Transcript
Speaker: Today, we're breaking from our regular format with a new kind of episode with a founder who is serving some spicy opinions on how an entrepreneur can succeed.
Speaker: Join us in today's conversation with Taylor Margo, founder and CEO of Keys and investor Tanner Potter, as we bring you both sides of A Perfect Pitch.
Speaker: Perfect Pitch is a podcast from Kickstart that reveals the minds of both investors and entrepreneurs throughout a startup's journey.
Speaker: I'm your host, Karen Zelnick, and I'm excited to introduce you to today's guests.
Speaker: So we'll start with you, Taylor.
Speaker: You're the founder and CEO of Keys, an intent-based communication assistant that works across any app.
Speaker: Across?
Speaker: Oh my gosh.
Speaker: That works across any app.
Speaker: And rather than letters, the keys on your keyboard represent the intent of your message, turning the worst communicator, like people who say across...
Speaker: to a highly effective one.
Speaker: And before Keys, you were a partner at Progress LLP.
Speaker: And before that, you were an M&A and VC lawyer at Wilson Sincini, where you closed 21 billion in deals.
Speaker: And you once lived out of your land cruiser where you spent time fly fishing in glacial waters, which I don't know what else we can add to that.
Speaker: That looks amazing.
Speaker: But what else would you like us to know about you?
Speaker: something that people are surprised to learn about me, and maybe this is reflected in that bio you just ran through, was that I always feel like an outsider almost no matter where I am, even when I'm around what you might call my people.
Speaker: I'm not very good at conforming.
Speaker: I try.
Speaker: I'm just not good at it.
Speaker: And I think that might be because I feel like I've spent my whole life trying to align who I want to be with who I am.
Speaker: And it's still a work in progress, I promise.
Speaker: Yeah, I think it's a work in progress for everybody.
Speaker: So at least good for you for recognizing it.
Speaker: And Tanner, it's so good to have you back on the show.
Speaker: Your first episode is our investor expert.
Speaker: And if you haven't already listened, we have an entire introductory episode with Tanner.
Speaker: So check out our show notes for that discussion and his full bio.
Speaker: What else would you like our listeners to know about you, Tanner?
Speaker: One of the things I thought about is the secret love for carrot juice.
Speaker: And I find it very sweet, just the right amount of sweet.
Speaker: And the funny story with that is one summer, I spent a lot of time drinking carrot juice every morning.
Speaker: And a roommate of mine came home after not having seen me for a few weeks.
Speaker: And he came in at first, he said, wow, you're looking tan.
Speaker: And then he said, wait, actually, you're looking really orange.
Speaker: And I think I kind of looked like an Oompa Loompa because I looked at the inside of my hands and my hands were orange.
Speaker: I've had to moderate that love, but it's still there in my heart.
Speaker: Oh, man.
Speaker: Well, would you have a favorite brand that we all need to try?
Speaker: The classic EA?
Speaker: Is it even you're just playing carrot juice?
Speaker: There's EA.
Speaker: There's another one called... No, there's only like one brand that sells carrot juice because I don't think it's very popular.
Speaker: So you basically have to take what they give you.
Speaker: Or you juice your own juicer.
Speaker: The big leagues.
Speaker: All right, let's get into Key's story.
Speaker: Key's is on a mission to help everyone in the world experience more connection and intimacy in their relationships.
Speaker: And we're doing that by inventing what we call real-time coaching for every difficult conversation.
Speaker: Okay.
Speaker: We all need to use it.
Speaker: Everybody pull out your phones right now and look it up because we all have difficult conversations.
Speaker: We all need help.
Speaker: Okay.
Speaker: And now we're going to break down how this episode is going to work.
Speaker: Prior to the recording, Taylor and Tan are compiled a list of their spiciest VC and entrepreneurial hot takes.
Speaker: We're going to review them live.
Speaker: We're going to discuss, we're going to debate, and it's going to be fun.
Speaker: So we're going to dive right in.
Speaker: Hot take number one from Taylor is that founders should stop listening to the advice from investors.
Speaker: And this is a juicy one to dive into because it is a podcast from our investors with our founders.
Speaker: So Taylor, tell us about this.
Speaker: I think this is the number one mistake the founders make.
Speaker: And the reason is that VCs are not in a position to assess their own behavior.
Speaker: There's two parts to this.
Speaker: I'm really curious what you think about these, Tanner.
Speaker: So first, even though they sometimes need to be reminded, VCs are human too, which means that they're by default bad at evaluating their own behavior.
Speaker: Would you ask, for example, a movie star for dating advice?
Speaker: You might walk up to them and be like, hey, how do I date you?
Speaker: Of course not.
Speaker: And they're going to say something to you like, okay, so you need to be six feet tall.
Speaker: You need to be a great listener.
Speaker: You need to be financially independent.
Speaker: Meanwhile, they're dating a jerk with bad tattoos and no job.
