Jnassiri's Blog

Lessons Learned on Fundraising

Posted in Uncategorized by jnassiri on January 7, 2012

After two rounds of funding, I think I’ve made enough mistakes to learn about how I would do things differently next time (or how I would advise others to go about it). 

1. The List – start by writing down a list of every investor you can think of; based on the round this could be friends and family, angels, super angels, or VCs. 

2. The Access – figure out which ones you can get access to: a friend-of-a-friend, someone in your network already (advisors are great for this), or alumni of the same educational program are the ones that come to mind. I know others differ on this, and there have been some pretty scrappy approaches to hunting people down for cold intros, but my take is: if you can’t get a warm intro, cross them off your list. These investors (if they’re worthwhile) are approached all the time, and have probably seen every gimmick under the sun; they don’t have time to review people who come through the front door.

3. The Priority – rank order the investors remaining on your list based on who you think would be the best fit. This will definitely change during the fundraising process as you get to know each investor, but it’s helpful to have a starting rank ordering. This can be based on reputation, fit with your business idea, or quality of advice.

4. The Warmup – this is probably the most important step, and one that I’ve botched in the past. Take the bottom three investors on your list, and move them up to the top in terms of who you’re approaching. No matter how good your pitch is, you’re going to need to work some kinks out. And, no matter what people say, you really get only one shot with each investor – so your pitch better be rock-solid by the time you walk through the door. There’s more consistency among VCs than Angels in terms of questions, holes in your presentations, and objections, and it’s best to surface these from the start. My pitch changed pretty dramatically after every presentation – as I worked to reword, clarify, and better explain points in my presentation based on the feedback I received. But those first three pitches are really helpful in ironing out all the holes in your argument. I made the mistake of learning some very valuable lessons – but burning my chances with that investor – by starting with investors that were higher on my list. 

5. The Timing –  To maximize the impact of the fundraising process, you really want all your potential investors moving at the same time. So, once you’re ready to rock, it’s helpful to start arranging meetings relatively close to each other. You’ll want some time to refine your pitch after each presentation (and, not to mention, to keep the business running), but the ideal spot is to be receiving multiple term sheets at the same moment.

I think there’s a lot more to be learned, but these five seemed pretty applicable to every form of fundraising.

Thoughts on pricing:

Posted in Uncategorized by jnassiri on May 7, 2011

Gathering thoughts on how to establish a pricing matrix. Good article:

Newsletters: how often post

Posted in Uncategorized by jnassiri on July 30, 2010

Been thinking a lot about how often to email customers with info (not promotions). found this info helpful.

How much:  Generally, once per day seems about right.  Recommendations ranged from 2-3 times per week to perhaps 2x a day if you have some really really cool stuff to show.  I would say we could do it at most ONCE per day, and only if we start off by showing people a crazy video like the ketchup one.  If we post two much, people will gloss over the posts and either not read posts or unsubscribe.
What time of day:  When the ratio of the (#people checking status updates) / (#people updating their status) is the highest. This ensures our post will receive the highest visibility.  Websites suggested late in the work day or when people typically take a break from work.  I would suggest either around 12pm PST/PDT or 4pm PST/PDT.
Again, there is no guaranteed approach, and the question of how much to post and what time of day has been in limbo for quite some time.

How much:  Generally, once per day seems about right.  Recommendations ranged from 2-3 times per week to perhaps 2x a day if you have some really really cool stuff to show.  I would say we could do it at most ONCE per day, and only if we start off by showing people a crazy video like the ketchup one.  If we post two much, people will gloss over the posts and either not read posts or unsubscribe.

What time of day:  When the ratio of the (#people checking status updates) / (#people updating their status) is the highest. This ensures our post will receive the highest visibility.  Websites suggested late in the work day or when people typically take a break from work.  I would suggest either around 12pm PST/PDT or 4pm PST/PDT.

Again, there is no guaranteed approach, and the question of how much to post and what time of day has been in limbo for quite some time.

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Posted in Uncategorized by jnassiri on July 29, 2010

Loved this look at what motivates people – great thoughts for customers and employees

Suboptimal is Optimal

Posted in Efficiency by jnassiri on March 24, 2010

I’m constantly reminded each day of how most of what I need to do is always performed suboptimally… and that that’s a good thing.

There is so much to do in a given day that polishing unnecessarily is going to do more harm than good. I think one of the unexpected challenges I’ve faced is learning when good enough is really just that.

