Work Hard. Get Lucky. Ride the Wave. And then Smile for the Camera.

Startup formula for becoming an overnight success: Work hard. Get Lucky. Ride the Wave and then make sure to smile for the camera.

I got an email the other day from a CEO at a company I advise who had applied for a startup accelerator called Impact Engine.   The news in the email was not good.  She had reached the last round of judging but didn’t make the final cut.

My advice to her was: don’t worry about.  As a startup founder, there is so much that is outside of your control, that all you can really do is continue to work your tail off and hope to catch a few lucky breaks along the way.

Here’s an example.

In 2009, I fell in love with a venture capital firm called First Round Capital.   A tweet from one of their associates had led me to a blog post, which led me to their website, which led me to their holiday card video. If there is such thing as love at first sight with a venture capital firm, this was it.  ”OMG,” I thought to myself after I watched the video,  ”These guys are as weird as I am.”

So I decided to email them.  It was the first venture capital firm I had ever reached out to and I had absolutely zero clue as to what I was doing.  I wrote a stupidly long and wordy email telling them about GiveForward and asked for the opportunity to pitch.  Within a day I got a very thoughtful response from an associate.  He said no and that we’d probably be better off as a non-profit.  A year later after graduating from Excelerate Labs, I reached out again to FRC to see if we could pitch and again the same associate said no.  This time, he wrote that he appreciated the progress we had made but didn’t see this as a “venture type deal”.  Another year passed, and then in April of 2012 I reached out to FRC again.  This time, we got a better response.  They agreed to hear our pitch and a few weeks later decided to co-lead our round along with Founder Collective.  (hooray!)

Now, the funny thing is, last night I got an email out of the blue from the First Round Capital  VC who I had written to all the way back in 2009 and 2010.  I hadn’t spoken to him in two years and he has since moved on from First Round Capital to start his own VC firm.   His email consisted of only one word.  It said:

Congrats :)

Moral of the story.  In life and in startups, if you believe in what you’re doing, just keep doing it and with a little luck, eventually someone is going to notice.

I think this is particularly true with raising capital.  As a first time entrepreneur, when you go to pitch investors you’re going to hear NO a lot more than you hear YES.  When we did our angel round with GiveForward in 2011 we ended up oversubscribed, meaning that more people wanted to invest than we had room for in the round.  Even so, the NO’s outnumbered the YES’s nearly two to one. (we pitched 45 investors.  16 said yes.  29 said no. 13 participated in the round).  With our most recent round of funding that closed this past July, we ended up oversubscribed again.  But we still heard NO eight times before we heard our first YES.  NO’s are the default answer in the VC world. Rejection is part of the game. It doesn’t mean your idea is bad. It might just mean that your idea doesn’t fit within a firm’s investment thesis or the timing is bad for the firm or that your concept is “too early” and the market isn’t ready for it yet.

When I look back at GiveForward in 2009, we definitely fit into this last category of being  “too early”.  And to be honest, if I was First Round Capital, I probably wouldn’t have invested in us back then either.

Here’s what the landscape looked like in 2009:

  • GiveForward, Kickstarter, and maybe three or four other crowdfunding sites exist; none of which have really taken off yet.
  • Facebook, the main platform people use to share their crowdfunding pages, has a ‘paltry’ 200 million users
  • The term crowdfunding is largely unknown.  Most people in the industry were still referring to the space as “peer to peer fundraising”

Here’s what it looks like in 2012

  • There are over 300 crowdfunding sites worldwide; Kickstarter has become a household name.
  • Facebook now has about a 1 billion users worldwide sharing crowdfunding pages millions of times a day.
  • The term crowdfunding has not only been popularized by the general public but President Obama has even passed a crowdfunding law called the JOBS Act with near unanimous support from Congress.

What a difference three years makes, right?  GiveForward isn’t a fundamentally different company than we were in 2009, but in 2012 the public is now comfortable enough with the concept of crowdfunding to make market adoption a real possibility.  And truth be told, we got really lucky with our market timing.   Although we were a little early when we launched in 2008, we bootstrapped and stayed in the game long enough to be in the right place at the right time.  In 2010 Kickstarter got funding from Union Square Ventures, putting crowdfunding on the VC map (thank you Fred Wilson).  By 2011, Kickstarter had blown up and crowdfunding had officially arrived.  And now in 2012…well, now everyone who got into crowdfunding early is just riding the wave and hopefully looking good when we smile for the camera.