Speaker: So it's sort of the same concept here.
Speaker: Why would you therefore ask a VC for fundraising advice?
Speaker: point here is, though, that people are bad at understanding their own motives and bad at connecting those to why they take certain actions.
Speaker: And VCs are no different.
Speaker: The second part, and this is the same take, the second part is that there is a mismatch of incentives between founders and VCs or investors writ large.
Speaker: So Mark Suster famously advises founders that VCs invest in lines, not dots.
Speaker: In other words, VCs invest after getting to know you and your company over time, watching it grow, watching how you make decisions, learning about you.
Speaker: Bullshit.
Speaker: VCs invest in DOTS all the time.
Speaker: If a VC isn't investing in your company, it's because they don't want to.
Speaker: Not because they haven't got to watch you long enough.
Speaker: The time between intro and term sheet has been shrinking over the last decade.
Speaker: It's down to something like nine days after being a number of weeks.
Speaker: So I do want to clarify your take though.
Speaker: You're saying advice from investors.
Speaker: Do you just mean fundraising advice or do you mean all the time?
Speaker: In this case, I specifically mean fundraising advice.
Speaker: Yeah.
Speaker: So if we're talking about a seed founder who's trying to make their first institutional raise and they're out there trying to absorb everything,
Speaker: They're out there thinking they're betting, and they may be.
Speaker: Their life on the line for this.
Speaker: Their family, the lives of their friends, their livelihood, all those things.
Speaker: They're trying to absorb every molecule of information out there from blogs to tweets to posts to podcasts.
Speaker: Every single time an investor gets out there on one of those podiums, they're violating the mom test.
Speaker: So the mom test is a customer survey technique that basically says, don't ask what people think they will do.
Speaker: Ask what they have done.
Speaker: It's saying, let's focus on actions rather than expectations.
Speaker: The classic one is like, hey, what's a feature that you would like added versus tell me how you've used your phone over the last week.
Speaker: And if you're up there pontificating about, oh, I want to see X, Y, and Z. And then if you look at the actual members of the portfolio and what investments look like, very often do those not look like, let's say, perfect concentric circles.
Speaker: This is a fun take.
Speaker: There's the adage that you've heard, Taylor, I'm sure, which is ask for advice and get money and ask for money, get advice.
Speaker: So I do think that giving investors a line, meaning giving them a dot where you talk to them, you get advice, you understand what their thesis is, is important for qualifying who you're selling to.
Speaker: But I agree that if you take the advice of every investor, you're going to run into what's the Paul Simon problem.
Speaker: So Paul Simon, when he was a musician, he's well known for having success over multiple decades.
Speaker: But what he found is after he wrote one of his hit songs, all of his record labels and the people advising him wanted to write the same type of song that he had just wrote.
Speaker: And so...
Speaker: Most VCs will succumb, as you mentioned, to the bias of like, I want you to invest in the thing that I think that looks good over the last five years, which is B2B enterprise SaaS.
Speaker: And the danger of that is that you won't really be innovating.
Speaker: You're trying to create something that fits into a box that may or may not work.
Speaker: So you can't take all the advice, but there's some grains of wisdom and they're particularly fit comes from Kickstart.
Speaker: I would like to add for any of you listening at home that Kickstarter led our round.
Speaker: And one of the reasons that we picked them was that they do not play by most of these rules.
Speaker: And yes, this is a sales pitch.
Speaker: And I hope it's landing.
Speaker: Yes.
Speaker: Because they have been completely different.
Speaker: Tanner in particular, I can't speak to everybody over in that shop.
Speaker: But no joke, guys.
Speaker: Tanner is the real deal.
Speaker: When he opens his mouth, wisdom will come out.
Speaker: You may not understand it for a long, long time.
Speaker: but it still was.
Speaker: We all just keep a notebook of Tanner's wisdom and we're like, someday, someday this will make sense.
Speaker: I feel like I'm like, my hair is going gray as you're saying that.
Speaker: Patience.
Speaker: Yeah, patience.
Speaker: VC is a long game in so many ways, including understanding Tanner's wisdom.
Speaker: Okay, I like it.
Speaker: That's good hot take.
Speaker: So Tanner, hot take number two and your first hot take.
Speaker: Founders should list the top three reasons why their businesses will die on their pitch decks.
Speaker: I would love to see this clearly and I have never seen it.
Speaker: If you've read The Power Law by Sebastian Malby, it's kind of the current canonical book for VCs and it gives a history.
Speaker: One of the things that we're always thinking about is what is the white hot risk here?
Speaker: As we invest, we're investing in risk at the seed stage.
Speaker: We know that there's a million reasons why this company could die.
Speaker: The reason that I think this should be on every founder's slide deck is because founders are running experimentation machines.
Speaker: So they're trying to figure out what a risk is and figure out what they can do to avoid it, mitigate it, or in some ways exploit this risk.
