We work with a lot of new ventures. Our goal is not only to help them distill ideas into digital products that users will love, but also to make them into successful businesses. In today’s climate this means raising money at the start.
Here are some product tips for VCs we think will help you move the needle in the right direction.
This goes without saying, but your users need value from your product the moment they open the app. The secret sauce here is a mixture of product, user experience (UX), and user interface (UI).
Using personas, or fictitious profiles, for your super users will help you understand them better. This also allows you to make decisions that will satisfy their needs and goals. If you satisfy those goals, make the experience repeatable. Give it a hook, and you’ll be well on your way to having a successful app. If you omit any of these, go back to the drawing board.
Ever wonder why instagram did so well early in the days of photo sharing apps? Or why Dropbox bought mailbox in what seemed like next to no time? Both products were exclusive, they made people feel like insiders when they got in.
Instagram launched to a closed group of folks in the Valley, and they used the app with it’s unique hook. Sharing photos taken with the app on social media, they were instantaneously part of the in crowd. Everyone else wanted in as well.
What about Mailbox? The app had 750,000 people signed up to it before launch. The mailbox team stated that they did a timed release to deal with server load—maybe true—but more likely it was to build hype. People shared that they “finally” got into mailbox, letting their immediate network know they were a part of the hottest new thing.
When you’re meeting with investors you’ll want to tell them that you’re in a 20 bajillion dollar market, growing at 5000% a year and you can grab 20% of it. Don’t do this. Tell a story instead.
Research out of a handful of business schools has shown that, contrary to popular belief, investors are not completely rational. Sure they’ll look at your credentials and scrutinize the team, but you’re selling them on your dream. The best way to communicate that dream is to tell a story around it.
For example, it you’re building a product that helps people tell their folks you’re thinking about them, frame the problem around a story. “We’re all really busy, we all work long hours and sometimes forget to write quick messages to our parents to let them know we’re thinking about them.
Well our app FriendPing sends quick notes to our loved ones, and says simple things like “hi, how are you?”, “Thinking about you?”, “Hows your week going?”. It does all the little good things we wish we had time to do, but forget to, and it does it automatically. When you get the app, you set up who you want to message, and then we do it on your behalf, making the recipient feel good knowing you’re thinking about them, and helping you seamlessly maintain those important communications with the people you care about.”
Now, I’m not saying build this product, but look at the story, it’s framed around a problem the other person can identify with.
Don’t wait. There’s no substitute for real data. Get a group or people to beta test your app from your network, and run quick feedback loops. Get them to tell you what they like / dislike about the app, what could be improved upon.
Do this early in the development process, the app doesn’t have to be launch ready, it just has to work. This will allow you to test your hooks, viral loops, and product features refining your product before launch, and before presenting it to potential investors. So when that pitch comes you’ll be able to give the app to someone and instead of walking them through the concept, you’ll have them asking you to get the app instead.
Many first time entrepreneurs will do one of the following, they’ll blind email VCs hoping to get their deck in front of them. This usually results in you wasting your time, and your deck along with your email getting deleted or archived, or they’ll go to events hoping to network with a VC. While Associates at VC can be great for getting you in front of a partner, a lot of the people you see at events are community outreach / ambassadors for VCs and have little sway in getting you in front of the right people. Spend your time more wisely, in who you target, and how you target them.
Build a database of the VCs that will be a good fit for your company, then identify the companies they invested in that are local to you. I.e. Quotidian Ventures is in NYC, and they invested in Admitted.ly an ed-tech company, I’m an ed-tech company, so they may be a good fit. Then go out and find the founders of those companies, build relationships, and ask for intros. Hands down the best intro to a VC is from a founder. VC to VC intros on the other hand can have a downside, especially when the referring VC passed on you, which will instantaneously bring up the question, “Why did VC A pass on this startup.” Be meticulous, be smart.
For more tips and tricks of the industry, check out our thoughts here.
I remember my first virtual reality experience as if it were yesterday. It was 1991 and I was with my dad at a mall somewhere in Westchester, just north of the city. In the mall, a gaming store that we always hit to check out the latest and greatest from Nintendo was having a showcase of Virtually VR’s Dactyl Nightmare, a Player vs’ Player VR game that touted all of the early 90’s best polygon graphics. For a whopping 20 bucks (that’s $35 and change in today’s money) I was led into a huge bulky circular contraption and had a massive headgear piece placed on my head.