Tagged , , , ,

VC Funding and Cancer Free

There’s a popular critique in many startup blogs downplaying the importance of raising capital. The argument is that raising capital is easy and the real work happens after a company raises money.   Rather than celebrating companies that are generating revenue and turning a profit, startup culture chooses to celebrate companies that are raising lots of venture capital and by doing so we end up lionizing the wrong startups.

Having bootstrapped two startups  and seen one of them fail in part because of an inability to raise capital, I can say straight up, I think this popular critique is a bunch of poop.

Raising capital IS important and it should be celebrated.

As a startup founder, your most important responsibility is getting key stakeholders to believe in your vision of the future. This means everything from finding a co-founder and early employees to convincing that first customer to believe in your product. Getting the right investors to buy into your vision is a huge part of your role, and it’s an important milestone in the lifespan of a startup.

For Most Startups, Capital is a Necessary but not Sufficient Factor for Success.

Of course raising capital doesn’t mean that your startup is going to be successful.  And of course not every startup is the type of startups that should be taking on VC funding.  But for the startups that actually do need the money in order to achieve scale (i.e. startups that hope to become $500 million+ companies) taking on an appropriate amount of funding from the right investors means your startup at least has a chance for success.

Here’s all the proof I need that money still matters…

Last week GiveForward announced we had just completed a $2mm raise with some great investors. On the same day we announced our raise, we got an email at the office from one of our users on GiveForward who was fundraising for a 17-year-old named Justin battling stage 4 testicular cancer.   The email subject line read: CANCER FREE!!!!!!!!!!

 

 

 

As a company, I can tell you there was 10 times more excitement around the office when we got this email than when we saw our names in TechCrunch. These are the kind of emails that we live for!  But, had we not raised capital last year, we would never have received this email.  We never would have been able to grow a team and advertise our services, and Justin’s family likely never would have found us.

So, at the end of the day is raising capital something worth celebrating?  Yes!!!!  If raising capital means we are now going to be able to reach thousands more families just like Justin’s, then I believe it is absolutely something worthy of celebration.

Tagged , ,

Leap and the Net Will Appear – Lessons I’ve learned from Desiree Vargas-Wrigley

Last night my co-founder, Desiree Vargas-Wrigley, won the Tech Woman of the Year Award at Builtin Chicago’s Moxie Awards.  I couldn’t be more proud of her and how far she has come.

On the other side of the country,  I was speaking to a group of  professionals at the Startup Leadership Program in Silicon Valley who were considering leaving the corporate world and starting their own companies.  One of the questions I was asked during the Q and A session was, ‘what is the hardest part about running a startup?’

Upon getting this question, I immediately thought of Desiree and the magnet that she keeps on her fridge that says:

Leap and the net will appear.

For Desiree, this maxim couldn’t be more true.  In late 2007, a little voice went off in Desiree’s head that said ‘YOU NEED TO START GIVEFORWARD’.  And so unlike the rest of us who typically sit on our ideas without doing anything, she decided to act.   Without an ounce of prior business experience, she wrote a business plan, which she used to secure a $10,000 crowdfunded loan from Prosper.com and another $5000 from her grandpa. She then contracted with a web development shop to begin building the first version of GiveForward.  She did all this without having a co-founder, a real attorney, or even enough funding secured to pay for the entire website (the total cost for the website was around $25,000 paid in three installments over 4 months).  She just figured as crazy as the idea seemed to others, she had to get started THAT DAY and the rest would fall into place.

As fate would have it, things have certainly fallen into place. A little less than four years after launching GiveForward, we won the award for best consumer startup in Chicago last night, and we’ve now helped people raise over $16 million for things like cancer treatments and organ transplants.  Certainly we’ve put in hard work and caught a lot of lucky breaks along the way, but none of  this would have happened if Desiree hadn’t had the courage to take the leap.

Flash back to the professionals in Silicon Valley, who asked ‘what’s the hardest part of running a startup?’   Well, my  response to this question was easy:  

The hardest part about running a startup, isn’t running the startup.  It’s having the courage to take the leap in the first place.

