How to Approach Venture Capitalists and Investors - with Chris Hutchins

[Treehouse Friends] 0:00 >>All right, Chris, thanks for being with us today. 0:03 To start off, let's talk about--a little bit about who you are, 0:05 what you do, what you've done, 0:07 and how you've ended up at Google Ventures today. 0:10 >>Out of college, I decided to go to New York and work at an investment bank. 0:12 I chose one that was focused on tech, 0:17 because I had always been passionate about tech. 0:20 I was the kid with the computer, 0:22 locking myself in my room, being a complete nerd in high school and middle school 0:24 and all that. 0:27 And I guess I didn't really know what investment banking really involved. 0:29 No one at my university went to an investment bank, 0:33 but I thought all my friends that were on the East Coast 0:36 at Ivy League schools said that was the job to get. 0:39 So it was fun, I learned a lot, 0:42 but at the end of the day, it kind of doesn't support the entrepreneurial mind 0:45 if you will. 0:48 I ended up determining that it wasn't the right fit for me 0:49 for me. 0:52 >>Right, okay. 0:53 So how did that transition into you moving into tech? 0:55 >>Yeah, so--and then I switched, 0:57 because I thought management consulting might be better. 1:00 It was the exact same. 1:02 >>Still in New York? 1:04 >>Still in New York, but I had managed to convince the manager at the consulting firm I worked for 1:05 to transfer me out to California. 1:08 So they moved me out to California 1:10 and then about a month or 2 months later, 1:12 I was part of the end of 2008 layoff season, if you will. 1:15 Here I am in San Francisco, just moved here, 1:20 not sure what I want to do, laid off, 1:23 trying to figure out what would be fun to do, 1:26 and I ended up coming up with the idea 1:28 to start a conference called Laid Off Camp. 1:30 So my first kind of foray into the Bay Area 1:33 tech scene was doing a conference called Laid Off Camp, 1:37 which was kind of a spin on a bar camp, 1:40 which is kind of like a tech "un conference," if you will. 1:43 So that was my first foray in technology in the Bay Area 1:46 and we put on an event about 1,000 people, 1:50 then I put another one on in LA, another one on in New York, 1:53 and then I had to open source the model. 1:56 People were putting them on all around the country, 1:58 on their own, 2:00 and that was kind of the first way that I kind of 2:02 built a brand that I was associated with. 2:04 >>Did you meet Kevin through Laid Off Camp? 2:06 How did--walk us through how it led to-- 2:09 >>How it got to Milk. 2:12 >>There's another company in between. 2:13 >>So, the first person I met 2:16 kind of in the Bay Area tech scene was a guy named Matt Van Horn. 2:18 He's now the VP of Business at Path, 2:21 and he had worked at Digg, 2:23 so Matt was the way I kind of met some people at Digg 2:25 and at this point, 2:27 I wasn't connected to anyone really that I started Milk with, 2:29 but slowly through rock climbing, actually, 2:33 is how I ended up meeting Daniel and Jeff, 2:35 who are both 2:38 early co-founders at Milk, 2:40 and so I spent the next year 2:42 kind of doing some freelance work 2:44 and just meeting people and trying to figure out what I wanted to do. 2:47 >>That freelance work, was it coding? 2:49 >>No, I was helping people throw events, 2:51 I was helping people do financial forecasting. 2:54 It was really anything that someone needed help with, 2:57 I was helping out with. 2:59 And then, finally, I decided 3:01 and this is totally off topic, 3:03 took a 7-1/2 month trip with my now wife 3:05 and traveled around the world. 3:07 >>Okay, very nice. 3:08 >>Came back 3:09 and I had submitted a talk to South by Southwest 3:11 that was about being laid off 3:14 in the tech community, 3:16 and that talk--and our trip ended 3:19 going to South by, 3:21 and at South by, I was like, "Alright, now's my time." 3:23 I need to figure out what I want to do. 3:26 My goal was to get a job at a start up. 3:28 I wanted to work at a start up that people recognized, that had a great brand, 3:30 that had a bunch of great engineers. 3:33 I wanted to position myself for what was next, 3:35 which was could we start a company? 3:38 Join another--I didn't know, 3:40 but I figured if I could work with smart engineers 3:42 at a company that people recognize, that'd be good. 3:44 And that company was SimpleGeo. 3:47 >>Okay, what did they do--what did you do, rather? 3:49 >>SimpleGeo was a location data service provider. 