Speaker: And so I think that there should be a slide that says, here are the top three reasons that I think this company...
Speaker: Either A might die or B might not become a unicorn.
Speaker: And by doing that, they both show the self-consciousness, the understanding of where the white hot risks are in the business.
Speaker: They immediately address the concerns that the investor has likely already thought as they're talking through their pitch.
Speaker: What do you think, Tyler?
Speaker: This is a good one because I don't disagree with the thinking.
Speaker: I might disagree with the when.
Speaker: Yeah.
Speaker: It's probably an under-discussed, under-thought-about aspect of founders around their own companies.
Speaker: Why are we going to sink?
Speaker: Because it's scary.
Speaker: And you don't really want to think about that.
Speaker: But you probably have to.
Speaker: And the founders that are actually making adjustments on that are going to have higher, if not home runs, less failure results.
Speaker: Now, that being said, what I want to know from you, Tanner, is why is the pitch deck the time to cover that versus, say, in a discussion live with the investor on a call?
Speaker: Because when I think about the pitch deck, it's serving a very particular role, which is to get you maybe to that first call, building some momentum, building some steam, building some rah-rah, building some excitement.
Speaker: Hey, I want to show this off.
Speaker: Versus like, when are we going to splash some water on all this?
Speaker: What's the right time?
Speaker: It's kind of a wet blanket slide.
Speaker: You're like, all of a sudden, you're getting so into it.
Speaker: And then they're like, oh, by the way, the macro trends may shift.
Speaker: And it turns out people don't use smartphones anymore.
Speaker: Well, I kind of put the dagger in my business here at QSAI.
Speaker: Yeah.
Speaker: You made me amending my advice to say in the second meeting.
Speaker: However, I do think that it would push conversations along much quicker.
Speaker: The startup has an experiments ledger that's like, here are the most important things that we're working on.
Speaker: And I think that you can turn it not into just a wet blanket, but like,
Speaker: here's the reasons why smartphones might go away.
Speaker: But then you can actually show the data and like, here's the reasons we can mitigate it.
Speaker: Actually, the usage on smartphones is 10x what it was a year ago.
Speaker: And so because of that, we think that there's a lot of reason to believe in this vision.
Speaker: I do think there's a danger.
Speaker: And I've heard other founders saying like, I would love to have Socratic dialogue and get feedback from the founder to investor.
Speaker: And I think one of the problems that you can get into is if you get too analytical, that kind of turns off the vision side.
Speaker: So you do have to be careful on not getting too far down in the weeds because then all you're thinking about are numbers and traction and metrics, which I know we'll get to soon.
Speaker: I love your take.
Speaker: If you think about our classic risk quadrant of four quarters, top right are dangerous, very unknown.
Speaker: Bottom left are not dangerous, fairly well understood.
Speaker: Those top right ones, what you called white hot risks,
Speaker: I think showcasing an understanding of those and using that as an on-ramp to a conversation about it is a place you can level with and meet with the potential investor and have, as you said, a real conversation.
Speaker: Let's accelerate this past the baby steps more quickly.
Speaker: I've not done that successfully in a deck myself.
Speaker: So I'm curious how it could look versus leaving somebody wanting and being like, Oh man, these guys are sunk.
Speaker: Yeah.
Speaker: And you may agree to those risks right there and say, yeah, those are too big.
Speaker: I do think that the stage matters.
Speaker: And at the pre-seed stage, one of the things that we're most thinking about, the meta-cognition or the meta-analysis that's happening is how high is the refresh rate of this founder?
Speaker: How quickly will they adapt to the environment?
Speaker: And so I think the earlier stage of business, the more that you can show that you're agile, that you can respond quickly, the more interested I'm going to be in making a bet on that founder.
Speaker: Nice.
Speaker: All right, then we're going to be moving on to hot take number three.
Speaker: And Tanner, you kind of alluded to it a little bit that we'll be talking about metrics and Taylor's hot take on this one.
Speaker: Our number three is that seed metrics don't matter.
Speaker: Right.
Speaker: You are.
Speaker: Am I?
Speaker: I don't know.
Speaker: Am I right?
Speaker: Tell us.
Speaker: I have two friends that are founders who have received investment from the same partner at a very well-known VC.
Speaker: We're going to go nameless.
Speaker: We're not going to call anything out, but you all know this fund and it's read their writing.
Speaker: One thing that they're adamant about is that they do not invest in companies that are not metrics-driven.
Speaker: Full stop.
Speaker: They say on the first call, hey, send me your metrics dashboard after this.
Speaker: And if they don't get a screenshot of that dashboard within 24 hours, deals off, you can take your ball and go home.
Speaker: There will be no investment or further meetings.
Speaker: When both of my friends received investments from this particular investor, they didn't know what dashboard was.
Speaker: They had no metric infrastructure set up.
Speaker: They had no KPIs.
Speaker: They had a story and a vision.
Speaker: They were particularly good at presenting themselves in level setting.
Speaker: What I'm getting at here, what matters more is being the mystery box.
Speaker: There's this Family Guy episode where Peter is given a choice between a boat and a box with a mystery surprise.
Speaker: And he goes, a boat's a boat, but the mystery box could be anything.
Speaker: It could even be a boat.
Speaker: So the seed founder's job is to be that mystery box.
Speaker: Metrics can be a component of it, but I'm not sure they even rank in my top five.
Speaker: And I say this, by the way, as a founder who, when he raised his seed round, had phenomenal metrics.
Speaker: You know what nobody remembered after the first call?
Speaker: Our metrics.
Speaker: Nobody remembered them?
Speaker: Nobody.
Speaker: Somebody sometime was like, Oh, hey, wait, you're the company with really good metrics, aren't you?
Speaker: And I almost ate my hat.
Speaker: So Taylor, how would a seed founder that's going out to fundraise take that advice?
Speaker: What's the practical application of that?
Speaker: I think the practical application of that is sometimes you're blessed with some optionality about when you need to raise.
Speaker: Maybe you have some extra runway.
Speaker: Maybe you don't.
Speaker: Maybe you have $50,000 in the bank and you're like, oh gosh, we have to raise now.
Speaker: Okay, so those are different.
Speaker: If you're in the case where you have to raise now and you don't have, quote, the metrics that you've either read about online or have heard that you need to hit a certain minimum threshold to go raise with, don't get discouraged.
Speaker: Instead...
Speaker: really maximize the things that you are good at.
Speaker: Because having bad metrics is not as bad of an anchor as you might think.
Speaker: And having good metrics is not as useful as you might think.
Speaker: We had a really hard time raising our seed, to be totally candid.
Speaker: And we had really good metrics.
Speaker: If you just looked at the metrics, you would have thought, oh, this company is going to have no problem.
Speaker: 40% retention at like 24 weeks, week over week engagement.
Speaker: Phenomenal.
Speaker: People engaging with the product 10 to 20 times a day, every day.
Speaker: Seems like a no-brainer.
Speaker: And yet, we still really had to chip away at it.
Speaker: So if you have things like founder, market fit, that's huge.
Speaker: Play off of that.
Speaker: All the other things you are bringing to bear, don't get discouraged.
Speaker: Don't feel like you're done because you don't have the metrics that, quote, the market says you need.
Speaker: I would largely agree.
Speaker: I would say seed metrics do matter.
Speaker: They should not be the primary thrust of your pitch for a few different reasons.
Speaker: I think one is sometimes I see the fallacy or the bias towards premature optimization, meaning a founder comes in and they start building a company and metrics and dashboards before they found a market and a product that customers really love.
Speaker: does anybody actually want what you're selling?
Speaker: Because that has to come first.
Speaker: And so I do think that if you get too much in the metric vacation, if that's a term that we use, you can fall into that battle.
Speaker: The second thing is, from an investor buyer standpoint, the mistake I might make with something with traction is I immediately go to benchmarking and heuristic thinking.
Speaker: I think, okay, if your cohort's this,
Speaker: 30% is best in class.
Speaker: So 40%, oh, it must be really good.
Speaker: I'm going to start anchoring on those things hard because it gives me some piece of data and it becomes more scientific than the art side of it.
Speaker: They certainly matter in the high-level metrics around growth and retention matter to the extent that they show, does the customer really love this product?
Speaker: And then the second question to that is, does this market and customer base represent a large customer base?
Speaker: Because what you can get is metrics that are really good and a really narrow space that only serves, let's say, boat owners.
Speaker: And so all that does is serve boat owners and the market size is never going to be big enough.
Speaker: So it doesn't matter how good the metrics are.
Speaker: That industry is just not going to sustain a billion-dollar company.
Speaker: I think the takeaway then is build the mystery box.
Speaker: Metrics can be one component or depending, they cannot.
Speaker: Yeah, we see a variety.
Speaker: We see companies that come in and see funds that have a deck, some that have a product, and some that have $2 million in revenue.
Speaker: And I don't think there's a jury.
Speaker: I don't think if we did a correlation analysis on those, that we would say one or the other is the most likely to be successful.
Speaker: There's a lot of different ways to do it.
Speaker: Would you say there are other things that founders focus on when they pitch that don't matter as much as they think they do?
Speaker: The first thing that comes to mind is the slide that I cared the least about is the Tam Sam Psalm slide.
Speaker: Because it just like, it never means anything to me.
Speaker: Not never, almost never, because it's just like such big numbers.
Speaker: I can't even conceptualize it.
Speaker: And so it's become such a...
Speaker: It's an academic exercise.
Speaker: Yeah, it's a road exercise that everybody's going through that I would much rather hear like, Hey, did you know that there are 10 million people that are doing this thing?
Speaker: And if we can sell them this thing, it's a hair on fire problem for them.
