For almost ten years, I've been volunteering on New York City's waterfront--introducing lifelong New Yorkers and tourists alike to kayaking. It's a reminder that a) they live on an island and b) that NYC's waters are usable. In fact, the more you come up with creative recreational uses for our waterfront, the less likely the city will be to do things like park garbage trucks on it or simply fence it off as a passive shoreline balcony for some wealthy waterfront condo.
I started at Pier 26 at the original location of the Downtown Boathouse--and eventually worked my way over to the newly created Brooklyn Bridge Park, where I co-founded the Brooklyn Bridge Park Boathouse.
One thing holds true no matter where on the waterfront I am--there's no more rewarding activity I have ever been a part of in New York City than volunteering at kayaking. Every season, we put thousands of people on the water. Every single last one of them, no matter how excited, scared, apprehensive, or even disgusted they were at the idea of getting in a boat and paddling around the waters that surround NYC, is absolutely thrilled by the time they are done--and completely grateful for the experience. It's the most positive thing I've ever experienced. They love being reminded that whether you're in Manhattan or Brooklyn, you live on an island, and that the water is yours to use. They love doing something new and different. They love challenging themselves and getting over a potential fear. They love getting wet in the heat of NYC summer.
That's why I'm so excited for our plans in Brooklyn for 2013. We're planning a major expansion to our youth kayaking activities--including the creation of a youth kayak polo team. Given how few organized kayak polo teams there are at this age level in the US, even though it's a global sport, we could very easily be sending local Brooklyn high schoolers to national competitions within a few seasons. It's a very exciting endeavor!
But, we need help. Kayaks aren't exactly cheap--and we need the time of qualified instructors. We're raising $12,000 on Indiegogo, but we'd be able to expand our programs even further if we overshot our fundraising targets. We've got some cool rewards, including trips on the harbor and private paddling time. If you've been down to the NYC waterfront and enjoyed these volunteer kayaking programs--or if you just want to give a local Brooklyn kid a sense of accomplishment or lessons in teamwork, please consider participating in our campaign. Thank you.
When I was in the fifth grade, I made a pretty penny printing out desk covers. I don't know if anyone else did this, but I'd get my pack of 10,000 Print Shop clip art items, pick a tiled format, and put someone's name in the middle of an 8 1/2x11 sheet of paper. They got to pick which clipart they wanted--tanks, ponies, you name it. I think I told them for five or ten bucks. Friends would place them on the top of their desk at school, and cover the desk in clear contact plastic. Instant customization. Ink paid for by my dad.
The Print Shop'ing didn't stop there. The videos of my grandparents' 50th Anniversary in 1989 have visual evidence of the six foot long Congratulations banner than I made them--that took nearly two hours to print and half a printer ribbon full of ink.
In fact, I even bought one of the first color dot matrix printers with my own money--mostly because of my Print Shop creations.
So where is that behavior now? Home banner making seemed to go away with the advent of ink jets and lasers--which print one sheet at a time, but making foldable cards, door signs, etc. doesn't seem to be a big home computing use case anymore. You can actually still buy versions of Print Shop, but I don't think the product is supported, and I'm sure it's probably pretty behind the times.
Is Zazzle the new Print Shop? I really don't think so. One, I don't really think the creation ability is much better on Zazzle than the old Print Shop and two, not being able to print stuff out yourself at home or get something at least the next day feels like a loss.
Maybe it's a generational thing? Is there some Mac Print Shop replacement that the kids are using these days to make "Do Not Enter" signs for their room?
Today, ElectNext announced that they had raised $1.3mm to launch a data, analytics and marketing service to bridge the data gap between politicians, lobby groups, and their constituents. The company provides contextual political data to media properties (Crunchbase for politics) and in turn uses that reach to provide actionable insights for campaign managers. Brooklyn Bridge Ventures led the round.
Describing it that way, however, makes the story a bit neater than advertised. This business model isn't how Electnext started, nor was investor interest always this strong. I think there are five key lessons here that put the company in the position to succeed that they're in now:
1) Find a lead.
It's very fashionable these days of crowdfunding and party rounds to go out, tell a good story to individuals, and piece together a lot of cash from a lot of folks--with no investor in particular really taking any responsibility for advising the company. I had been meeting with Keya and her team months and months before I actually invested--because I liked the space and was impressed by her personally. Yet, the product needed direction and Keya had a lot of questions about how to prioritize her time as a non-technical founder. We've been on a schedule of meeting up every two weeks and have worked together to hone the strategy. It's been a terrific partnership and I've been super impressed with her ability to learn fast. She knows campaigns like the back of her hand, but she's a first time CEO of an internet startup. What's most important here isn't that I was around to help--but that Keya has an innate ability to ask relevant questions at the right time. I think it mattered less who the lead was, and more that, unlike a lot of other entrepreneurs, Keya reached out and leveraged the resources she had around her wisely. Her success thus far is a function of her ability to know when and what to ask--and to surround herself with people who can provide her answers.