Big hugs to my partner Desiree for taking the leap four years ago, and a special shout out to my friend Mary-Ashby Brown from law school who just took the leap and officially launched her wonderful business Salve Sister today!

Tagged , , ,

@FakeGrimlock: Best Startup Advisor EVER?

You ever wonder what it would be like to have @FakeGrimlock as an advisor to your startup?  This past April we were lucky enough to convince Mr. Dino-man himself  to join GiveForward in an advisory role.   Since that time we keep hearing two questions over and over:  Are you really getting advice from a robot dinosaur?  and  Does he always talk in robot voice?  The answer is Yes and Yes. Here’s his recent UI critique of our homepage:

Look for some of these robotically awesome changes to appear in our next product release.
Tagged , ,

An Open Letter To Artists

Dear Artists:

If you’ve ever painted a painting, written a blog, bootstrapped a small business, mentored a student, volunteered for a non-profit, sung at an open-mic night, or shared your art in some way, shape or form, you’ve probably asked yourself  ”does what I’m doing actually matter?”

My answer is an emphatic YES!

I’ve been writing this blog for about nine months now. I’ve gotten a total of 29,656 of visits.  By no means are these gaudy numbers.  I’m certainly never going to become the next Seth Godin or  make a penny from this blog.  So why keep doing it?   Well, last month I got a couple of emails from readers that totally made my day.  And for me, that’s enough.

This one came from my friend Brittany Graunke of Zealous Good.

Just wanted you to know, reading your blog post on mantras is homework for the ZG team! Read it last week on Startups and Burritos and it really made me think. Anyways – just a quick thanks for being awesome and having so many very helpful blog posts (in addition to being a cool, awesome person).

Have a great memorial day weekend!
Britt
And this one from my law school friend who has decided to quit the legal world and start her own business.
Just want to say thank you Ethan for being such an awesome source of inspiration and such a good person to boot – your example is keeping me chugging forward with hope in getting my business off the ground!  I really appreciate it.  Thanks for being so wonderful!

When you open yourself up and share your art with others, it may not always be readily apparent to you,  but what you’re doing matters to someone. Keep doing it.

On the flip side, if you’re somebody who has enjoyed, appreciated, or benefitted from a piece of art that someone has shared with you, let them know how you feel.  Chances are they had no idea their work had any impact, and your note will make their day.

For further reading on this topic, check out Startup Metrics: Why Early Stage Startups Should Measure Hugs Instead of Revenue

The Scary Reality of Chocolate

I don’t normally blog about political issues as I have a strong dislike for the uninformed, misinformed or half-informed, holier-than-thou, preachy types, and never want to be one myself.

And while I know I risk becoming one of these people by writing this blog post, I think it’s worth the risk.  I learned something last night that I found so absolutely abhorrent I couldn’t get it out of my head.  It rattled me and I felt the need to share it with others.

Last night, my girlfriendBrittany and I went to a talk about food justice by Raj Patel, author of the book Stuffed and Starved, The Hidden Battle for the World Food System.  He spoke for over an hour on various subjects like food deserts, climate change, and locally sourced foods, but what struck me the most was something he said in passing about fair trade coffee.   Although he didn’t go into any detail about the labor practices of  the coffee  industry, he referred to non-fair trade coffee as ‘blood beans’.  It seemed a bit hyperbolic to me but the phrase stuck in my head.

In an odd coincidence, yesterday I also happened to buy Brittany her favorite treat – dark chocolate. She has a big presenation at work today and I figured she could use a stress relief in the form of delicious chocolatey goodness.  Now mind you, Brittany is the ultimate dogooder and doesn’t eat chocolate unless it is clearly labeled FAIR TRADE.  I had never really dug into why she does this and I didn’t really care.  To each their own, I thought.

When we got home from the talk, I gave her the bar, but unfortunately it was not labeled FAIR TRADE so she politely declined the gift.  It kind of bothered me.  I thought she was being stubborn.  But having just heard the term ‘blood beans’ a half hour earlier I decided to at least find out what FAIR TRADE actually meant.  So I googled Lindt (the brand of chocolate bar) + FAIR TRADE to see if perhaps the bar was actually FAIR TRADE chocolate, so she could nibble on a bite or two.

