Some startups are lucky enough to get funding right away, but there are many who go through meeting after meeting trying to find the answer to the golden question. What do investors want? Well, MillionaireMatch can help with that. We got the scoop from serial entrepreneur Bastian Lehmann, CEO of Postmates. Postmates allows consumers to order food and goods that may not be conveniently located to them and have their craving within minutes. In October 2016, Postmates closed with $140 million in funding and a $600 million valuation.
The idea for Postmates first came in 2006. But like many entrepreneurs, Lehmann had attempted other businesses. Lehmann, who was a college drop-out with a dream to be a movie director, launched his first business called Seven A Day. Lehmann was unable to raise money. So, with the help of his parents, he bootstrapped the company for a year. It eventually failed.
Lehmann met his co-founders Sam, in London, and Sean in the U.S. They soon created a startup called Curated.by. Curated.by later evolved into Postmates. Once again, Lehmann attempted to get funding. Lehmann and his co-founders went to Naval Ravikant, who is the CEO and co-founder of AngelList. He wasn’t impressed with their idea, but instead he offered them the opportunity to be venture hackers for his new company. They turned the offer down. But, after showing him a prototype of how the service would work, they walked out of the meeting with their first seed round of $250k.
“Postmates was one of those ideas that just kept haunting me,” Lehmann said. The business model for Postmates was a model that VCs were not familiar with, which made it hard for Lehmann to raise the money needed to get it off the ground. “VCs have this crazy herd mentality. They like to think that they want to be the first to discover a company,” he explained. “They love to compare it to other companies. That’s why they love to invest in the number two or number three in the market. At the time they do, it’s already the most obvious thing in the market,” he continued.
There are those investors who need to see other successful companies with a similar model. There are also those VCs that just believe in the company once they see the pitch. “If they are convinced of something, they don’t need a lot of external singles to justify their opinions,” he said.
There are a few ways to prepare. Being able to answer key questions that more than likely will come up is one of them. “In the beginning, you have to answer questions around who wants to use this and how big is the total addressable market,” Lehmann said. You should also be prepared to answer, “How big is the market? How high will my return be,” said Lehmann.
It didn’t get any easier for Lehmann and his team, not even after making over 1.4 million deliveries a month. “We weren’t prepared to not be so well received for Series A,” Lehmann said. They ran out of money, and had to go back for a bridge round of funding with current previous investors. It’s not an uncommon thing, but Lehmann said you shouldn’t be proud of it. When you get to this level of funding after being in business for a few years, there are another set of questions investors want you to answer. According to Lehmann, you should know how does your company stick out? Are you losing money? If so, why? Are you going to make more money?
Lehmann is now putting his focus on more premium and subscription based services for Postmates. “Our vision is to provide deliveries on a large scale in major metro areas, cheaper than you would pay from a big retailer,” he said.
If you haven’t already used Postmates, do yourself a favor. Head over to www.postmates.com.
Have you ever purchased something for a one-time use and wanted to take it back to the store? If you are looking for a way to have cool summer nights with your own backyard movie or go camping for the weekend without purchasing all the goods, Joymode is just what you need. Co-founded by Joe Fernandez, who is also the CEO and CEO of Klout, Joymode allows you to have those one-time experiences by renting equipment. Fernandez has raised $3 million in funding from several investors including Homebrew, Founders Collective, Sherpa Ventures, and more. MillionaireMatch got the scoop on how Fernandez built up two great companies.
Fernandez was first known by the popular site Klout, which gives its users a score based on social media analytics. Fernandez admits, raising funds for his first startup wasn’t easy. It took him over a year and 37 investors. “I was struggling a lot when I would pitch,” he said. Fernandez explained that some investors wanted lots of data, while some thought he went over too much data. His first four months went back and forth like this. “What finally helped me was deciding the company I wanted to build, and pitching it as many times as it took to find people who wanted to invest in it,” said Fernandez. After 200 pitches, Fernandez got funding from 37 investors, each contributing small amounts. “I was able to get investors to introduce me to other investors,” he explained. It wasn’t his ideal situation. He didn’t want to have so many investors, because it’s too hard to manage. The average check was $25k from each. It was needed to get his startup off the ground.