2) Fail fast.
Many startups in the political space have tried the direct to consumer offering--like Votizen and Popvox. It's a tough slog, and, at the end of the day, it's tough to gather the audiences and then figure out a business model to support the effort. ElectNext started out along that path, but quickly realized that it would be more efficient to leverage the existing audiences already at major media properties. They left themselves plenty of cash in the bank to pivot and give themselves enough runway to execute the new model when the writing was on the wall for the consumer offering.
3) Use existing models of success.
In the poltical data space, information is all over the place, and often inaccessible, even though voters want to be informed and political figures and groups want to get their data out. Media properties gather big audiences, but none of them are quite resourced to solve the data problem. This problem isn't new. Singleplatform built a $100mm business gathering up menu data for restaurants and augmenting the offering that media properties had--creating a service to merchants in the process. They power, for example, the menus you see in Foursquare--something Foursquare would have been unlikely to gather themselves.
When ElectNext looked at their strengths, they had great media relationships, disaggregated data, and two sides that wanted better transparency--as well as the interest in making transparency actionable. Same situation. The SinglePlatform team was very generous with their time in helping ElectNext work through it's model and solidify a base for an attractive offering to all sides. The business isn't exactly the same, and ElectNext's knowledge of their space helped them craft a custom offering for their stakeholders, but they started out in a great position because they had seen a similar model work elsewhere.
Too often, startup try and reinvent the wheels around business models, inventing completely new things that have no proxies for success in other areas. That limits who you can learn from and seems incredibly risky, versus porting over something that worked in another sector and making it fit for what you're doing.
4) Keep up with the investors you meet, even when they turn you down..
Sometimes, you can tell when an investor genuinely has interest in you as a team, but just can't get their on the model. This happened to ElectNext. Everyone seemed to be very impressed with their team, but a lot of people didn't love the consumer offering. When the company pivoted, they solidified their offering, got some key proof points, and had continued warm enough connections to investors they had met previously to reapproach people. Almost overnight, investors jumped on board with the new model. The key here is that the change in the company was real. It wasn't just a slight tweak. It was a definitively different approach--one they committed to before necessarily waiting to hear what investors thought.
5) Go find the customer money.
The driving force behind ElectNext's consumer to B2B pivot was the thought of "What will customers pay for?" The aim was to create a real business and so they sought out ways they could provide real value to paying customers. They stayed in constant contact with key customers and built up a network of "friendlies" that could give them back channel feedback on what would appeal and what wouldn't. This helped them hone their offering.
If you've got interesting political datasets, work for a media organization that covers politics, or you're running communications and/or social media for a government official, candidate or lobby group you should reach out to Keya at email@example.com to find out how you can work together.
That is why some entrepreneurs have turned towards an alternative to getting investment from us...
Going into business for themselves...
In the past week, both AngelList and FundersClub got SEC "No action" letters--notices that their crowdfunding platforms were going to be allowed to keep operating without fear of getting run over by the government.
Call it fate, call it luck... call it karma...
A lot of people have asked me over the last year what I think of crowdfunding. I'm of two minds about it, to be honest.
In the short term, I think it will be kind of a mess. A lot of companies that probably shouldn't get funding will get it, because of the novelty of the platform and the momentum investing that tends to characterize individual investors.
That will cause some VCs to try and outbid them, causing more and more hype for mediocre deals. At the same time, the good deals that hit the traditional markets will also be overfunded--because VCs will fear companies getting financed by other means.
At the same time, the talent market will heat up even more. These crowdfunded companies will pour a lot of new money into the market for human capital, driving salaries up. It will be harder and harder to get quality hires for the rest of the companies.
Then, reality will set in.
I don't really think a bunch of individuals with little to no experience are suddenly going to "beat the market" when compared to people who do this for a living fulltime. Plus, I've heard, and can anecdotally corroborate, that most angel investors put 70% of all the money they will ever put into startups to work in their very first year of angel investing. Why? Because they realize it's super hard, a lot of work, and dealing with the companies then they need more financing and start hitting a wall is much more difficult than just writing checks. For many investors, its a pretty sobering experience. It's going to be no different in the crowdfunding world. Moneyflows will come pouring in at once, and when returns aren't there, they'll dry up quickly.