As primitive as Dactyl Nightmare may look by today’s standards, the experience was pretty darn cool. You entered this huge contraption, picked up your controller and got to move around the virtual arena all the while dodging the other person’s attacks. Simultaneously, you’re making sure you didn’t get snatched up by the big green flying pterodactyl. Fast forward 25 years and it finally looks like this type of gaming experience is at our doorstep.Thing is though, good experiences on today’s premium VR headsets are games. There are no utility applications, there’s nothing that creates any kind of long term value for the user.
Sure you have 360 videos, nifty short experiences that teleport you wherever they were shot, but quality wise they leave a lot to be desired: you don’t get to walk around, just look around, and they get boring a few minutes in, and you can get the same experience on your Apple TV which costs around $150. Which brings me to my next point. Price. Oculus Rift will set you back $600 and you’ll need computer hardware that will cost another $600 if you assemble it yourself, or for the less technology adept of us, at least a $1000. A purchase hard to justify when a new, better than average, non-Apple laptop costs the same as a VR headset.
This will impact VR’s market penetration, since application development for a platform is driven by the customer demand. The question then becomes, “Will brands spend millions to develop digital products for VR?” Not initially, at least not until there’s a large enough install base to justify the capital expenditure. Now you’ve got people saying that VR is slated to be a 20 billion market by 2020. Maybe, since when it’s done well it’s super cool. Others are saying that VR’s addressable market is the same as it was for mobile phones. Wishful thinking. Phones live in pockets, VR headsets live next to your desktop computer, and I honestly can’t see your run of the mill folks carrying their Samsung VR headsets around everywhere or wearing them in the subway. Glasshole anyone? VRhole?For the moment though it’s more than just cost and a lack of applications holding VR back.
If you look at early low cost VR experiences for your phone like the Google Cardboard, they’re fun for about 5 minutes, but a few moments in and you’re fighting back feelings of nausea, this is called Virtual Reality Sickness, and is very real. But the problem isn’t unique to Google Cardboard. The same phenomenon exists with premium products like the Oculus Rift, HTC Vive and Samsung Gear VR as well. Proponents of VR state that all this goes away after a few days in the virtual world, but how many people will realistically subjugate themselves to systematic bouts of nausea in order to have a new and novel experience? None.
So with all this holding VR back, are Facebook, Google, HTC investing in a flop? No. Being able to strap on a headset, jump into a Virtuix Omni, a VR treadmill, and go for a run in a land where “there be dragons” flying overhead is quite frankly amazing. And while the wealth of software that will make VR world changing isn’t here yet, it will come. When you tie VR in with 3rd party peripherals, you’re opening possibilities for brand experiences and digital products. For now though, those experiences will still need to be bespoke. Unfortunately, it seems as though 2016 is not the year of VR. This article first appeared on the Huffington Post
Check out our predictions for all things tech here.
This post first appeared in Campaign Magazine.
Remember that time you were watching Hulu and were prompted to watch one ad or another, and you couldn’t care less? What if the ad instead offered you a discount and was specifically related to what you wanted to do? Well, it looks like that’s about to happen. The Federal Communications Commission (FCC) last month voted to unbundle set-top boxes from cable companies. That means television advertising is about to get a lot more interesting.
Most reports focused on consumer choice in new streaming devices and the marginal savings to cable customers of $231 annually. However, this misses the point altogether. What’s exciting here is that this decision will inevitably have a profound impact on the way we receive and interact with content in the living room. Why? It’s all about the data and giving people what they want.
Think about it this way: Younger Gen X-ers and Millennials are cutting the cord and have been for some time. Netflix, Hulu and HBO Go/Now top the charts on over-the-top (OTT) streaming devices like Apple TV, Fire TV and consoles. Instead, products like Google’s Chromecast allow users seamlessly to broadcast video content from their phones to their televisions. In addition to the on-demand content these apps deliver, they also incorporate interactive experiences such as karaoke, shopping, and exercise. Much of this delivery is based entirely on user patterns (i.e. user data).
The FCC’s ruling effectively forces cable companies to open designs to their systems, paving the way for technology companies like Apple and Google, who have historically struggled to get TV deals, to establish stronger footholds in customers’ homes. This is great for the customer, because it offers more choice. This also opens up a system that was previously under lock and key. It’ll lead to more competition.
That in turn will lead to innovation in both TV hardware and software and will give both cable and technology companies a mode of seamlessly gathering data on viewing patterns across live television and streaming services. It is with this data that we could see paradigm-shifting services arise. This, coupled with machine learning, predictive viewing pattern analysis, and smart content delivery, of course. Like Netflix learns what we like to watch, technology and cable companies will be able to more deeply understand us. In doing so, offering us highly tailored content and smart advertisements like we’ve never seen before.