What I discovered was frightening.  I learned the actual meaning of FAIR TRADE chocolate.

FAIR TRADE chocolate means the cocoa beans were not picked using child slaves.

What the FUCK?!?! Child Slaves?????????????!!!!!!!!!

The truth is that 40% of the world’s cocoa, including nearly 100% of the cocoa that goes into Nestle, Mars, and Hershey products comes from the Ivory Coast where they literally enslave stolen children from other countries (Mali and Burkina Faso) and force them to pick cocoa beans for little or no wage in dangerous and unhealthy, pesticide laden conditions. The US government estimates that there are up to 100,000 children in the Ivory Coast forced to work under these conditions.

“Holy Shit!!,” I yelled out.  ”Non-FAIR TRADE chocolate is grown by slaves??”

“Yeah, of course.  What’d you think it meant?” she responded.

“I don’t know.  I thought it meant, you know, like that shade grown, organic coffee stuff.”

“Nope, it means it’s not grown using child slaves.”

“Uggghhhhh.”  I winced

Now, here’s what really blew my mind.   I had NO IDEA that slavery still existed in 2012 and that huge companies like Nestle and Hershey were complicit in this horrendous practice. Had it not been for a weird coincidence of seeing that talk yesterday and then accidentally purchasing the wrong type of dark chocolate for my girlfriend, I would have continued eating mass produced chocolate in ignorant bliss.  But now that I know the facts, it’s going to be impossible for me to ever eat another candy bar or other mass-produced chocolate product in good conscience.

It got me thinking…I consider myself a relatively intelligent and informed human being, but still had NO IDEA that this was going on.  I wonder how many other people have no idea that this is going on?  My guess is that it’s a lot, and that’s what compelled me to write this blog post.
With our busy lives and The Facebooks and the Twitters and all that jazz that comes out of the pipes and tubes of the Interwebz, we’re constantly on the go, moving from one thing to the next, bumping into people and other inanimate objects on the street as we type out one last email on our smart phones before we head into the next meeting.  We grab ‘get me through the day foods’ like candy bars, fast food, and Red Bull on the go without so much as thinking twice about how that food was made or where it came from.  In short, we live in a state of blissful ignorance, completely divorced from the not-so-pleasant realities about the world around us.

This whole experience has served as a bit of wake up call for me. From here on out, no more chocolate, and I am at least  going to make a effort to better understand where my food comes from.  It’s just a tiny step but I think this change is necessary.  I know I’m never going to be perfect, but I can at least ask questions and become more inquisitive about the world around me.

I’m not going to ask everyone to stop eating chocolate.  That’s a personal choice.  But I will encourage others to start thinking a little bit more about where their food actually comes from.  Ask questions. Learn facts. Start make food decisions based on knowledge and not just what advertisers tell us. And if you think this is important, share it with someone else who probably has no idea that slavery still exists in 2012.

*Stepping off my soapbox now*

For some further info on the cocoa trade, here’s a short film from CNN called the Human Cost of Chocolate.

 