Just like in the stockmarket, some individuals will thrive as direct investors, but they'll do so by focusing on it fulltime, investing in the right infrastructure and research, and coming up with an investment process and philosophy. Most won't do better than average, and so they'll turn to professional managers.
This is where I'm optimistic. My hope is that funds, too, will access this crowdsourcing market. They'll be more transparent about their returns, and what they do to add value. Track records and PPMs will be public, and individual investors will pool their knowledge and research to start investing in funds.
The best funds will not only rise to the top, but they'll be free from catering to institutional thinking. For years, VCs have been pitching and getting funded by the most conservative investors on the face of the earth--pension funds and endowments. When you have to defend deals you did to a pension board, you inevitably take less risk. I think going direct to the public will make fundraising easier for VCs and allow a much wider variety of strategies and types of investments. This will be a good thing for everyone.
What will also be a good thing is that the competition will force VCs to be better actors in the ecosystem. Gone will be the days of meeting with a company seven times only to turn them down based on something you knew during the first meeting. Gone will be the mindless intros of "other people we like to invest with" where no VC is willing to stick their flag in the sand and to be the first one in. Gone will be the days where VCs can just hang around the rim for weeks and weeks, even months, on deals without ever saying yes or no--letting entrepreneurs just hang out to dry while the risk is taken off the table. Early conviction and real value-add will count for more now than it ever has before.
So while I look forward to the challenge and feel well prepared against the quick, inexperienced dollar--something most NYC VCs have always dealt with--I think we're going to see a lot of noise about companies raising crowdfunded dollars. I'll say this:
Nothing beats an active, thoughtful, experienced, and in-person investor who can see you for coffee in just an hour or two. That's not happening in many cases where VCs and "professional" angels are making companies jump through lots of hoops to no avail. If many VCs don't up their game in terms of being decisive, helpful, and respectful of an entrepreneur's time, the VCs on the bottom are going to fall seriously behind in a world of increasing alternative options for capital.
This post is either brilliant or idiotic. You've been warned...
You're on a boat. There's a terrible storm at sea. The boat capsizes, washing everyone overboard except for you and one other person. You're both stuck inside, unable to get out because only the hull is peeking above the water--but the sea is rising fast in the cabin. Your only hope is to break through the bottom of the hull to escape. You find a hammer, but its going to take you a few hours to bash through. Luckily, you've also found yourself the only remaining scuba tank--and it has just enough air left to give you enough time to break open a squeezable hole, maybe less.
The other survivor swims over, sees you intermittently breathing through the scuba tank as you go to work on the hull. He asks, "Can I have some air?"
You reply, "I hate to be that guy, but do you have an underwater blowtorch? 'Cause otherwise..."
It's not that you're trying to be a jerk--you certainly understand his need for air--but you share that air and you're both toast--because you won't have enough time to bust out of the hole. What's the point of that?
Well, it's kind of like that with VCs, or most professionals, and time. You feel like you're literally drowning--holding on to the precious little free spots of time you have left in your calendar. Then someone comes along and asks for some time, which is fine, except they're not really bringing anything to the table in return.
I can't tell you how many emails I get where someone just says "I'm not pitching, I'd just like to learn more about Brooklyn Bridge Ventures."
To which I'd really love to respond, "Do you have an underwater blowtorch?"
The thing about an underwater blowtorch is that it's not particularly useful to most people, most of the time--but when you need one, you really need one. For someone else, it's not an underwater blowtorch--maybe it's a six foot plumbing snake or a spare tire or a purple hat that matches a particular coat. Whatever, it doesn't matter--the point is, no matter how busy someone is, every single person has some item or short list that they will move everything else aside for.
When you're an individual VC, time is in short supply, but I am absolutely, 100% willing to make time--you just normally have to get me... something. That's the way it is for everyone. I see too often people just trying to either a) give something I don't need, like coffee or alcohol, neither of which I ever drink or b) trying to minimize how much they're taking from me. I've never taken a five minute meeting. If you're offering five minute meetings, it comes off as desperate. Go find someone that you are the underwater blowtorch for--and try and get a normal sized meeting with them.
I put out a ton of content on this blog--and so when I get someone asking for a "general take on fundraising for early stage companies", it's like... "Umm... I kinda have a blog for that, plus I speak in public about once a week..." On the other hand, if you found a specific post and have a specific, relevent, interesting question... YAY! Happy to engage. Interestingness and clever conversation is everyone's underwater blowtorch.
The more homework you do to figure out what someone really needs, the more likely it is they'll make time for you.