Even at the time he launched Klout, Fernandez had another idea that he couldn’t shake- Joymode. In 2015, his second startup officially launched without the long funding round. “It was a lot easier this time around than when I did my first round with Klout. With Klout, I had never even met with an investor before. I didn’t have that network,” he said. Today, he has a warehouse in downtown Los Angeles that houses all the products that can be reserved. “We wanted to provide a consistent, magical experience where you could touch a button and step into a life and have the things you want,” Fernandez said. “We don’t judge status any more by on how far out in the suburbs somebody lives and how much they fill their house with stuff. It’s about the experiences that people have,” he continued.
Joymode has a subscription based model. You pay a $99 subscription fee for the year, and that includes a free experience. After that you pay a reservation fee. Other than the backyard movie night, camping and at home karaoke are the favorites.
One bit of advice he has for entrepreneurs, “Not getting too high or too low. Startups are an emotional roller coaster. Hour by hour I would either feel like we were going to take over the world or that we were so screwed. Getting comfortable with those cycles and not letting yourself get too high or too low, has been really impactful on my life.”
Klout was acquired by Lithium Technologies in 2014 for $200 million.
For more information on Joymode, visit their site at www.joymode.com.
The best person to learn from is someone who has failed. In failing, you know what works and what needs to be improved. Justin Kan, a serial entrepreneur and partner for venture capital firm, Y Combinator, shared a few things that all entrepreneurs should be thinking about. MillionaireMatch is sharing those tips with you.
Kan is best known for his startup, Twitch, an online video gaming broadcast, which was acquired by Amazon for $970 million. But before he hit major success, Kan had another startup called Kiko. Kan has publicly admitted that Kiko was a bad idea. “You need to build something that you use, or you have to talk to customers that will use it,” Kan said. Kiko was an online calendar app that not even Kan used. At the time he launched the app, he only had two appointments on a weekly basis. So, he never used his own product. Luckily, he was able to sell Kiko on eBay for $258,000. The winning bid surprised him, and it gave him the push to create another startup.
Kan’s next company would be Justin.tv, which started after a short pitch to Y Combinator’s Paul Graham. Kan walked out of the meeting with $50k to start a live streaming reality show with him as the star. It was an interesting startup, with people watching his every move for 24 hours a day. Justin.tv was actually a back up idea to another really bad pitch. His original idea was to offer an app that could print your online blog content into a coffee table book. Justin.tv eventually was renamed Twitch, after six months.
In 2007, Justin.tv launched, and had a growing community for two years. Kan and his team continued to make changes. “The process was just talking to our customers and identifying what they really wanted from us, and trying to deliver that. We pretty much did that for the first two years,” he said. He added this advice, “Invest in your community.” Kan and his partner, Michael Seibel, had no previous experience with creating video content. They were both programmers, and at the time had to create the technology to do the live stream. In 2011, Kan launched another platform called Socialcam which was a mobile social video app. We like to think this was the precursor for Periscope and Snapchat. Socialcam was acquired by Autodesk in 2012 for $60 million.
Even though they made the effort to involve their community, at some point it stopped growing. “Anything that’s not growing on the internet is about to fall off a cliff,” said Kan. There are ways to know if you are headed off the cliff, or if you are climbing the mountain. “Set milestones for what you think success is,” Kan explained.
After creating and launching several startups, Kan became a partner at Y Combinator. He shared what things he looks out for as an investor. “I see people who have great ideas, and they are working on something that can be successful but they give up. They can’t stick it out,” he said. “What I look for most in founders is people who I think aren’t going to give up. People who are relentless,” said Kan. Some may be looking for overnight success. But Kan advises, “Companies need to be ready for the long haul.”
For those looking to sell their company, Kan says to focus on creating a good product, and a product that people want. He also added that picking a great team is key. “I believe anyone can be successful building a company on the internet, if they are persistent enough. Observe and learn from their experiences. I’m a bad programmer. I’m not a very good manager. I think, I’m just okay. What I did is find really smart people to work with,” he said.
To keep up with Justin, check him out at www.JustinKan.com.
Everyone wants to be lucky enough to walk into a meeting, and get an immediate yes from a venture capitalist. Some are this lucky, but more often you will be bootstrapping it a few years before you land a nice chunk of money to support your idea. Before 99designs landed $45 million in capital, it thrived on its own. MillionaireMatch got the scoop on how CEO Patrick Llewellyn grew the company to what it is today.
99designs is one of the largest platforms for graphic designers to offer their work to customers. Created with a unique bidding model, clients can select the designer they want to work with. This innovative platform was created after a few designers were playing a game of Photoshop tennis. In 2008, the company was launched in Melbourne, Australia by founders Matt Mickiewicz and Mark Harbottle. With little money and few investors in Melbourne, the company grew by word of mouth. “Raising money wasn’t the solution to building a community. Have a balanced community, execute and build great technology,” Llewellyn said.