3:51 They basically made developers' lives easy when they wanted to do location stuff 3:55 in mobile and web applications. 3:59 I honestly, when I was trying to work there, 4:01 still didn't know what they did. 4:04 I tried to figure it out; it was all API. 4:06 I was not a developer, 4:09 but I got the space; 4:11 I just didn't get their product, and I just-- 4:13 I met with their CEO, who I'd been introduced to. 4:15 I met with the person they'd just hired in business development, 4:18 and I was like, "I want to work here," 4:20 and I had learned that if you are non-technical, 4:22 and you don't want to do sales, 4:24 you need a job in business development. 4:26 Like, that's the role; if someone's like, "What do you do?" 4:28 and you're like, "Oh, I'm not a designer and I'm not a coder," 4:30 and it's kind of like what does that mean? 4:32 Well, if you're not a salesperson, then you do BD. 4:34 And I just wasn't a-- 4:36 like I like selling, but I didn't want to just sell. 4:38 I wanted to build something, 4:41 and so BD seemed like where I could do that. 4:43 >>Okay. 4:45 >>So I worked at SimpleGeo for about a year, a little less, 4:46 and at South by Southwest again, 4:50 Kevin and I got connected, because he asked around for 4:52 who's a good BD guy, 4:55 got introduced to me, and we all decided to start Milk right around South by that year. 4:57 >>Interesting. 5:01 How did the idea for Milk come about? 5:03 Well, let's talk about that first. 5:05 >>So the idea came about, 5:08 because didn't actually have an idea. 5:10 Right, so Milk originally, 5:12 Kevin and Daniel had always said, "We should start a company together." 5:14 They'd had this vision since they worked together at Digg, 5:17 and they had been playing with ideas, 5:19 but they never really knew, 5:21 it wasn't, "I have this great idea; let's go build it." 5:23 It was, "We want to work together." 5:25 And so Kevin and Daniel brought on Jeff, brought on me, 5:27 brought on 2 other IOS engineers, 5:29 and we kind of brought together a team of people 5:31 that wanted to work together and build something cool, 5:33 and we raised our first round on that idea alone. 5:36 Like, we didn't have a business idea. 5:39 We had a few things we were playing with, 5:41 but we weren't sure what the big idea would be. 5:43 >>So let's talk about, like, 5:45 how did you manage to raise a round 5:47 without having an idea? 5:49 For people out there who think you need to have an idea there 5:51 and have to have a business plan in place and all that stuff done. 5:53 >>The short answer is 5:56 you be Kevin Rose. 5:58 So the real answer is, you need an idea. 6:00 Like, if somebody e-mailed me and wasn't a Kevin Rose or a Kevin Systrom 6:03 or an Evan Williams and was like, 6:06 "I would like to raise a round of financial from you and Google Ventures," 6:08 I would be like, "No." 6:11 It just doesn't work like that. 6:13 >>Right, so you need to have past success? 6:15 >>Yeah, and we've done some studies at Google Ventures 6:17 and the general investing ecosystem has, as well, 6:21 and past successes 6:24 is a very key indicator 6:26 for future successes. 6:28 So that's one of the reasons we do that, 6:30 but that's a very unusual circumstance 6:32 to be able to raise a round without anything. 6:34 But we did have a tech team 6:36 and if that's the first step, right? 6:38 Like you can build a product. 6:41 You have a team that can build a product, 6:43 and you have some ideas. 6:45 Most companies just need to spend a month, build something, and then raise a round. 6:47 We were just fortunate because of Kevin and Daniel 6:50 and who the team (inaudible-speaking at the same time), right. 6:54 >>So what were some of the difficulties you ran into 6:56 when starting Milk, from a business perspective? 6:58 >>Yeah, so my role was the business guy, 7:01 like we had engineers, developers, designers. 7:03 Like and then Kevin, 7:05 and then I was in charge of everything else. 7:07 So in the early days, 7:09 I came in, and I was like, "Alright, we don't have payroll. 7:11 We don't have a bank account. 7:13 We don't have any filings with California. 7:15 We don't--literally, we had nothing. 7:18 So we took an approach early on 7:20 and there's reasons, too, not to do this, 7:24 to kind of do everything in a way that would scale. 7:27 So depending on how much money a company has, 7:30 I would advise to or not to do this, 7:33 but we hired a law firm. 7:36 We hired an accounting firm. 7:38 Things that probably cost more than they needed to 7:40 in the first 6 months, 7:44 but that--when we grew 7:46 and eventually when we were getting--going through negotiations with Google, 7:50 it made it so seamless. 