Speaker: It's a paint mess and not a vitamin.
Speaker: That's going to perk me up and make me think about the market.
Speaker: But if they just do like a top-down like Ibis or McKinsey reports that X million of people use this, it doesn't mean anything to me really.
Speaker: I recommend founders, if they get pushback on their TAM, to just stop the call.
Speaker: Just be like, no, we're not doing this.
Speaker: That's another hot take.
Speaker: There's a hot take embedded in a hot take.
Speaker: I don't know that I agree with that.
Speaker: But more power to you if you do.
Speaker: What I think I'm hearing said, but without being specifically said is, Tanner, what you're looking for most is a founder who can communicate that they really understand the customer.
Speaker: Tell me about your customer and help me understand why you understand that customer more than any of your competition does.
Speaker: Is that fair?
Speaker: Yeah, absolutely.
Speaker: It's tell me about that customer that you really understand them and whatever anecdotes, stories, metrics help do that.
Speaker: Tell me that there's a lot of other people that are just like that customer.
Speaker: And then tell me that that customer has a wallet that will actually sustain this business.
Speaker: I'm thinking about those three things.
Speaker: And so a lot of times, yeah, if you go from first principles up, you'll answer those questions and not do it in a rote way.
Speaker: Yeah, thanks.
Speaker: Taylor, any feedback to that before we jump to the next one?
Speaker: No, I'm really excited to get into the next one, actually.
Speaker: Okay, then let's get to the next one.
Speaker: I feel like we need a drum roll with this one.
Speaker: But hot take number four from Tanner is that most founders do not research the VCs they're talking to.
Speaker: Explain, Tanner.
Speaker: Self-explanatory.
Speaker: Let's just say sometimes in life, there are areas where the bar is actually quite low to delight.
Speaker: And we had a founder come in recently that had memorized the names of all the team members at Kickstart.
Speaker: And I think I may have told her that that was the first time I think that anybody had done that.
Speaker: That 15 minutes of preparation to know who you're talking to, what their background is, what they're interested in, what kind of companies they invest in.
Speaker: Not only, A, does that help you get to the meaty stuff instead of saying, hey, here's what I am, here's my background.
Speaker: Obviously, you don't want to appear stalkerish.
Speaker: But I think a lot of times I've noticed founders don't really understand the theses that the investor has, what they're focused on.
Speaker: And if you just look at their LinkedIn, their company website, what boards are on, what companies are interested, you can pretty easily intuit or infer what they're interested in.
Speaker: And that will help the conversation go much quicker.
Speaker: It will help you also to say like, hey, I know that you're interested in IoT AI devices.
Speaker: Like, here's how I'm thinking about this.
Speaker: And that way you're going to connect quickly and it's going to feel personable.
Speaker: What do you got, Taylor?
Speaker: I think that it may be true that most founders don't research the VC as they're talking to.
Speaker: It may be true that founders do not research VC ahead of time.
Speaker: I am not sure there's a correlation between having conducted 15 minutes of LinkedIn research and a positive outcome for that company.
Speaker: That being said, I recommend to founders to do that research as well.
Speaker: You may learn something, you may not.
Speaker: But what I do not recommend is coming out and demonstrating all that knowledge in the form of, hey, let me repeat or just read your LinkedIn to you.
Speaker: What I do instead recommend is level setting with that particular investor and hearing from the VC's mouth what their thesis is, what they're interested in.
Speaker: Every VC wants to jump in and dive into the company.
Speaker: I'm like, whoa, hold on.
Speaker: Once we start talking about keys, I know it's going to take up the rest of time.
Speaker: So I'd really like to hear, Tanner, how you come to this, what's your experience investing in consumer generative AI, and how you found yourself at Kickstarter in the first place.
Speaker: That'll open the spiel that probably is stuff that I already know that I have confirmed or read already on LinkedIn.
Speaker: Tanner's going to be like, well, I went to BYU for undergrad.
Speaker: I went to Harvard for my MBA.
Speaker: I like basketball and I'm a power user on Twitter.
Speaker: I'm like, okay, great.
Speaker: What do I got there?
Speaker: I got nothing.
Speaker: That doesn't actually help me as the founder.
Speaker: I could have been told that or I could have researched it.
Speaker: What we have instead now is a doorway to walk through where I'm like, okay, that's very interesting, Tanner.
Speaker: Tell me now, if you really knew me, what are you currently investing?
Speaker: What is it that is keeping you up at night that you can't wait to talk about on Slack the next day?
Speaker: What are those things going through your head?
Speaker: And by the way, how is your fund actually doing that?
Speaker: Are you just researching things?
Speaker: Where have you been making bets?
Speaker: That, I think, is the real thrust around why you do research so you can have that kind of conversation.
Speaker: I could write down the names of all the partners, I guess.
Speaker: I just don't know what that shows.
Speaker: That's why we invested in you right there.
Speaker: I think that you're running a company that's about communication.
