deeper than that. We had one family vacation that I can remember as a youth; a spring break trip four hours down the highway from Greenville to Myrtle Beach. It was a great one, though. I still remember the ocean breeze and the blue-colored rented condo. I also remember being in a U-Haul when we moved from Texas to South Carolina when I was seven. MC Hammer and Bell Biv Devoe playing on the radio. I remember saving up my money from my grass-cutting business to pay for my 8th grade Beta Club trip to Washington, D.C. I remember seeing a veteran cry in front of the Vietnam Memorial, a friend he’d loss. I remember the halls of the Capitol. That feeling carried me to our nation’s capitol after I graduated from college to chase that memory.
But I moved back from D.C. to Austin in 2009 because I realized that in order to create something that I could truly call my own and truly leave my mark on the world, I was going to have to live somewhere I felt truly at home. Austin’s flare for friendliness, creativity and entrepreneurial spirit is hard to match. I realize this every time I take a flight – more than 100 in the last three years – and arrive home in Austin. I realize over and over again that when you travel, you represent something. You take something with you. You represent yourself, your experiences, your knowledge, and also your hometown. You take it all with you like a badge.
And I realized that while I wanted to see the world – Toronto and Tokyo, Lake Tahoe and Lake Como, London and Los Angeles – I wanted to do it as someone who represented a place known for friendliness, creativity, entrepreneurship and local more than I wanted to represent a place known for influence, history and power. But to each his or her own. There is merit in all cities and towns, and we each have our own weights and balances for place like we have unique fingerprints. When you travel, you learn. I’ve known that since my youth. As an adult, I’ve learned you also learn when you realize where and why you’ve found a place to call home.
When I was really young, I used to love the idea of one-day being one of those self-made success stories. We're all naive in youth, I suppose. As an adult, I've realized that while I can attempt to write my own story, it's still going to be one full of many others characters, contributors, guest appearances, and roles I did not fully anticipate. Being self-made would be a rather lonely place that I thankfully left many many years ago.
When you're the only Millennial or one of few minorities - ethnic or otherwise - in a room, at the office, on a board, etc. I think you can't afford to play the role of sitting back and waiting for the group to make decisions. Progress and forward-thinking doesn't work like that.