7:52 We didn't have to go create financial statements to send in. 7:55 We didn't have to make sure our docs were in order. 7:58 And so the cost might have been 8:00 10, 20, $30,000 8:02 all in for the first year for legal 8:04 and finance and accounting, 8:07 but for us, it was worth it. 8:09 So my job getting in was, 8:11 alright, who is going to manage our HR? 8:13 Who is going to manage our accounting? 8:15 How do I set that up? 8:17 >>For founders out there, 8:19 should--who don't have a start up round necessarily, 8:21 should they take the time out to learn accounting, 8:24 finance, the legal stuff, 8:26 or should they just 8:28 not necessarily hire a law firm or an accounting firm, 8:30 but hire someone onto the team who can do that? 8:32 >>For any company, 8:34 it's good for someone at the company 8:36 to understand the fundamentals. 8:38 Does someone need to go learn how to use Quickbooks? 8:40 Absolutely not. 8:42 From most companies that we see at Google Ventures, 8:44 like the accounting that they have in place 8:47 for the first 6 months is almost nothing, 8:50 and that's fine, 8:52 but for someone to understand what that means 8:54 and what that will mean down the road 8:57 and understand why it's important to have 8:59 your formation docs 9:02 and filing your--all your tax documents 9:05 for your stock purchase agreements and all that stuff 9:08 done right, 9:11 it's important to understand that 9:13 as a co-founder or founder of a company should take the time to learn that, 9:14 but that's something you can learn in a few days, 9:17 having a conversation with friends and that kind of stuff. 9:20 But do you need to hire a business person 9:23 to run your company? 9:26 It just depends on what you're building. 9:28 It's good to have 1 person that's at least familiar with it. 9:30 >>So I watched a talk once. 9:33 I think it was the CofMid.com, 9:36 and he said that when he was raising his round, 9:38 he was told that for every non-tech guy that you have 9:40 in a tech start up, 9:43 it decreases the valuation of the company. 9:45 First off, is that true? 9:47 No. 9:49 >>Okay, because he said, 9:50 I think his numbers were $250,000 for everyone that was 9:52 not a tech person was deducted 9:55 >>From the purchase price of the company-- 9:58 >>The valuation of the company. 10:01 >>There's a million examples of why that's not true. 10:03 Like if you took all the non-technical people out of sales force, 10:05 like they would have no revenue, 10:08 or they would, but it wouldn't be growing at all. 10:10 So you can't--there's not way to blanket state 10:12 that that's the case. 10:15 I know that had 10:17 we done during acquisition talks, 10:19 I know that if you took a person who was a non-technical person 10:22 out of the mix 10:25 in a lot of scenarios, 10:27 like that kind of company would be worth less, 10:29 like if some company came to me 10:31 and they have 4 co-founders, and it's an engineer and 3 business people, 10:34 is that less, usually less desirable 10:37 than 3 engineers and 1 business person? 10:41 Yes, like at an early stage, 10:43 there should be more engineers 10:46 than business people, 10:48 but that doesn't mean that there should be barely-- 10:50 >>It's not necessarily a bad thing. 10:52 Okay, yeah, let's take a step back, 10:54 because I forgot to ask this, 10:56 but what are some of the difficulties 10:57 you personally ran into on the business side when starting up Milk? 10:59 >>Yeah, so I think 11:03 one of the biggest difficulties was just keeping everything in order, right? 11:05 You've got documents that need to be signed by everyone. 11:08 You've got paychecks that need to be issued, 11:11 and it's just really important to kind of set aside 11:14 like here on this day of the week, 11:17 like I'm going to make sure that all the payroll is actually entered and stuff. 11:19 Once you get to a stage that you're paying people salaries and stuff, 11:23 like you have a responsibility 11:26 as a person in charge of that to your employees. 11:28 They are legal concerns. 