Tagged , , ,

Why Your Company Needs a Mantra

This post originally appeared as a guest piece  I wrote for NBC’s INC WELL
Does your company have a mantra?  If not, stop what you are doing and develop one.  Like, right now.  It’s that important.
What the heck is a mantra?  Good question.   It’s the core purpose for why your business exists.  If you’ve ever seen Simon Sinek’s TED talk, ‘it starts with why’,  your mantra is the why.
To catch you up to speed, here’s a quick, (somewhat-bastardized) synopsis of Sinek’s TED talk:
Every business has a what a and a why.  The what explains what your business does (e.g. sells widgets).  The why explains why your company does this (e.g. to create world peace)
Let’s use Acme Electric Wheelchair company as a hypothetical.
What Acme does:  sell electric wheelchairs to non-mobile elderly folks.
Why Acme does it: to provide freedom and empowerment through mobility.
Alternatively, here is a real world example.  At GiveForward we give people online fundraising pages to raise money for their loved ones’ medical expenses.  This is what we do.  But our mantra is  create unexpected joy.  Creating a little bit of unexpected  happiness for families during an otherwise dark period in their lives is why we get up and go to work every morning. It’s what makes work fun. It’s the core purpose that is driving us.
Now that we have a basic understanding of a what a mantra is,  I suppose the next logical question is why is it important to have a mantra?
Having a mantra is important for many reasons but  one of the more practical benefits is that it acts as a filter for business decisions.  Once you understand the purpose for which your business exists, it makes it a lot easier to understand which path to take when faced with tough decisions.  Once you have a mantra in place you simply ask: is this upcoming opportunity in line with our mantra? If the answer is yes, feel free to proceed.  If the answer is no, pass on the opportunity.
For example, here’s a recent scenario where we relied on our mantra to guide our business decision.
At GiveForward, we used to have an email that automatically went out two weeks after someone donated.  It would thank them for their donation and then would explicitly ask the reader to refer others to GiveForward.  In exchange, we promised to give them a t-shirt if they did this.  This email got marked as SPAM all the time and no one ever referred people our way.
One day, a donor named Alan wrote to us and told us how much we sucked and how spammy our email was.  And he was right.  We did suck.  This email was SPAMMY and it wasn’t creating unexpected joy for anyone. So we changed it to fall in line with our mantra.  Instead of asking people to spread the word in exchange for a cheap, cotton t-shirt, we changed the email so that it said:

“Thank you for the donation you made a few weeks ago to [Joe's] fundraiser.   We hope that your act of generosity filled you with lots of warm-fuzzies.  And just in case you are in need of some extra warm fuzzy goodness today, here is the cutest video EVER ”
After we made the change, I sent our friend Alan a courtesy email to let him know he was right and we were wrong.  [here's my actual email]
Dear Alan,
A couple of week ago you let us know how sucky our update email was.  And you were absolutely correct.  It was spammy and it wasn’t what GiveForward is all about.  We’ve since changed it. Thanks again for helping us see the light :-)
Sincerely,
Ethan
Now here’s the best part.  Since we changed the email, not only have we stopped getting marked as SPAM, but we’ve actually started getting fan mail from people telling us how much they love the kitten video (duh…everyone loves kittens).
The lesson here is that when you base your business decisions on a core set of values, it resonates with your fans. And if you’re  trying to build a brand that is going to last for decades or even centuries, the reality is that your fans are never buying what you do.  They’re buying why you do it – they are buying an idea, not a product.  On the other hand, when you stray from your values and make decisions based on short term objectives, you end up alienating fans and getting marked as SPAM.
At the end of the day, Mantra >  SPAM.  Be the mantra.  Don’t be the SPAM.
For further reading on these topics, check out Start with Why by Simon Sinek and Art of the Start by Guy Kawasaki.
PS – Apologies for the lack of spacing between paragraphs.  WordPress was not cooperating with me this morning!

Hug it Forward: 1000 Hugs for Justin

17 years ago, my dad passed away from cancer. He had stage 4 colon cancer and only lived 11 months after diagnosis. Today is his birthday and in honor of my dad, I’m asking everyone to give forward to another person fighting stage 4 cancer, Justin Salcedo.  My goal is to inspire 1000 “hugs” for Justin by the end of the day today, May 9th, 2012.
Please take a minute read more about this amazing young man on Brad Feld’s blog with whom GiveForward has partnered for this project.  Once you’ve taken a minute or two to read Brad’s blog post, here’s how you can help.
Go to Justin’s GiveForward page and do the following:
(1) leave a “hug” for Justin (doesn’t cost anything; only takes 30 seconds).
(2) Include at the end of your comment the following hashtag “#1000Hugs4Justin”
(3) Email this to any person you’ve ever know who has been touched by cancer.  Post this on your Facebook wall, share it on Twitter and encourage others to keep hugging forward until we reach 1000 hugs.
I’m not asking anyone to donate money but if we can get 1000 people to leave hugs on Justin’s page by the end of the day, it could change the world for this young man and give him the emotional boost he needs to beat the crap out of this stupid cancer!
We’ve got 15 hours.  I realize this is going to take a monumental effort, but I know we can do this.  I just gave my hug.  999 to go.  Ready. Set. Hug!
—–
UPDATE:  We didn’t get to 1000 but we did over 100 hugs for Justin on the first day.  Thanks to everyone for hugging.
Tagged , , , , , ,

Success in life hinges more on seizing opportunity than having everything go according to plan.  Anyone who tells you otherwise is lying.