Imagine, for example, that you’re watching the Super Bowl and based on your viewing data, the content provider’s algorithm will know that you’re a health conscious viewer who likes to exercise. They serve you a GrubHub ad, potentially with a coupon, touting a local restaurant that makes amazing kale salads. You can buy now, and have it delivered to your door in 30 minutes or less. Meanwhile, your neighbor might get an ad for pizza instead. Convenient, awesome, amazing, and this is exactly where we are headed.
The plan, of course, has its naysayers. Cable companies are set to lose approximately 20 billion annually because of the ruling. However, if these same cable companies invest in technologies that provide value-add services like a food recommendation engine and extend them across an array of goods and services that same 20 billion will eventually seem like an afterthought.
While government is often well intentioned, the end result is often lacking. This ruling, however, is huge and will affect everyone within the TV hardware and software ecosystems, from content creators to brands to consumers and ISPs. More so, if we are to look at the overarching trend in TV content delivery, consumers have spoken: they want digitization.
Google in Q3 of 2015 alone sold 9.2 million Chromecast units, accounting for 35% share of the streaming devices market in that same quarter, according to JPMorgan, Apple is expected to sell 24 million units of the new Apple TV this year, and market intelligence firm Parks Associates estimates that more than 1 in 5 US broadband homes has an OTT device.
Yet these streaming devices are simply precursors to the types of set-top boxes that we’ll be connecting to our TVs in the years to come. These new devices will enable cable and technology companies the means to collect customer data, create more sophisticated algorithms, and establish real relationships between consumers and brands, leaving advertisers to become technologists and data scientists.
Check out our predictions for the future of tech here.
Comprehensive startup marketing strategy requires a mix of digital and real world efforts. Marketing can become extremely expensive very quickly, and without the right approach, can exhaust the resources of a young startup. Strategies will be different depending where in the product cycle the product is.
For example, if you’ve just build the MVP, marketing goals will be focused on acquisition of the first 10k users. This makes sure these users are effectively on-boarded (using the product), and that the product is giving them value. In this situation, a large spend on an Instagram campaign will likely bear little fruit, especially by comparison to cost.
However, if the product were already something that was being used by a core audience, and displaying constant growth in a few key verticals, then one could articulate an argument for an Instagram spend. For example, an Instagram spend of 50k would be forecast to yield. This is based on an understanding of the product’s growth metrics to date, 50k lifetime users. This is a potentially viable move (depending on the value of a lifetime user from the perspective of the business.) i.e. how much money is to be made per user.
A younger startup needs to think a bit more out of the box about the way it markets its product. Many founders of younger product companies naturally want to go after press, however, there are two issues with this approach.
The first is that, as a young product, there may not yet be a story around your product. Journalists write about things that people are already interacting with, celebrating, and about which word of mouth is trickling around. Press wants to discover the “next big thing” and inject awareness to an already growing product.
Then there’s the other side of the coin. What if you do get press and you haven’t already achieved a method of product growth? The typical outcome of an article in TechCrunch is a one-day traffic spike and a slow trickle back to normalcy. It can yield anywhere from a few hundred users to a few thousand, but considering the high opportunity cost (i.e. time spent) chasing down journos, efforts are better spent first building into the product itself an engine of organic growth. This is achieved by fitting the product to its core audience (first 10k users). Audience is often better reached through non-traditional marketing.
First determinations when constructing a marketing strategy for your product:
Once we have our approach factors determined, the next requirement is the development of a marketing mix. This is made up of the the channels that we will use communicate with our target audience. It is important to note that certain channels are more appropriate than others for certain products.
Through hypothesis, experience, or experimentation a channel can be a poor or productive fit. An additional factor is that the product may be at a stage that makes it inappropriate for a particular channel. For example, pushing an MVP to a wide Instagram audience may not capture efficiently the core audience that would be most engaged by the product at its early stage. In such case of poor channel fit, the audience views the product as not creating much value
Channel targeting is a game of mix and match, and understanding the audience reach and product reception of each channel. Let’s start with things that everyone should be doing to begin development of an optimal marketing mix.
SEO should be a complete no-brainer. It’s cheap, and there are a wealth of free tools out there to do well with it. When embarking on your SEO strategy you want to first learn what people are searching for that is relevant to you, then identify the optimal keywords for you, and build your SEO using this data. Research tools:
PROS:Cheap, anyone can do it, and can have drastic impact on your product. CONS:Some factors like domain age are out of your hands, certain verticals can be very difficult to rank on, google changes its algorithm frequently meaning you always have keep abreast of changes. |
Social media should always be a two-prong approach. Individual outreach to people who may have influence over your target market are a great way to onboard users. This however, is time consuming and depending on the market and your overarching strategy may not help to build brand. This is where SM automation comes in, using tools like iftt.com you easily set up a constant and ongoing stream of relevant content that will provide value to your target customer (user) and build your brand. Automation tools:
PROS:Cheap, largely effortless, and provides high value in terms of engagement and brand building. CONS:Upstart times can be long, and building a strong social media channel takes time. |
Your own newsletters are a great way to keep your community, media, and business relations abreast of developments. Newsletters tend to lend themselves more to b2b applications, and to bringing back users that may no longer be using your app for whatever reason.
PROS:Lets you communicate with your user base in a meaningful way, bring back portion of drop off. CONS:Limited to current user base. |
Product placements can be a great way to get fast exposure with your target audience. and by this I don’t mean having an app on the next episode of Vampire Diaries, product placements can take many forms. From digital ones, like product hunt, to highly targeted ones like college radio stations who will talk about a new app invading their campus. Placements can be a great way of building a user base relatively quickly.Areas to consider placements: Blogs, Review Sites, Radio Stations, Newsletters, Soundcloud, YouTube, podcasts.
PROS:Often very large potential markets, especially if the person managing the placement is keen on the product. CONS:Needs a lot of leg work to get to the right people if you don’t want to spend money on promotion. |
A great way to get the community to work for you. Referral loops can be incentivized, think “inviting people to dropbox gives you more dropbox space” or user value generating, “if I have more friends on app, I’ll get more use out of it. The second one is a lot more difficult to achieve as the application’s value has to be communicated to the user before she will engage in any form of a referral, however a tangible reward should also be a part of the Types of referral loops: Verbal, social, email, sms
PROS:A referral loop is only as good as the value it creates for the user, but can be a very powerful tool if executed well. CONS:Loops should be a seamless experience – the referrer needs to be kept up to date of her referrals, and depending on the strategy upstart costs for the referral program can get pricey. |
The beauty of search engine marketing is that it can propel your product to the top of any number of targeted search results, the drawback is you can easily spend 100k/month on Google’s AdWords. That being said there are alternatives ads that can create value. Facebook, LinkedIn, Twitter all offer Ad display networks where you can seamlessly target your core audience
PROS:Once you know what emotional triggers in ads work well on your target audience, a large spend can have a very positive impact. CONS:It can take 6 months to see results from PR, it’s also not cheap, at minimum 3-5k/month, and a misaligned PR strategy won’t have much positive impact on your or your brand. |
As mentioned before PR can be a very powerful tool, however it takes time, the company needs to produce news, and results are never immediate. That said, there are many paths to chose from in PR, these are the Agency route, freelance consultant, in house. However, what makes a good PR person is the number of relationships they have within your target audience’s media space, and how much they will hustle for you. An agency whose clients are Nike, and Universal Pictures, will undeniably put much less effort into your company than someone who’s just gone freelance. Be wise how you pursue PR and remember, it should always support your main marketing objectives.
PROS:A solid laid out PR strategy can have a great impact on you and your business, from positioning, to press mentions, brand building, conferences / speaking engagements, and through leadership, PR is a great way to build brand. CONS:It can take 6 months to see results from PR, it’s also not cheap, at minimum 3-5k/month, and a misaligned PR strategy won’t have much positive impact on your or your brand. |
isn’t always expensive in terms of monetary expenditure, but it is always expensive in terms of time allotted to guerilla activities. While expensive, it needs to be strategically executed and measured the same way as any other activity.
PROS:Guerilla marketing can be extremely effective in combination with other marketing activities, ambassador programs can steer thousands of new users to a product, and word of mouth is one of the most powerful marketing tools available. CONS:Ensuring guerilla campaigns run smoothly takes a lot ot time, diligent reporting, and a top down multi-level program if they are to be expansive. |
Useful for on-boarding b2b clients.Online Video – Useful for the purposes of expanding reach through thought leadership in vertical markets.
Aside from retargeting (more on these later) web banner ads are going the way of the dodo. In 2015 Ad blockers were installed on 17% of browsers and this number is growing, couple this with the tech savviness of your target audience and that number can be significantly higher.
is when you have an article posted about your product in a publication. Costs vary, and the effect is relevant as it creates a backlink from a highly rated site to yours. The problem with sponsored content is that it can be expensive, and outside of an short uptick in traffic will often have the same effect as a PR article. Think up-shoot in traffic and a decrease over time.
Trade shows can be a bit of a tricky beast, and it is important to differentiate between trade shows and speaking engagements. Speaking engagements serve to build brand, whereas trade shows are great for b2b, specific verticals (i.e. Geographic Information Systems, Fashion, et al), but will have little impact on the growth of any social consumer application.
https://startuplister.com/list-of-startup-directories/http://promotehour.com/https://growthhackers.com
No secret that we at SWARM have worked with, and work with startups. As a part of our business these are some of the most fun and challenging projects because they require us to really dive into the product and make those assumptions that will place the MVP at launch as close to product market as you can.
But unlike enterprise that has an annual budget for digital or product, startups need to cut their teeth by raising money; first from family and friends, then from Angels and finally from VC. This article is about raising from VC’s, only where you already have something that’s getting a bit of traction, still needs polish, and cash to scale.
So say you’re there, have a three months of runway left, four maybe if you stretch it. What do you do?”A few questions to ask yourself before seeking financing:
Fundraising has a strategic purpose. Raising money doesn’t mean you’ve made it — far from it — and it’s not about getting written about on the top blogs. It’s a vehicle to help your business grow, expand and capture more market share. In entrepreneurship there is no end, there only is. Here’s to navigating venture capital and the murky waters that follow.
Business is about relationships and raising capital is no different. Start building those relationships early by asking for advice (not money), and asking for introductions. These folks don’t know you, and you don’t know them. Raising capital is not just about the capital, but finding a partner who will help you grow. Entrepreneurs constantly make the mistake of thinking cash is cash. It’s not. It’s a relationship.
Just as VCs will conduct due diligence on you, your cofounders, business and history, you should do the same with each fund you’re speaking with. Talk to the people who’ve worked there, portfolio companies and their employees. Get a sense for who these people are and how they work with their portfolio companies.You may want a hands-on approach, or perhaps a hands-off one. Getting to know the people behind the paychecks is unavoidable.
First thing’s first, if you’re in NYC and looking for funding, you’ll have more luck with funds that are either NYC-based, or have a presence here. Investors want to know where their money’s going, and by going to west coast funds without a lead or personal intros, the first thing people will think is: “why are they reaching out to us? Did everyone in NYC pass on them?” The mentality between the east and west likewise differs. If you do go out there to pitch, there are a few things to consider. NYC funds are much more market driven. They want numbers and stats on how you’re going to grow in the market. The west coast, however, is more about the vision and whether you can disrupt a market or better yet, create a new one.
Never be afraid to ask questions and bring up problems. For example, if you found a lead investor, but couldn’t convince other funds to hop on, don’t be afraid to bring this up. You might worry that telling this to your lead will make them pull out. It may, but more likely than not they’ll just look to their network for help. Remember, this is all about trust.
Remember that due diligence we spoke of? Good. If you did your job right, you’ll know whom it is you’re taking money from, and how they work with companies. When they’re ego driven people, stay away. If they offer you wonky terms for capital distribution, say three tranches of 100k for a total of 300k, under various caps – run like hell. Not only does this create artificial down rounds, but a messed up cap table early-on will negatively affect subsequent fundraising effort. And I can’t stress this enough, get to know the jargon.
An exploding term sheet is one that has a finite expiration date, typically 72 hours or less. VCs will typically give these to companies under two conditions. One: they believe you’re leveraging them to get better terms from other funds who better fit their culture, and that you the entrepreneur does not want to work with them. Or Two: they want to put you into the corner and force your hand to sign a deal. The second type is much more dangerous than the first as the terms they offer may be outright rubbish.
It’s imperative to get a solid lawyer on your side, learn the jargon, and understand the math behind how these deals work. Some of the law firms to look at are Lowenstein LLP, Orrick, Gunderson, and Withers.
At the end of the day, follow your gut. Fundraising is a time intensive, complex process where you’re selling yourself, your team, showing maturity, preparedness and ability to grow a company. During this time, you’re also getting into a relationship with people — one where you should use your own emotional intelligence to decide whether or not the deal is good for you. After all, a good deal is one where both parties are happy, and not a zero sum. While brief, I hope this guide points you in the right direction and helps you pick investors that bring the most value to your business. If you have any questions, please feel free to ping me.