Speaker: And I think you're giving a model of how it could be done in a way that's both personable and applicable to what you're doing.
Speaker: Your goal is to connect and deliver the vision of that company.
Speaker: And there's a lot of different ways to do that.
Speaker: And the case that happens sometimes is you end up doing a pitch and the founder talks for 30 minutes and...
Speaker: You don't even get to questions.
Speaker: And so I think research to the end of helping the conversation to quickly get to the vision, who you are, who the investor is, and what matters to them, I think will get you to your point.
Speaker: I don't know if it gives you more success in terms of investment than I suspect it would.
Speaker: At the very minimum, I've noticed that I have more of a dialogue, ongoing dialogue with those founders.
Speaker: I'm more open to giving feedback because I feel some connection and I feel some reason to be more open in that way.
Speaker: And it keeps the door open for if you don't fund this round, there's later opportunity.
Speaker: That kind of did spur a question, Tanner, with most founders not researching their VCs, especially in the current fundraising environment, when it's really tough and they are kind of just going for volume.
Speaker: They're like, I need the money.
Speaker: I need this.
Speaker: I don't necessarily have the time to get into this.
Speaker: I just want to blanket it out there.
Speaker: Even if I'm not technically a fit for their thesis, it doesn't really matter.
Speaker: Maybe I can talk myself into being a fit for their thesis.
Speaker: What would you say to those founders about research?
Speaker: time-strapped people who really are kind of desperate sometimes.
Speaker: I think what I'm recommending is that just as you qualify your customers and you create an ideal candidate profile on ICP, you should qualify your investors.
Speaker: Try to find who the investors are that would be most likely to be interested in what you're doing.
Speaker: And so that may mean taking 30 initial meetings
Speaker: winnowing it from there and saying, these are the attributes.
Speaker: They invest in B2B SaaS, they're seed stage, and they like X industry.
Speaker: I think that way you're going to have much more success selling to people that are ready to buy versus trying to convince somebody to invest in something that they have a prior around.
Speaker: And let's just say there's some industry they don't like, or they have scar tissue.
Speaker: The chances that they're going to invest in that are very low in changing somebody's prior.
Speaker: So I would be trying to sell to the qualified leads.
Speaker: 100%.
Speaker: My job as a founder when fundraising is first and foremost, not to find an investor, it's to qualify an investor.
Speaker: It's to screen people out.
Speaker: It's to look for no's that we can identify, whether that happens from them saying no or me saying no more quickly.
Speaker: I think there's two stages of research.
Speaker: There's researching whether a fund or a particular partner is
Speaker: or a particular investor analyst is a good match for your company.
Speaker: And there's, I think, personal research into that person's background and what they're doing.
Speaker: I 1000% agree with spending as much time as you can allot to making your CRM of potential VCs look exactly like the profile of investor that would invest in companies like yours.
Speaker: That is time well spent.
Speaker: understanding and learning about maybe the hobbies of somebody, I might take issue with.
Speaker: Speaking of our intros where we're like, what else do you like to do, guys?
Speaker: So hot take number five from Taylor.
Speaker: Your story isn't where you worked or where you went to college.
Speaker: That's called background.
Speaker: So instead, you say, tell me about your company without actually telling me.
Speaker: All the time you hear, and I remember this as a early founder in the pre-seed and seed stages, VCs want to hear your founder's story.
Speaker: They want to hear how you came to this.
Speaker: That's really important.
Speaker: That is one of the things that they latch on to.
Speaker: And you're like, okay, great.
Speaker: What is a founder's story?
Speaker: Nine times out of 10, I'd really like to hear, Tanner, what you think about this, like the frequency.
Speaker: What people leap to is some version of rattling off their CV.
Speaker: All of that is called background.
Speaker: A founder's story is something very different.
Speaker: It's a five-second moment that dovetails why you could not not start this company into the vision of the company itself.
Speaker: Here's how I tell mine.
Speaker: If you'd asked me when I was eight years old what I wanted to be, I would have told you a lawyer at Wilson Sincini.
Speaker: They're a big law firm in the Bay Area.
Speaker: They took Google and Apple public.
Speaker: Fast forward 20 years, I'm a lawyer at Wilson Sincini, just starting to think about going for the partner track.
Speaker: The part of the job I love is communicating, talking to other founders, understanding their pains, what's working.
Speaker: And I get approached by my partner mentor to give a presentation on communication best practices, how to talk to founders.
Speaker: Turns out the senior partners were losing deals because they didn't know how to talk to founders to other hip young firms.
Speaker: I'm floored by this.
Speaker: I'm just starting to get noticed at the firm.
Speaker: This is my opportunity.
Speaker: I've looked up to these people forever.
Speaker: Here we go.
Speaker: I stare out at a sea of whiteheads and I cover all the greatest hits about communication.
Speaker: Being an intent-based communicator, starting with an outcome and working towards the role that things like punctuation and grammar and mirroring have to do.