A few quick examples:

  • Negotiating my Terms Sheet: the perfectionist side of me wanted to find what was right for each and every term and push for this. The business school side of me wanted to research market standards on each line item and not stop until I got it. However, the truth is that not only would this take weeks of negotiating, but it would also damage the relationship with my investors. Thanks largely to my advisor’s and legal counsel’s advice, I became comfortable realizing that I needed to find the 3-5 most important terms to me, and focus on optimizing those 3-5 items. Already I’ve seen how most of the items I would have bantered on don’t even manage in the grand scheme of things…and would have simply damaged my investor relationship.
  • Product: I owe a lot to whoever coined the phrase “minimum effective product”. This is the biggest mantra in my mind these days, and keeps me from rushing to finish non-essential features. I look back on the first website I launched – I think of all the hours I could have wasted polishing absolutely useless features. Instead I had a barely functioning product from which I learned invaluable lessons. It’s still hard for me to strip things down to the MEP, but remains one of my most valuable lessons.
  • Desks: Rob and I spent some time at Ikea this weekend getting furniture for the new office. Every fiber in my being wanted to create a spreadsheet, shop at 5 different stores and online, and find the best possible value for each table, chair, and office accessory. But, as Rob wisely pointed out, it wasn’t worth the time and the solution in front of us, while perhaps suboptimal, was still the most efficient use of our resources (of which time is the most important!)

I could go on with countless examples, but it goes to show me that in a startup, being optimal is not always being smart and efficient. Instead, I need to focus on prioritizing, and realizing where it counts to be optimal.

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Developing a website prototype through outsourced teams

Posted in Action Oriented Startup, Efficiency by jnassiri on March 1, 2010

I get a lot of questions about how I developed my first website, so I thought I’d take a few minutes and throw up my rough thoughts. Basically, I built my first two websites through outsourced developers for an extremely small amount of money, and then fundraised after getting some users on these sites.

The advantages of the route I went was:

  1. It allowed me to gain real user feedback on a real, working product. For what I was doing, this was the next step in my rapid prototyping process, and a tangible website was necessary to get more detailed feedback. The lessons I learned from this also lead to the direction the company is currently headed, which is quite different than the initial website.
  2. It was a big boost of credibility when presenting to investors. I believe it showed (1) that I was capable of managing a group of engineers, (2) I was able to transform an idea into product specifications into a working website, (3) that I was able to do this on an extremely constrained budget. My favorite quote from fundraising was one investors’ comment that, “Justin, I’ve given entrepreneurs $100k to get to the point you’re at right now.” – that provided more insight into how I operate than anything else.

There’s a lot of downsides to using outsourced labor (lack of team for investment purposes, no emotional investment from your developers, no feedback from working in a collaborative environment), but for me these were definitely offset by allowing me to focus on immediate execution (rather than recruiting).

The rest of this post will be about my recommendations about how to go this route – I’ll leave it to you to decide if that’s the best option for where you’re at. I have a lot of thoughts on scalability and long term sustainability, but for what I did this worked. There’s also a wide range of outsourced developers, and my post will be geared towards the entrepreneur that wants a decent product for an extremely small amount of money (ie. Scalability is not a major concern – you’re planning on reinventing the wheel down the road).

Product Specifications:

This is by far the most important part of the process. Most of the outsourcers I’ve worked with (the majority being in India) are great at development, but will perform exactly to your specifications. This is also important since this route is cheaper if you work on a project basis, and for that you’ll need finalized specs that you and the developers agree on. Lastly, during this process you’ll really need to think through the details of how you want your product to work – a lot of issues come out of this process, and when a plan is on paper it reveals a lot of holes that may have existed in your mental image.

I started with an idea, that I transitioned to a whiteboard, that I then built out on PowerPoint. I augmented the PowerPoint design with a 5 pages of Word Document RFP that explained the basic intent of the website. This was ok, but lead to a lot of problems down the road. In hindsight I’d recommend doing something much more detailed.

Specifically, get a decent wireframe program. I used Axure, which has a free trial period. You should be able to complete your specs within that window, and avoid purchasing the program. What Axure (or the other products like it) allows you to do is actually layout how you want the website to function. At the very least, this automatically translates to a Word document that explains every detail of your website. At best, you can generate the basic wireframe for the website, which will save your developers at least some time.

Your goal here should be at least to know how many unique pages you need, and how the website functionality will work. If you really have time, you could go into applying an actual design to the layout (see my post on Crowdsourced design), and then give your developers  pretty comprehensive specifications. If you’re in a rush, though, you can parallel process the design aspect while they’re building the basic website.