In 2009, with only eight employees, Llewellyn joined as CEO. This was a position he never held before, but he learned quickly a few key things for success. “The ability to be decisive, pick a quality, intuitively understanding what is going to be important, and then getting it out super fast,” he said on what makes great leadership. “To start a business you have to be slightly crazy, and very passionate,” he continued.
Realizing that their base of clients was located in the U.S., including a plethora of venture capitalists, the company opened its doors in California. The company continued to focus on building a community to gain traction, and with that their brand spread. Entrepreneurs were talking so much about 99designs, venture capitalists knew about them long before Llewellyn would take on an investor. “We didn’t want to talk to them, because we didn’t know what we would spend our money on. As we got more confident, it started to make sense,” he said. They turned down 20-30 VCs that had reached out to them even before moving to the U.S. “If someone wanted to give us some money, we actually have an understanding of what we should spend on it,” Llewellyn explained.
Llewellyn decided to get serious about taking on investors around March 2011, and by April they had raised $35 million. He would advise those early in their career to, “Be laser focused in the beginning. Work at how to monetize very quickly, so that you can live to fight another day.”
The early years served as a great time to learn their customers, build their conversion rates and even create a plan. “Creating a business plan and thinking one, two, three years out where do we want to be, and then we actually started seeing ourselves achieve the things that we wrote down. It’s empowering,” said Llewellyn.
99designs is great for any entrepreneur looking to get their logo, website, or even a book cover. For more information, visit www.99designs.com.
The saying goes that your network indicates your networth. Pascal Guyon of Hyperloop Transportation Technologies knows this all too well. Hyperloop Transportation Technologies, also known as HTT, is a transportation company inspired by famous entrepreneur, Elon Musk. HTT promises to save you time by cutting down travel time between popular cities using high speed, low pressure train tubes. Guyon, a music producer, spoke to MillionaireMatch about networking his way up and working with HTT. HTT has raised over $100 million including in-kind investments and services rendered.
“I like to say I’m a creator. I like to create things,” Guyon said about his life as an artist. Guyon, who is French, has always loved music. That love for music led him to become Head of Audio for HTT. Guyon has worked with some of Hollywood’s finest including Walter Afanasieff, who wrote the song Hero, which was sung by Mariah Carey. Guyon also worked with the hip hop artist Heavy D, which lead him to receive two Grammy nominations. How does a guy who loves music, but lives in the French countryside, finds his way to Hollywood? Network. Network. Network.
Guyon started to build awareness for himself at a time when many music artists were on MySpace. Guyon would post videos, and reach out to people introducing them to his skills and passion for music. “If people see you have a clear brand, message, and following that already triggers admiration,” Guyon said. “You need to create original content on social media that’s going to grab people’s attention,” he continued. Soon enough, he was being asked to work with some famous talent. After being flown to Los Angeles, and asked to work with some major players in Hollywood, Guyon knew he couldn’t go back to his quiet countryside.
Already with some great connections, Guyon made a goal to meet even more people. He was intentional about improving his environment and making new friends. MillionaireMatch asked Guyon for a few tips for those looking to network up. He offered, “The big mistake that most people do is they act needy. That’s a huge mistake. However, if you provide value that changes everything. Do your homework. Become an expert in something, so that you interest somebody else. Those who always need help will find that those who are busy are not going to look at you.” Guyon continued, “Find what you love, what you are passionate about. Work on it. Become an authority in that. Busy people are going to look at you in a different way, and potentially trigger business opportunities.”
After meeting new people and being introduced to some decision makers, HTT’s Dirks Alhborn asked him to head up all audio for the project. “This is something I really talk about with artist nowadays. A lot of them are stuck in the mindset that they want to make their songs, they want to get signed and have a great life. It doesn’t work that way anymore,” Guyon said about creating a business out of your passion. He knew from his early years that you have to create different lanes of business when it comes to being an artist. Guyon had no problem coming on board to HTT. “This is one of the most talked about technology projects,” he said.
The company has grown to almost 500 people. HTT is planning to build a five-mile demonstration track. The tube is estimated to reach a top speed of 800 miles per hour. For more information on HTT, visit http://hyperloop.global. You can keep track of Guyon at pascalguyon.org.