Speaker: And this senior rainmaker comes up to me afterwards.
Speaker: He shakes my hand and he looks me in the eye and he goes, Taylor, you rocked it.
Speaker: That'll come in so handy when I have to cancel plans with my wife.
Speaker: All the color drained out of my face.
Speaker: Nobody cared about communication.
Speaker: It became a running joke where they're like, oh, you need to set up lunch plans with your daughter.
Speaker: Get Taylor to text that.
Speaker: And it killed me because I found out that the people that I looked up to didn't value communication the same way I did.
Speaker: And it was at that point that I was like, for the first time ever, how can I help everybody communicate better?
Speaker: Not these people.
Speaker: So some version of that is what I coach founders to do.
Speaker: Mic drop.
Speaker: There's nothing better to get an investor engaged in a presentation than a personal story or an anecdote.
Speaker: I've heard ones of like, hey, I was in the hospital.
Speaker: I was watching my dad go through a stroke.
Speaker: I was seeing what was happening.
Speaker: I was seeing problems here, here, and here.
Speaker: And at that point, I knew that I had to solve this coordination problem because it was meant life or death.
Speaker: Something like that that drags the personal into the realm of the entrepreneurial world as well as it just is so clear why this person started that.
Speaker: Those often are the most electrifying pitches that we hear.
Speaker: I think the thing you said, Tanner, there that really sticks out to me is what is the moment you didn't jump into the company, the company dragged you into it.
Speaker: You were forcibly thrust into this where you had to be doing it.
Speaker: What was that?
Speaker: I call it the five-second moment.
Speaker: When did that happen?
Speaker: And then work backwards from there.
Speaker: I want to tie that into our hot take number six because they kind of are tying together at this point where Tanner says that he... Basically, that's what he wants.
Speaker: He only wants to invest in entrepreneurs who could not do anything else.
Speaker: You want to invest in entrepreneurs who are deeply interested or embedded in the space rather than, as he says, trendpreneurs.
Speaker: Talk to us about that, Tanner.
Speaker: Yeah, I think we have a perfect example here with Keys.
Speaker: Taylor started working on Keys how many years ago?
Speaker: Three.
Speaker: Three, and integrating generative AI before that term existed.
Speaker: And it was clear that he had a mission, which was to change the way people communicate.
Speaker: And generative AI was a tool to get there.
Speaker: That was an example of somebody that was mission-focused, that was clear and intent on changing the way that people behave.
Speaker: And what we see sometimes is when Web3 rolls around or Gen.ai and entrepreneurs see that these are opportunistic moments to go do a business, instead of starting with the first principles, they choose some problem that they're mildly passionate about and then they slap on generative AI or they slap on Web3.
Speaker: And you can generally sense this.
Speaker: There's a thousand ways to be a good entrepreneur.
Speaker: So I would never limit the ways in which you could do that.
Speaker: But for me personally, I would rather invest in somebody that's a missionary on a cause rather than a mercenary.
Speaker: what founders are doing is really irrational in so many ways.
Speaker: They're signing up for a 10-year journey to go build something really, really big that has a high chance of failure.
Speaker: And so for almost any person that have the grit to stick through that, it has to be a deep why undergirding it.
Speaker: And so I think that's really the first principle thinking that I'm trying to get at is really why are they doing this and what's motivating them to do it?
Speaker: And how long have they been interested in this?
Speaker: Is it just like the last year or has it been like the last 10 years they've been thinking about it?
Speaker: I'm curious about so many things, I'm going to limit it to one at a time.
Speaker: What advice do you have to founders that might think they are verging on that trendpreneur bucket?
Speaker: Are you dead in the water?
Speaker: Should you just fold the company?
Speaker: What do you do if you're new to generative AI and I think you found a use case, but you're pretty fresh?
Speaker: I think this is something my wife and I actually talk about often is with trends.
Speaker: Let's say khaki pants are the new trend.
Speaker: If you like khaki pants, just wear the khaki pants because you like them.
Speaker: Just because it's trendy, that doesn't mean you shouldn't do it or because it's trendy, you should.
Speaker: For me, if somebody's interested in a trendy area, it's making sure that they've really thought it through.
Speaker: They think, okay, if I'm going into generative AI, here's what the incumbents in this industry are going to do.
Speaker: Here's what the startup's going to do.
Speaker: I know that.
Speaker: I know that on a scale between less competitive and more competitive, it's likely going to be more competitive.
Speaker: We're not going to say, no, we're not going to invest because it's a trend.
Speaker: Trends have a lot of weight behind them.
Speaker: And to use the NFX term, fast-moving water is what you're trying to find.
Speaker: And so sometimes the space you're in is more important than almost anything else because you get carried with that current.
Speaker: But it's really being eyes wide open about what that means.
Speaker: What are the trade-offs of being in a space that's really competitive?
