Startable – Healy Jones’ & Prasad Thammineni’s Blog

Vivek Wadhwa has started yet another interesting conversation on startups – this time on the dearth of female leaders in the IT space. I left a comment on Brad Feld’s blog in response to his response… and here is my response to Brad’s response and the original article. I guess it’s my response².

The original point is summed up by Vivek as: women make great entrepreneurs but represent a tiny % of leaders at technology startup companies. (That’s not a direct quote, that is me summarizing in a 7th grade book report style.) As usual, Vivek has done a real study and has numbers to back up his conclusion.

Brad nicely hits the point: This is “about innovation, competitiveness, and entrepreneurship.” (That is a direct quote.)

This whole point is something that my wife and I talk about a lot. She is at a tech startup; as am I. (We have some fascinating dinner conversations around HTML and the SalesForce Force.com API.) My comment on Brad’s blog pretty much explains where we are coming out on this issue:

Brad, I think a large part of the problem is pretty easy to understand. My wife and I both work at different startups; last night we were both at work pretty late. She didn’t finish up until around 10:30; I got done an hour or so before her but kept working for a while. We don’t have kids, but this lifestyle is not going to be possible when we do. Our highest performing women tend to marry high performing men (in my case I got lucky with my wife…). Since the burden of taking care of kids tends to fall on the woman, and since our best and brightest women are marrying men who have similar hard working lifestyles, something has to give. And it is usually the women’s careers.

There has got to be a business model taking top tier women with kids and getting them back into the workforce part time. That may be my next startup, but I’d be happy if someone else beat me to it.

This is a real issue. A couple of points that I see as “proof” that our best and brightest women are leaving the workforce: 1) A very high percent of female MBAs drop out of the workforce and become full time moms, much more than other professional female grad schoolers and 2) At the venture firms where I’ve worked, not a single one of the male partners’ wives worked. This is dozens of women, many with advanced degrees and who had very solid careers prior to doing the whole mommy thing.

I know that a lot of these women love being moms, but would also like to participate in the workforce. They are people who added a ton to the places they worked, but who don’t have the 70+ hours a week to commit now. There has to be a way to get them to find fulfilment both as a mom and as a startup exec.

Should startup founders spend time creating a crisp elevator pitch? Yes! Let me explain what got me thinking about this…

I recently received an email from a student in Texas who is thinking of starting a business. He stated, “I’m 23, I have my eyes on an idea with IP that’s protected, I’m piecing together a business model, and I’m doing all in my power to make this happen. The problem is that I’m so young I don’t have many industry contacts and, even though I’ve yet to try, I think it would be difficult to get a VC to sit down in the room with me and listen to my proposal because I’m so young. I think because of my youth they may not take me seriously even though the idea is solid, potentially very profitable, and has IP security. ”

My advice to him was that if his idea was good, and if he could articulate it well, then he could make smart people interested in helping him. First he should get together a smart elevator pitch and then approach potential advisers who could help him evaluate his idea’s probability of success, firm up the business plan and then introduce him to capital sources and team members. I really think a crisp elevator pitch will be critical in getting experienced people to lend him a hand. (I guess I just articulated it better here that I did in my emails to him! Sorry Steve!)

What is an elevator pitch?

Venturehacks has a great post on how to prepare an elevator pitch for an investor and says, “the major components of the pitch are traction, product, and team.” If you are preparing to raise venture capital you must read their take on the elevator pitch.

But I think that an elevator pitch has an importance greater than just impressing investors. If you are a startup, no one has ever heard of you. No one knows what you are doing. No one knows how or why they should lend you a hand or buy your product or make an introduction to someone who could join your team. You need to be able to let people know what you are up to quickly, and interest them enough to get them thinking about how they can help you build your business.

An elevator pitch is a short description that will help the entrepreneur quickly explain the purpose of their startup to someone who has not heard of the company before. I think you should have a single elevator pitch (that you occasionally tailor to a specific audience, such a customer or investor or potential team member). You will need to have practiced this pitch to the point where you can recite it in your sleep, because you never know when you’ll be in front of the CTO of a potential customer or find the VP of Sales that you’ve been dreaming of for months. Make that first impression a solid one.