One other random thought: I really like Axure’s ability to generate a prototype off of your specs. If I were to go back, I’d use this prototype in every meeting I had to show my thoughts on the product. Who knows, that could actually be just as compelling as the actual website. I do think that the feedback I got from real users was pretty priceless, though.

Finding a Developer:

If you’re going to go this route, I’d recommend using a third party system like www.RentaCoder.com. Just as recommended in my thoughts on Crowdsourcing design work, I’d recommend looking at a few similar projects to see how people explain their ideas. You can use that as a sanity check of your own specs.

After that, the process is pretty simple. You throw your project up, and people bid on it. The three metrics I was most interested in learning were price, time estimates, and rating of coder. A few specific thoughts on RentaCoder:

  • Eliminate any programmer that hasn’t done at least three projects
  • Depending on how many bids you actually get, you should probably eliminate any programmer with less than an 8.0 rating.
  • Push each person that responds to give you price and time estimates
  • One of the main advantages here is that you can very quickly (2-3 days) get a pretty realistic feel for how much your project should cost. A lot of people ask me how much they think their website will cost, and it’s a pretty pointless question unless you’re constructing a video website. This process doesn’t take that long and you’ll get a feel for how much most people think your specific project should cost. The range here is pretty wide though – I’ve had $500 – $15,000 ranges on projects I’ve done, but there’s still a lot of consistency in that range.
  • Once you get a week’s worth of bids, it’s worth reaching out to your top 5 choices. Check out what people have written about them in reviews (especially the negative) to get a feel for if they complete a project well and on time. Also ask them for examples of similar websites they have done.
  • You should also speak with them on the phone – you’re going to be communicating a lot with them, so it’s good to make sure they really understand your idea and that you’re able to communicate with them easily. My team and I would speak about 3 (sometimes 5) times a week on the phone for the months I worked with them…communication here is going to be key.
  • Negotiation is possible – most of my final picks dropped their price when I mentioned I was going with someone else. The good ones won’t drop too much, since their first estimate will be pretty accurate.

Once you’ve found your developer, most of the risk is taken out of this. Your payment goes into escrow, and they only release it if you’re 100% satisfied.

Working with your Developer:

Although there will probably be minor changes to your design, if you’ve done the first step correctly you should not have to change much. I found the easiest way to work with my team was to use screenshots and powerpoint. This will depend on the time zone you’re working with, but by the end of each day (the beginning of my team’s day) I’d take screen shots of each of the pages they’d completed. I’d paste that in PowerPoint, and then mark up every single change I wanted. That made for faster communication than trying to explain what was wrong. Phone conversations can clarify this pretty quickly too.

You can use Odesk to track their work if you want – it gives you really detailed screenshots so you can see what they’re working on all the time. Not really necessary, since you should be getting project reports regularly, but it was nice to get a sense for where they’re at.

To be honest, looking back there would have been a lot of advantages to having a team in place before doing all of this, but it worked out well for me and there were a lot of things that had this work better for my individual situation. Those are the main points that come to mind right now, so hope that helps!

Picking a Company Name 2

Posted in Action Oriented Startup by jnassiri on February 25, 2010

I went to a presentation this evening by Laurel Sutton, the Founder of CatchWord. Most of what I learned was – hire a company like CatchWord to do a thorough process for you. Not really very helpful for an early stage startup.

But a few points I did find helpful were:

  • Identify the company’s Point of Differentiation to determine the name – this can be by style (descriptive to suggestive to abstract), by tonality (scientific to edgy to friendly), by construction (real words to coined to abstract), by messaging (focus on benefit or process)
  • One name can’t do everything, and graphic design and the copy of the website will help drive the name home
  • People dislike all new names, so only use customer research as one data point. It’s most helpful to ask customers for the images and associations that accompany a few naming choices
  • “The best brands are often the most uncomfortable names – at first”
  • Right now Laurel sees a shift towards non-english names (since most are taken) or using real words but in strange combinations (I wonder what Chip Heath would say about this)

Picking a Company Name

Posted in Action Oriented Startup by jnassiri on February 25, 2010

After 7 months of being known as TheOneAbout, we’re about to re-brand. When I first chose TheOneAbout, it was a never ending debate over what name to choose, and everyone had an opinion. Finally, I ended up putting a stake in the ground realizing that I’d need to change it, and it looks like we’re at that point now.