11:31 I think one of the most interesting things is when I was interviewing people, 11:33 I had to, like, step back and actually realize that, like, 11:35 I have, like, a legal responsibility as a corporation 11:38 in the United States, in California 11:41 to treat a potential job applicant a certain way, 11:43 and you just have to realize that you have these responsibilities 11:47 that you might not know about or might not be used to, 11:50 and they come in a number of different ways, 11:52 and you just have to get used to it. 11:55 >>Right, yeah, I think it's interesting, because a lot of people 11:57 when they're going through all these pains when they starting a company, 11:59 they look at companies like Milk or Digg, 12:01 and they're like, "Oh," they probably didn't have anything, 12:04 because you see successful companies, 12:06 and you don't realize that they go through some of the same things 12:08 that everyone goes through in start up companies. 12:10 >>Oh, yeah, the hardest thing starting Milk was that 12:12 we needed to figure out an idea, 12:14 and we basically needed to--we knew we had a good team, 12:16 and it was what do we want to commit to 12:19 and I think the hardest thing in this ecosystem right now 12:22 is that people want an idea, 12:25 and they're scared of pivoting their company, 12:27 so they commit to something so hard 12:29 that, like, they won't change paths 12:31 and there's kind of a stigma around the pivot 12:34 that I don't think maybe their should be, 12:37 because the most important thing is to just build something 12:39 and if that doesn't work 12:41 like, change what you're building, 12:43 but don't sit there and not build anything. 12:45 >>Okay, let's talk a little bit more about Laid Off Camp. 12:47 Like, so it was 12:50 pretty much national, right? 12:53 You did it in multiple locations. 12:55 What did you talk about there? 12:57 Now this was pre-this recession. 12:59 >>Yeah, this was late 2008. 13:01 >>Yeah, what did you teach? 13:03 Was it only tech stuff? 13:05 >>No, so the interesting thing about Laid Off Camp 13:07 was it was done in San Francisco. 13:09 It was modeled after bar camp. 13:11 It had a very strong influence on--from technology, 13:13 but it was not a technology event at all. 13:17 The general thesis was 13:19 the economy was terrible. 13:21 People were getting laid off pretty much every day, 13:23 and people didn't have skills that they wanted. 13:26 People would, like, complain and be like, "Oh, I can't get a job, I need skills." 13:30 And traditional job training just wasn't working. 13:33 And then there's also this whole freelance community in San Francisco 13:36 that kind of--they're not laid off, but they don't have full-time jobs, 13:40 so what I kind of wanted to great was a place 13:44 for people without the kind of full-time job situation 13:46 to come together and learn from each other. 13:49 So when you show up in the morning, there's nothing on the agenda, 13:52 but there's a giant white board 13:54 with a bunch of rooms 13:56 and a bunch of sticky notes, 13:58 and you can get up and say, "You know what? 14:00 I want to talk about Twitter; I know so much about Twitter, 14:02 and I'm here to create a session about Twitter." 14:04 And so the really cool dynamic that ended up happening was 14:07 we had people in their 70s, 14:10 and we had people in their 20s, 14:13 and there was this one guy who probably, let's say early 50s 14:15 who, his whole life, he was a hiring manager, 14:18 so he probably interviewed 14:20 hundreds and thousands of people his whole life, 14:22 and he knew everything it took 14:25 to kind of light up his eyes when he was interviewing someone. 14:27 Nothing to do with technology, 14:30 but so he led a session on how to interview 14:32 and how to wow an interviewer. 14:35 Similarly, there was, like, a 20-year-old kid 14:37 who knew everything about Twitter and Facebook and LinkedIn and technology 14:39 who was able to teach that guy, who knew nothing about tech, 14:43 some skills and then likewise, 14:46 that guy was able to teach the younger-- 14:48 so basically, you had people that were learning from their peers 14:50 instead of learning from me or someone else 14:52 how to do anything. 14:55 The sessions were--exactly. 14:58 >>So a question for you. 15:01 So since we're in an education space, 15:03 like if I learn something from Treehouse, 15:05 taking those skills and showing it to 15:07 a company and saying, "Hey, I learned these things" 15:09 without having an accreditation. 15:12 Like how did Laid Off Camp 15:14 take the skills that you taught people 15:16 and, like, give them a way to show it to companies 15:19 so that you can say, 15:22 "Hey, I've learned these new skills now with Laid Off Camp." 15:24 >>We didn't do stuff like that, 15:26 but not--but I don't think we needed to, 15:28 because when we hire an engineer at Milk, 15:30 we weren't saying, "Show me your certification from some PHP seminar." 