Here is my take on how to get a good elevator pitch put together:

1. Problem definition
2. Size/magnitude of problem
3. Your solution, including why it is better
4. Your company’s traction
5. Who you are

I don’t think your elevator pitch should be more than 30 to 45 seconds long. (And you probably don’t want to talk at light speed, unless you are pitching a speed speaking product – lame joke.) If the listener is interested then they will ask you questions and you can elaborate on the points that interest them.

I’m not convinced that my formula for a good elevator pitch is perfect, nor is it the only way to create an effective pitch. I’d love to hear other people’s ideas on elevator pitches that have worked for them.

Having spent some time over at TechStars, it is pretty clear that the TechStars founders take the elevator pitch very seriously. The teams are forced to play with their elevator pitch over and over –  practice, modify, get feedback on and practice. These pitches are not focused for particular audiences – rather they are generic pitches that would be interesting to customers, investors and people who might want to pitch in with their time or introductions. My experience at TechStars has really re-inforced the impression that an articulate elevator pitch is very important for pretty much any entrepreneur. After all, you never know when you’ll bump into the person who will somehow help your startup take over the world!

I was recently turned onto an academic post on the the “Success of Persistent Entrepreneurs.” Two HBS professors have recently concluded that repeat entrepreneurs who have been successful in the past are substantially more likely to have success in their second venture than novice or previously failed entrepreneurs. This study centered around entrepreneurs whose first startup raised venture capital: 

“Successful entrepreneurs in the study had a 34 percent chance of succeeding in their next venture-backed firm, compared with 23 percent for those who previously failed and 22 percent for first-timers.”

This is something that venture capital firms have been acting on since … well, since I know about! (Of course, I haven’t been doing this long enough to really know when it started, but I’m pretty sure VCs have always preferred to work with previously successful entrepreneurs.) Given a choice between two equally affable, competent seeming, well regarded founders with similar business plans, VC’s will pick the previously successful entrepreneur to back every time. 

So what can you do if this is your first time as a startup founder and you are looking to raise venture capital funding? (Or I guess if you’ve failed at your first?) Attract a successful entrepreneur to your team! VCs LOVE LOVE LOVE getting involved with successful entrepreneurs’ projects, so go get yourself a successful entrepreneur! While it would be best if you can get them to join your management team – and by best I mean what the VC would like best, maybe not what you would like best – you can still get some of this successful entrepreneur pixie dust by having this person join your board or by having them as an active advisor to the business.

How do you meet a successful entrepreneur? Hopefully you can easily network to one in or around your particular industry. Conferences, industry networking groups or trade associations, or even lawyers can help you. Some of the young startup founders I’ve spent time with have literally cold called successful entrepreneurs and gotten them to become advisers of their startup. If your idea is good enough, and if you can explain it well enough, you should be able to attract the right people to your side.

I came across this HBS blog post from Darmesh Shah’s twitter feed (OnStartups) – I’d suggest you follow him, as he comes across some pretty interesting stuff.

Pretend you are on the board of a startup. Unfortunately, this startup is not living up to its potential, and is failing to get sales traction as you and the team hoped. Why are sales not materializing? I had a brief, but insightful, conversation with one of my partners today. This partner (like most venture capitalists) is on several startup boards. Most of these startups are growing quite well; however, one of them is not.

The question is why? From a board level, it is quite difficult for a venture capitalist to determine the cause of the startup’s sales slippage. Is it the sales team? Or is it a market/product issue?

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Should a startup blog even before they are ready to tell the world about their idea? By blogging will you be giving away your idea? Is there a real benefit to creating a blog and updating it on a regular basis? These are questions I asked myself when we founded Pixily and in the ensuing months when we were in stealth mode.

Reflecting back on these questions, we at Pixily wish we started blogging within the first couple of months of founding Pixily. It would have helped us in a number of ways including acquiring customers, being perceived as an authority in the market and in recruiting employees. In this post, I will cover the benefits and in a following post I will talk about blogging strategies that a stealth mode startup can employ.

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