Don’t get me wrong. I think the exercise of putting pen to paper and writing out a plan is actually incredibly important for sharpening your mind and your focus.  But rarely, if ever, do you hear successful entrepreneurs tell you they are successful because everything simply went according to their plan. (Ha. wouldn’t that be nice!)

The far more common reality is that startups chug along for a while following a general plan.  They might have good growth but not quite hockey stick growth.  And then an unforeseen opportunity comes along out of the blue and punches them in the face. If the company is prepared, they grab that opportunity by the tail, ride it all the way home and never look back.

You can plan and plan until you’re blue in the face, but at the end of the day things hardly ever go according to plan.  If you really want to change the trajectory of your company, rather than planning out every detail for the next three years, spend your time putting yourself in situations where opportunity can come a’knocking.

When Opportunity Knocks You Better Be Prepared

Tagged ,

A World Give Day Surprise for Fatima

May 4th is World Give Day.  It’s the one day a year where people around the world come together to support the causes that they care about most, whether that means giving money, giving their time, or perhaps just giving free hugs.

For this year’s World Give Day, I am holding a mentor-thon and  giving all the money I raise to a little girl named Fatima. Fatima is 4 years old and battling leukemia in Los Angeles.  Friends of the family started this GiveForward fundraising page to relieve some of the financial burden as they cope with the high medical bills.  Fatima’s family doesn’t know we are helping and I think it would be awesome to surprise them with a big donation on World Give Day representing the collective generosity of all the awesome people on the Interwebz! My goal is to help make Fatima’s page rock!  I’d love your help!

So how’s a Mentor-thon work?  Good question!  For the next 24 Hours, I will be using Clarity.FM to take as many phone calls as possible  from anyone who wants startup advice.  Whether your question is about business plans, raising seed capital, finding a co-founder, hiring your first employee. marketing, customer acquisition strategy, blogging, you name it. I’ll answer it.

The goal is to raise $500 for the Ortega family.   All you have to do to help is go to my Clarity.FM page and click the button that says “call me now”.  It’s $2 per minute and all the money is being donated to Fatima through the family’s GiveForward Page.

So that’s it.  Give me a call!!!!  Like ASAP!!!  And if you don’t have any startup questions, ask me about burritos.  And if you don’t have any startup or burrito questions, pay it forward this World Give Day by sharing this on Facebook or sending this along to someone who might.  Let’s make this happen for Fatima!

Click here to talk turkey with me! —> https://clarity.fm/#/ethanaustin

Alternatively, if you think talking to me will be a real snoozer and you’d rather just give directly to Fatima, you can donate on her GiveForward fundraising page here —>  http://www.giveforward.com/friendsoffatima

As an extra incentive to give, I’ll match up to $100 (in total) on donations that use the hashtag #WorldGiveDay in the donation comments.  Let’s go Internet.  Let’s make something amazing happen!

Thanks for your support and happy giving!

- ethan

PS – I hope this post inspires you to do something meaningful on World Give Day.  Feel free to share your plans or idea in the comment section.

PPS – If you haven’t used Clarity.fm before it’s a super-cool website started by Canadian entrepreneur extraordinaire Dan Martell (sorry, no relation to the Model, Rick Martell of WWF lore).  Basically, Clarity allows startup founders (or anyone really) to call up successful entrepreneurs to get advice.  For instance, you want to call up Mark Cuban for advice?  Boom! Here’s his profile. Give him a call.

Clarity is still in private beta, but there are already some really awesome entrepreneurs in the network like Dave McClure and Micah Baldwin.  Holy crap, right?  Imagine not having to deal intro emails and LinkedIn nonsense.  Imagine actually using your phone for (gasp!) talking and not just emails and text messaging. Clarity.fm eliminates all the gatekeepers, and gives people direct access to the most bad-ass, nerd-celebrity entrepreneurs in the universe.  I love the fact that it is democratizing mentorship and bringing back the phone call like it’s 1996. I only wish this service existed when we were first starting GiveForward.

#IcallfirstdipsonprankcallingJeffClavier

Tagged , , , , , , ,
Follow

Get every new post delivered to your Inbox.

Join 232 other followers

%d bloggers like this: