Founder to Founder with PhilHSC

Welcome to part of one of PhilHSC's capital raising master class from 20 March 2019.

Here are the resources that we discussed during the class

Start here...

•Investor Selection Planning & Criteria - Google Sheet

•11 Things You Don't Know About Fundraising The First Time Around - Post

•What Do You Look For In An Investment - Post (Andrew Chen)

•How Do I Raise Money For My Startup - Post

...then continue here

•How Founders Should Think About Money - Post

•How To Prepare For Investor Meetings - Post

•Be Wary Of The 18-Month Runway - Post

•How To Prepare For Investor Meetings - Post

•Press Releases About Financings Are Lightening Rods For Startups - Post

•30 Legendary Startup Pitch Decks & What You Can Learn From Them - Post

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Pocket Cast:

2019 International Women's Day. The truth is I love this occasion for two very different reasons.

I identify as a feminist in the same way I do a father, husband and business leader.

I take great pride in doing my part to increase opportunities for women and girls. That includes combating outdated stereotypes, the consequences of which women and girls have been subjected for the longest time.

In fact, standing shoulder to shoulder alongside women like my wife, Jo Burston, Rhonda Brighton-Hall and Julie Bishop (to name a few) and taking daily strides to create an equal footing for women and girls is invigorating.

Because we are on a mission. Together.

IWD reminds us of our collective contribution and our conviction towards one day declaring that this day we celebrate is redundant.

IWD also provides a platform to remind people of a choice that is well within their control.

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If you'd like to know when new episodes are released or when Phil publishes his weekly...

In episode 88 of Founder To Founder, Phil talks to serial entrepreneur Dr Silvia Pfeiffer.

Silvia is the CEO of Coviu, a cloud application focused on enabling healthcare providers to set up video consultation services for patients and to collaborate on patient cases with peers. Silvia has more than 15 years of experience with Web video technology. She has previously worked for Google, Mozilla, NICTA, and CSIRO and has been involved in creating the Web standards that underpin the Coviu technology. Silvia has a PhD in computer science, a masters in business management, has published two books on HTML5 video, and one on video consultations for healthcare businesses.

In this episode Silvia and Phil talk about how to history repeats and why backing yourself when you're young and not underestimating how much you know (and can learn) is important. They also talked about the three habits that founders need to develop to be successful.

Enjoy!

RESOURCES

•Connect with Silvia on LinkedIn

•Visit Silvia's venture Coviu

•Get's Silvia's book called Beyond The Clinic

3 KEY POINTS

•Look at how history has played out before. Fast forward to now and people look at the Australian startup scene and see and ecosystem which focused on building companies, not just placing bets on interesting ideas (2:49)

•The are significant advantages in delivering health services online, not least of which is the ability to help people stay on track with post surgery or injury rehabilitation (9:20)

•Why exercise, taking care of you and your team's health and mental health and celebrating small wins is important (16:17)

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Overcast:

The punchline is to plan the four actions you need to take when the answer is 'YES'. Consider this training to reduce surprise and potential confusion that can come from an unexpected 'YES'.

Planning for rejection, risk and worst-case scenarios is second nature to entrepreneurs. From the moment the first version of a business model is hatched, we are in de-risking mode. Ten steps back for each step forward. It's a familiar tune. I love this grind and how it forces adaptation and learning.

I also love being told 'YES'.

Doesn't everybody?

There's nothing better when the grind pays off. Closing a partnership deal, finalising funding rounds, securing that key hire or having a product launch work better than expected makes it all worthwhile.

Founders feel relief and the team embraces the shot of confidence.

What happens next can make a business. Or dramatically stall its momentum.

If a 'YES' answer is the suck, then go where the suck is

Opher, my good friend and co-founder at AirShr always used to remind me to 'go where the suck is'. The essence of this statement is to serve people who like what you do. And we followed that advice but we did so carefully.

In early-stage companies, founders invest a lot of time validating who makes up their actual target customers. In fact, most will tell you that moving from a 'persona on paper', or who you think your target customers are, to understanding who they really are is much harder than it sounds. But, you have to start somewhere.

When people start expressing interest by wanting to test and buy what you're selling, there is a natural inclination to listen more to those people.

And herein lies the cautionary tale: Homogeneous customer groups are not (usually) representative of your total addressable market.

Kickstarter and LinkedIn

There are two interesting examples to illustrate this point.

First, consider Kickstarter, the world's largest funding platform for creative projects. While Kickstarter has helped facilitate pledges of more than 4B USD to projects on its platform (of which there have been more than 150,000 successfully funded projects), it is difficult to name 10 household brands that have achieved significant scale from starting on that platform. And while many companies have successfully adopted Kickstarter as their business model (by launching all of their products via Kickstarter), it is hard to scale beyond an early adopter market.

LinkedIn is the second example. As Reid Hoffman described in his Masters of Scale podcast, the early days of LinkedIn attracted a self-organising group called LinkedIn Open Networkers (or LION's as they became known). This large and at the time growing group believed that they should be able to connect with anyone on the platform. They also believed that everyone would want to connect with them.

That was obviously not true and the LinkedIn team prevented that from happening. The point is that at the time the signal was so strong that LinkedIn could have gone where the suck was but it would have alienated other users and that would have stalled growth. A potentially terminal move.

So the moral of both of these stories and why you should plan for when the answer is 'YES', is that if you don't, you could find yourself course correcting your company to a false plateau. In other words, and in the absence of other recent wins, founders pursue this win as their new strategy.

Keep reading...

Happy 2019! In this episode Phil talks about two new projects, one on Youtube and the other called Be In Motion.

You can learn more about the YouTube Daily project here.

You can learn more about Be In Motion here.

By the way, if you'd like to know when new episodes are released or when I publish my weekly long-form blog post, sign up for the insider's email list here.

You can also follow me online:

Website: https://philhsc.com

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Spotify: http://spoti.fi/2AdJcPH

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Overcast: http://bit.ly/2HhJAMX

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In episode 84 of Founder To Founder, Phil talks to Lumi CEO and Co-Founder, Yanir Yakutiel.

Yanir began Lumi with one major goal in mind: to help Australian small businesses flourish by offering fast, flexible and fully transparent loans. One of the biggest differences between Lumi and other financial lenders is the fact that we harness big data in real-time, allowing us to offer customised lending decisions like no other. Having been involved with SME financing for the last 3 years, Yanir recognised the opportunity to use the power of data and analytics to create a market-leading, customer-focused small business lender that truly solves the lack of access to capital that is an existential problem for Australian small business owners. As the owner of a small business, Yanir says he understands firsthand how the lack of capital can hinder the growth of a business and limit the entrepreneurial potential of small business owners. His overarching ambition with Lumi is to empower small business owners to grow their businesses and achieve their dreams and aspirations.

In this episode Yanir and Phil talk about growing a FinTech startup, leadership decision making, podcasts and the three habits that founders need to develop to be successful.

3 KEY POINTS

•Building technology to achieve operational efficiency and achieve favourable unit economics was the big lesson from Sail that was carried across into Lumi because it's good business and because in Australia, unlike the US, investors won't fund loss making ventures for long periods of time (07:14)

•Startup is a team sport. A B-grade idea backed by an A-grade team will always win over a A-grade idea and a B-grade team (12:10)

•Making quick decisions, in particular in relation to talent and if a hire isn't working out is essential (14:10)

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Advisory boards are recruited to help leaders make high-quality decisions and expand influence. They are useful mechanisms in resource-constrained environments and hence popular at startups and not-for-profits.

I serve on numerous advisory boards. And while these roles are different to company directorships where I manage fiduciary responsibilities with my board member colleagues, I enjoy both styles of engagement.

I formed my first advisory board nearly 15 years ago. The key reflection from that first one, those I have formed since and through serving on advisory boards today is that the formation step is only a small part of the journey. The underlying routines and rituals that generate value from the advisory board is the main game.

Founders contemplating the establishment of an advisory board will nod in conceptual agreement. It's these same founders who 12 months later lament how disappointed they are with the group they brought together.

The recruitment and formation of members to their advisory board might have felt like the assembly of a grand coalition of the willing. A formidable team destined to achieve greatness. But something went wrong along the way. Greatnesses is still a long way off. Advisory board members seem disinterested or hard to reach and the founder feels like a significant piece of their armour is missing.

This is not a new issue.

Keep reading here.

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In episode 81 of Founder To Founder, Phil talks to serial entrepreneur and Maxwell Plus CEO and Co-Founder, Elliot Smith.

Maxwell Plus, a Brisbane based start up applying artificial intelligence to improve medical diagnosis. Maxwell Plus uses medical imaging, blood tests and patient data to deliver a fast and accurate diagnosis of prostate, breast, and lung cancer. Before founding Maxwell Plus Elliot completed a PhD in biomedical imaging designing the next generation of MRI scanners.

In this episode Elliot and Phil talk about how to manage being 'in between' ventures, how designing a product is often a collaboration between multiple systems and people, and the three habits that founders need to develop to be successful.

3 KEY POINTS

•Fundraising always takes longer than expected. Maxwell Plus budgeted 3 months to raise its first round and it took nearly seven months to close the round (16:39)

•You get told 'No' a lot when you're building a venture. No only means 'no', today. It often isn't a reflection on you or the work you're doing (18:10)

•People need uninterrupted time and space to do deep work. Elliot subscribes to Cal Newport's philosophy of Deep Work, you can read more about Deep Work here (24:22)

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In Episode 81, Phil talks with the team at Reckitt Benckiser about innovating within a large fast moving consumer goods company and the five ways you can win by obsessing about the problem (and not the solution).

For more information about hiring Phil to talk at your event, please contact his team here.

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Assumptions are the basis for most startups. After identifying opportunities, founders use assumptions to begin piecing together a narrative to communicate their vision. And it's just expected that each assumption in a startup's business model will get tested and iterated over time.

The reality is, however, that there are assumptions that don't get tested. Some of these are linchpin assumptions, ones that are critical to the business model that founders are selling to customers, investors and partners.

The punchline is that founder's risk building a 'house of cards' by relying on untested assumptions.

And there are two reasons why founders press on with untested assumptions. One is legitimate, the other convenient.

The legitimate reason is limited time and resources. Assumptions live on a semi-prioritised but nonetheless messy Trello board and you keep hearing yourself say 'I'll get to them'. I've been there many times. As a side note, and while resource constraint is a legitimate reason, I recommend you putting your mentor(s) to work to help prioritise assumptions. This will bring them closer to your business (which they will enjoy) and you get help from a 'friendly'.

'Convenient' untested assumptions are more dangerous because they:

•Are important to the business model's viability

•Are difficult to test (and may reveal a fatal flaw in the business model when tested)

•Receive the most positive feedback when a founder declares that the assumption is under control or well understood

The third characteristic is as subtle as it is important.

Consider this. You pitch to your first potential investor. They query a few of your assumptions and in the haste of wanting to appear like you have your act together, you offer a response. It is plausible and the potential investor accepts your answer. The meeting finishes and you agree to meet again shortly.

You meet another prospective investor (or partner or customer) and they ask the same question as the first investor. You offer the same answer. They accept it, the cycle continues and it gets reinforced when the founder raises money using the same thesis.

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