15:33 We were saying, "Show me what you build." 15:37 >>But see, that's easy with tech. 15:39 You can build a product. 15:41 What about some other start up? 15:43 >>Exactly, so if I'm going to hire a BD person 15:45 or an associate at Google Ventures, 15:48 I don't care that they have 15:51 experience doing BD; 15:54 I care that they can use their BD skills, 15:56 their hustle, their enthusiasm, their passion 15:59 to convince me that I want to hire them. 16:01 So I was going to 16:03 SimpleGeo when I wanted a job, 16:06 I pitched the founder; I tried to pitch one of their investors, 16:08 I tried--I was using the kind of skills 16:10 that I would need to have in that role 16:12 to get the job, 16:14 and so I think that if you want to show someone that you know how to interview, 16:16 wow them in an interview. 16:19 If you want to show them you know how to use Twitter, 16:21 use Twitter well, and link them to your Twitter page 16:23 The same thing applies in the business side, 16:25 but you just have--it would be difficult for, like, an introverted person 16:28 to be able to convince someone that they had all these skills 16:31 unless they can demonstrate them. 16:33 >>So moving on, let's talk about investing. 16:36 What is it--what brought you to Google Venture--? 16:38 >>Right there, let me pause you and say, 16:41 So, the reason I'm at Google Ventures 16:43 is because Milk, 16:45 about 1 year after we started was approached by Google. 16:47 We were at a point in time 16:49 where we had built our first product. 16:51 We kind of realized that product 16:54 wasn't going to just be a break-out success 16:56 that we needed to dedicate everything in company to, 17:00 but we had also realized it had some legs 17:03 and we weren't sure what to do. 17:05 So we kind of started thinking, "What can we build next?" 17:07 And during that same process of being unsure of what our next project was, 17:09 we were approached by Google 17:13 and kind of talked to Google about 17:15 how could we work together? 17:17 We had a lot of visions for how Google 17:19 could improve social and mobile and all that. 17:21 And so that conversation kept going, 17:24 and eventually, the 4 of us from Milk joined Google. 17:26 >>Okay, so that's what brought you to Google Ventures. 17:30 >>So that brought the 4 of us to Google+. 17:32 Google is a great company. 17:35 Like, they really want everyone at the company to be happy. 17:38 So genuinely, they kind of ask you, 17:42 "You got acquired by Google+; you're working at Google+ right now. 17:45 How do you feel?" 17:48 And I was a PM, and I very much like to be out and about, being social 17:50 and it turned out that a PM role wasn't the right fit for me. 17:54 I love product and at a start up doing product is great, 17:57 because there's a lot more that you do than just traditional product role. 18:00 At Google, to be a great PM, 18:03 you need to love writing PRD, 18:06 and you need to really understand that, 18:09 and I understood it, but I knew it wasn't my passion. 18:11 So when I went to my manager 18:13 and was like, "Hey, I've been talking to the Google Ventures guys. 18:15 They invested in Milk. 18:18 I love what they're doing." 18:20 She was like, "That makes sense; why don't you do that?" 18:22 >>So let's talk a little bit about structures like at Google Ventures. 18:24 Like what do you guys do? 18:28 >>Sure, so we're a pretty large firm, right? 18:30 We have over 50 employees. 18:33 We basically have an investing team 18:35 of about 14 employees, 18:38 and then we have a whole other team 18:40 of different hands-on groups 18:42 that help out our portfolio. 18:44 We've got a design studio 18:46 with 5 designers 18:48 who basically, depending on the size of our company 18:50 and how much we have invested, 18:52 do everything from office hours, talking about design with our portfolio companies 18:54 to actually helping prototype things out 18:59 to sitting down with their designers and walking through UI flows. 19:02 >>Okay, so very hands on. 19:04 >>Very hands-on. 19:06 We have a bunch of engineers from data modeling, 19:08 machine learning, status, PHD. 19:11 The goal is there's some of these areas like design 19:13 and really heavy data modeling 19:16 and recruiting, we have 5 recruiters 19:18 that help our portfolio companies, 19:21 where it's really hard for an early-stage company 19:23 to dedicate a person 19:25 or a head count to recruiting, 19:27 and it's a huge thing that almost all of our portfolio companies need, 19:29 so we found that as a way that we can provide a lot of value, 19:32 because not everyone needs a full-time recruiter. 19:35 So if we have 5, 19:37 that can serve our entire portfolio. 19:39 >>So you're a VC plus an incubator, essentially. 19:41 >>I wouldn't say that we're an incubator, 19:44 but we're a VC that offers a lot of the same value 19:48 that an incubator would, yeah. 19:51 >>When you guys invest, 19:53 what do you look for in a founder or a team? 19:56 What qualities make a good leader 19:58 or, like, translate into a successful business? 20:01 Now you don't have to get into Google strategies 20:03 or have--specifically what you guys do. 20:05 What in general? 20:07 >>Yeah, so when I sit down with a founder 20:09 which happens multiple times a day, 20:11 I'm really looking for 20:14 someone that is passionate about what they're doing, 20:16 incredibly talented, 20:19 put together a team that's capable of getting them to the next step. 20:21 I'm not looking for a founder that's also 20:24 necessarily going to be able to run the company when it's a $500 million company, 20:27 but I'm looking for someone 20:30 that's really able to do what they have-- 20:32 tackle the challenge that they have at hand right now. 20:35 Yeah, I've seen a couple of companies where it's just a business guy, 20:38 and he has this dream of raising a million dollars 20:41 and hiring engineers, 20:43 and I'm typically looking for the person that's already found a team 20:46 that can build what they want to build, 20:49 and usually that's already built something. 20:51 There's nothing more amazing 20:53 than going to a meeting 20:55 and someone saying, "Here's my app; play with it," 20:57 and like, it's not trying to decide 21:00 what it could be; 21:02 it's decide what it is, and the cost of building something. 21:04 So you guys at Treehouse know you're teaching people 21:07 how to build products all the time, 21:10 different coding languages, different platforms. 21:13 Because that's so easy, all it takes is your time. 21:15 And so you can build something tangible that I can play with. 21:17 Half the time, some of the pitches, they just say, 21:20 "Here's my site. 21:22 Like, let's talk about it if you're interested," 21:24 and I can just go use their app; I don't even meet them at the first step. 21:26 And so that's really important. 21:29 So I love being able to see the product, 21:31 and I love being able to really just understand the passion 21:33 that comes with the entrepreneur. 21:35 >>Okay, so how do people 21:37 get in touch with you or any investor in general? 21:39 Like, should people network their way up? 21:41 Or find you through a contact 21:44 or should people just e-mail you things? 21:46 >>So what's the most effective way? 21:48 >>So the most effect--in start up business, life, anything; 21:50 like, the most effective skill someone who's running something, 21:54 whether it's a company or anything, 21:57 the ability to network, to hustle, and to be-- 22:00 that's important. 22:03 So if I get an e-mail from a friend that says, 22:05 "You have to talk to this guy," 22:07 I'm going to respond a lot faster than if I get an e-mail 22:09 that was sent to 100 people, 22:12 that's not even personalized to me, 22:15 and it was sent out. 22:17 The same thing goes when you're trying to find a job. 22:18 You can sent 100 resumes to 100 different companies, 22:20 or you can pick 3 companies 22:23 and do everything you can to get in. 22:25 And that's--when I decided I wanted to work at a start up, 22:27 I picked 1 company and did everything I can to get a job there. 22:30 I didn't even interview with any other company. 22:33 >>Right, so, 22:35 so you said, like, 22:38 you're looking for someone with passion, with the ability to get the task done. 22:40 Does that have to be--what if it's a business guy 22:45 with a--trying to start a technical company. 22:47 Doesn't have technical skills. 22:50 Because the stigma in this day and age 22:53 is you need to be able to build your own product. 22:55 One of the things we talked about often is 22:57 should founders be able to code? 22:59 And--so what if a founder comes to you who can't code 23:02 but is super passionate? 23:04 Does that come across as a positive thing? 23:06 >>So I'll take myself as an example. 23:08 I know sometime in the future, I'll probably start another company. 23:10 Maybe it'll be technical. 23:13 Maybe, in the future, we do things that I can't even predict, right? 23:15 But I know if I were going to pitch a VC right now, 23:19 saying, "Hey, I want to start this company," 23:22 I would feel ill prepared 23:25 if I didn't have someone on my team 23:27 who was able to build what I wanted 23:29 So similarly, 23:31 I think that if I have a passionate business 23:33 co-founder come and meet with me 23:36 and he was like, "I have this great idea," 23:38 my advice to them would be, 23:40 why don't you go find someone you can work with 23:43 and build your product with, 23:45 because it's important that you have that team in place. 23:47 Money doesn't solve the ability to meet someone, 23:51 so you're not at a stage where money gets you to the next step, 23:53 because the next step, you don't need any money. 23:56 >>Right, you just need to find someone. 23:58 Okay, once--say that I found a VC or an investor, 24:00 what is the best way for me to get my idea across 24:02 and convince them that I'm worth investing in? 24:04 You know, usually you need a business plan. 24:06 You need financial projections. 24:08 You need a model. 24:10 >>So in the old days, that was true. 24:12 I would say 24:14 I have never seriously considered a company 24:16 that sent me a business plan 24:19 with financial models, forecasts, projections at the seed stage. 24:21 So at Google Ventures, we kind of do 24:24 seed investing, 24:26 which is what the team I'm on, 24:28 and then we do tons of other investing 24:30 at series A to series Z, 24:31 all the way up and down the timeline of a company. 24:33 At the seed stage, 24:35 if someone's giving me financial projections, 24:37 they basically mean nothing. 24:39 So I'm not even looking for them. 24:42 Sometimes the companies don't even know how they're going to make money, 24:44 let alone how much they're going to make 5 years from now. 24:47 The concept of a business plan 24:49 and putting together an executive summary is similar, right? 24:52 When someone mails me a 5-page business plan executive summary, 24:55 I just kind of think this person doesn't get it, 24:59 because right now, what I want, 25:01 I mean, if I were to craft the perfect e-mail that someone would send me, 25:04 it would be, "Here's who my team is," 25:07 in 1 to 2 sentences, 25:09 "Here's what we're building," in 1 to 2 sentences. 25:11 That 1 to 2 sentences needs to address the problem they're solving. 25:13 I don't want to hear that you're building Pinterest for cats, 25:17 unless you have a strong reason 25:20 why Pinterest for cats is something that the world needs, 25:22 which I don't think it is right now. 25:25 I'm always looking for 25:28 someone to say very concisely 25:31 who we are, what we're doing, and what problem we're solving, 25:34 and if they can do that in a few sentences 25:37 and attach a link to a product, 25:39 a link to a demo, a deck, 25:41 anything at the beginning, 25:43 it just makes it easier for me, 25:45 because if someone sends, "Hey, I've got an idea; I'd love to share it with you," 25:48 then it's on me to say, 25:51 "Okay, will you share it with me." 25:53 Then they say, "Here it is" 25:55 >>Right, so initiated that conversation yourself. 25:57 >>Absolutely; once I have it, I can go look at it-- 25:59 chances are, if you send me a deck, I'll read it. 26:02 If you send me a deck, and I read it, 26:04 and it's just crazy, and I have no idea who you are, 26:07 like that much lowers the likelihood 26:09 that I'm going to react quickly. 26:12 So definitely get an intro, 26:14 but also be proactive and be prepared 26:16 so that the person reading your e-mail can do everything they want to do, 26:19 which is evaluate your company. 26:22 >>Right, okay, and now to wrap it up, a final question: 26:24 A lot of people out there have ideas. 26:27 What advice do you have to those people? 26:29 Because you started companies, 26:31 and now you're in the place where you help companies. 26:33 So do you have any advice to those people 26:35 to take that idea, and execute on it? 26:37 >>So ideas are kind of a commodity, right? 26:39 Like you probably came up with 5 ideas today 26:41 of things that, "Oh, this doesn't work." 26:43 So instead of an idea, 26:45 I love when people come to me with problems. 26:47 So that's the first step, "I have an idea. 26:49 It would be really cool if 26:52 I could use my phone to send a text message in the shower, 26:54 because maybe sometimes I remember something." 26:58 So the idea stems from the problem that I want to do it, 27:00 but then think about, is this a problem people can really have? 27:03 There are a lot of times where I'm like, "This would be so cool!" 27:07 And then I'm like, "Do people really need this?" 27:09 So the first step is vet your idea to make sure it actually solves a problem 27:11 that lots of people have 27:14 that people are willing to pay for. 27:16 If you can create a business out of the idea 27:18 and solve a problem, 27:21 then it's probably an idea worth pursuing. 27:23 >>Right; not to cut you off, but with ideas, 27:25 you need to kind of gage the success, 27:27 and a lot of people are secretive about it. 27:29 Do you recommend sharing ideas? 27:31 >>So every now and then, I get an e-mail with someone asking me sign an NDA, 27:33 and you probably won't find a single investo 27:36 that will sign an NDA, 27:39 and if they will, they're probably not the kind of investor 27:41 that really gets the space. 27:43 Mostly because we see so many ideas. 27:46 I can't agree to 1 company 27:48 that I'm not going to know what they're doing-- 27:50 We have our reputation based on the fact that 27:52 we don't share pitches with other people. 27:55 But to go through the paperwork of having our legal team, 27:58 it's just never going to happen. 28:00 Similarly, the idea isn't what I'm investing in. 28:02 I would say there's not a single company 28:05 that I've ever thought of or invested in 28:07 or thought of investing in or invested in 28:09 because of the idea they had; it's who they are. 28:12 So share your idea; 28:15 don't share it to someone you think might go built it 28:17 and try to do it--do it better than you, 28:20 and if you think they could, work with them. 28:23 But the general idea is 28:26 share your ideas with people to get feedback, 28:28 but don't share it to the world, 28:30 but don't be afraid of requiring people to sign NDAs or anything. 28:32 At the end of the day, 28:35 what's going to be successful is your passion about this idea. 28:37 You are the one--that's who investors are going to bet on. 28:40 So to finish the previous thought, 28:43 it's make sure you're sharing it with the right people, 28:46 get lots of feedback, 28:49 and then if in anyway possible, 28:51 build something. 28:53 I don't care if--there's this great app called Prototypes 28:55 that lets you take a bunch of pictures 28:58 and create links between pictures 29:00 by touch. 29:03 You can pull it up on your iPhone, and it acts like an app, right? 29:05 You can jump from page to page to page, 29:07 you can interact with it, 29:09 except all it is is pictures with, like, links at different parts of the pictures 29:11 that all work together. 29:14 You don't have to be technical to do that, 29:16 but it lets me, the investor, understand what you're doing. 29:18 I'll probably want to see that you can build it before I'd invest, 29:21 but it would definitely help me vet an idea 10 times faster 29:24 than you just saying it. 29:28 >>Right, and then now, in this economy, and with you having experience, 29:30 dealing with Laid Off Camp, 29:33 what advice do you have to people 29:36 who are trying to build a company in this economy? 29:38 >>This is a great time to build a company, right? 29:41 There's a lot more investors than there had been. 29:43 There's a lot of resources; there's incubators and accelerators all over the country, 29:46 all over the world. 29:49 People are starting to become more entrepreneurial. 29:51 You see a decline in college students wanting to go get a regular corporate job. 29:55 So it's a great time to meet co-founders, to start companies. 30:00 Customers are now a whole lot more open, I think, to buying from small companies 30:03 than just always buying at the Walmart or something like that. 30:07 So I think that my advice to people is 30:10 if you're passionate about it, go for it, right? 30:12 Like there's--you can sit, 30:14 and I've done this, and debate whether this is worth doing, 30:17 but the people that can get over that 30:20 and just do and the people--I always tell companies 30:23 if they're thinking, "Oh, we're not sure if this is the right thing," 30:25 and I'm like, "Just keep doing something; don't stop." 30:28 The people that don't stop 30:30 and the people that get over the fear of starting something 30:32 or the fear of if they're doing the right thing; 30:35 those are the people that end up doing amazing things. 30:37 >>All right, Chris; I think that's all we have for today. 30:40 Thank you for your time. 30:42 [Treehouse Friends] 30:44