I’m finding that the naming process could take another year if I let it. But to keep an already long process from getting even longer, here’s a few lessons I’ve learned so far:

  1. When I get an idea for a name, I check out the domain to see if it’s being used.
  2. If not, I see if it’s available on GoDaddy.com
  3. If not, I see if I can buy it from BuyDomains.com
  4. If not, I see who owns the domain from Whois.net. Sometimes they’ll be contact info if you want to feel out what the selling price is.
  5. After that I check out to see if the name is trademarked by using tess2.uspto.gov. If there’s any conflicts for the trademark (ie. if it’s for a similar product), I drop the name and move on. Once I made an exception and contacted the person that owned the trademark, but they weren’t willing to budge.

To provide a bit more data than just asking my own peer group and friends, once I narrow in on a name I find it’s worth using either mTurk or Pickfu to get some quick feedback from a variety of people with different backgrounds. For mTurk, I find the comments people use the most helpful in getting a feel for the image and association that the name may trigger.

Additional Hiring Lessons

Posted in Action Oriented Startup by jnassiri on February 25, 2010

One other means I didn’t get a chance to investigate further were programmer communities. A few of these I started to look at are:

  • Y-Combinator alumni through hackernews. From what I heard, the community is pretty sensitive to new users posting jobs, so it’d take some ramp up to show facetime in the community before looking to hire.
  • Founder Dating through Saar Gur. It’s still getting off the ground, so they don’t meet too regularly, but it seems extremely promising.
  • Meet-up. There’s a lot of RoR meet-ups in the Bay Area, that should attract people passionate about developing and on the cusp of the latest tech trends. By plugging into most of the meet-up groups, it should be possible to meet a lot of top-notch programmers looking to get in on a new startup.
  • StackOverflow has a pretty vibrant community of developers, and also has a job board, but it costs $350 for a post. Probably would have been better money spent than Craigslist, which resulted in a lot of more senior, hands-off developer applicants.
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Hiring Lessons Learned So Far

Posted in Action Oriented Startup by jnassiri on February 25, 2010

95% of my time right now is spent on searching for my CTO. Learning as I go, but here’s my takeaways from tech hiring so far:

  • JobNob – $25 to setup a table at one of their job mixers. Pretty much useless for tech hires. Perhaps worthwhile for softer skills. JobBoard is free, but worthless for tech hires. Most of the people of value from here ended in my “Programmer” bucket rather than “CTO” bucket, so may prove useful going forward. Timing also may be better closer to graduation (lots of students looking for internships)
  • CraigsList – $75 for job post. High volume of applicants, virtually all without any sort of targeting or cover letter (or knowledge of company). Good to drive volume, and I’d probably repeat. I found higher value prospects with a CTO post than a VP of Engineering post, and think the salary comments attracts mostly 40-50 y/o engineers.
  • Startuply – free, but limited value so far. Maybe good for programmers. No focus in applicants or knowledge of company. Student heavy
  • StartupHire – $10. This is a little better since they screen for funded startups.
  • Facebook – I screened for specific schools and jobs. I’ve only paid $0.54 so far, so no complaints. Their CPC method makes this actually pretty appealing if you can find a post that will attract the right sort of attention
  • GSB Mailing list – got some good referrals from this, and the reference helps add some credibility
  • LinkedIn – hands on the best means I’ve used so far. Time intensive to search, and I usually request an in person meeting when I get put in contact. Takes using your personal network, so need to prioritize who you choose, and need to follow-up on all leads. Almost all intros resulted in at least a 30 minute discussion, and most of those resulted in a few introductions. Good way to build network anyway. I found it useful to choose companies and positions I wanted (eg: YouTube, Software Engineer) and then check for 2nd degree connections to solicit intros. If this doesn’t work, try doing the same search, but adding Stanford in their education. You can get their email address from the Alumni Database, and that usually leads to a high response rate (ie. I saw your profile in the Alumni Database, subject line: Stanford ’09)
  • MIT / Berkley/ CMU / CalTech Mailing list – no leads that I know of from going this route, but probably still worth the time.
  • BASES / CS Job Board – no leads so far, but still worth the effort.
  • HeadHunters: Joanna Samuels (Jolt) – used to dealing with larger startups (> 5ee). Very friendly, helpful, kicked one reference my way. Could pay per resume ($75) but might be too small to get worthwhile candidates this way. Definitely worthwhile to connect with and keep in mind for later down the road. Sangeeta Narayan – contacted her through LinkedIn. She’s earlier and less established, and willing to negotiate to get some business. Could be worthwhile, but too late in process to consider her at this point
  • Facebook / LinkedIn / Twitter status updates: absolutely and utterly worthless
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