Speaker: Yeah, I think there's a lot of first-level thinking that goes on with these sorts of trends that people jump into it, even jump into the deep end and are chasing version number one of an idea versus version number two or three, which often is where the real value lies.
Speaker: That sometimes experience in a space is almost necessary to have done it wrong initially.
Speaker: Yeah, and the last thing I'll say is there's sometimes the solution in search of a problem.
Speaker: What is the deep problem here and why is this the right solution rather than inverse, which is anything like solution first, problem first.
Speaker: Why is it in the AI?
Speaker: Why is Web3?
Speaker: Why is blockchain actually the right solution here?
Speaker: And Taylor, any final comments on that before we segue into the last question?
Speaker: I do h ave a couple of final thoughts.
Speaker: One, so my company is in generative AI.
Speaker: We're helping everybody in the world be better communicators and the process have better connections.
Speaker: We were doing this before generative AI was generative AI.
Speaker: We were doing it really more on the cusp of GPT-2 and GPT-3.
Speaker: I hear all the time from people, oh my gosh, you killed the timing.
Speaker: You know what I have to say to that?
Speaker: If you nail the timing, it means that you were wrong on the timing for every single day until the day you were right.
Speaker: That means you were wrong about 99.9% of the time.
Speaker: There are 365 days in the year.
Speaker: You're wrong for one whole year.
Speaker: You're right.
Speaker: One third of 1% of the time.
Speaker: If you hit that is not very good.
Speaker: So it is overrated in some ways to be the current trendy thing.
Speaker: And the outcome is that it really sucks, frankly, often not being in that spot.
Speaker: When we were trying to get off the ground with Genre of AI, nobody knew what GPT-3 was.
Speaker: I was literally explaining to people what a transformer model was.
Speaker: And as a result, people often look at you and think your business is silly.
Speaker: They don't think that there's a there there.
Speaker: Investors are not kickstart, but notoriously not creative thinkers.
Speaker: And I guess I'm just really commiserating with everybody that's at the beginning of the next wave right now.
Speaker: All right, that was our last hot take.
Speaker: I actually kind of like this format.
Speaker: I think we should explore this moving forward.
Speaker: So thank you, Taylor and Tanner for contributing your hot takes and all the thought behind them.
Speaker: Taylor, there is one final question I'd like to ask you.
Speaker: We like to ask this to every guest on our podcast.
Speaker: And that is, what's an effective practice you've implemented in your work or personal life that you think has had a great impact on your success?
Speaker: This may come as no surprise after this podcast, but it's rewriting.
Speaker: I write a lot and it's not necessarily cohesive or coherent or intentional.
Speaker: I wouldn't call it journaling per se.
Speaker: It has to do with thoughts and ideas.
Speaker: It has to do with how I understand my company, the space I am myself.
Speaker: But the real value lies in the second time that I come around to things or the third or the fourth and make adjustments and tweaks and basically learn where I'm wrong and where the meat on the bone really lies.
Speaker: I didn't do that as a lawyer.
Speaker: I wasn't in a space that I felt like I had a lot of passion for that.
Speaker: Since moving over, it's been one of the primary drivers of my success in this space.
Speaker: I would say I've seen that firsthand.
Speaker: One of the ways with keys, one of the unique things that Taylor has done is with board meetings, instead of sending out a pitch deck, he sent out a full written report that I'm sure he's revised multiple times, which then the other board member and I end up reading through and commenting on.
Speaker: And then there's comments and revisions there.
Speaker: And then in the board meeting, instead of
Speaker: the point earlier on being on your first idea.
Speaker: We're now on the fifth evolution of that idea.
Speaker: We're not talking about the basics and the trade-offs of that decision.
Speaker: We're getting into the meat of the decision.
Speaker: We've had some of the most effective board meetings I've seen because of that.
Speaker: And the product you see with Taylor is the work that comes on the other side of those revisions.
Speaker: There's a quote that you're trying to get to the simplicity that's on the other side of complexity.
Speaker: And I think that's what revision and rewriting does is it gets you to that simplicity on the other side of complexity.
Speaker: Well put, Tanner.
Speaker: Thank you for that.
Speaker: This has been so much fun.
Speaker: Thank you, Taylor and Tanner, for being on the episode.
Speaker: Thank you for coming with your hot takes and just being just a delight to record with.
Speaker: Talk to you later, guys.
Speaker: Thanks, all.
Speaker: It was a pleasure.
Speaker: And of course, thank you for listening as we dive deep into what it takes to create the perfect pitch.
Speaker: If you want to learn more about our investor, Tanner Potter from Kickstart, or our CEO, Taylor Margo from Keys, we'll have a link to the company and a longer bio in our show notes at kickstartfund.com.
Speaker: You can listen to more episodes of Perfect Pitch wherever you listen to your podcast.
Speaker: And if you like what you're learning, leave us a reviewer rating.
Speaker: We'll be back next time with more insights from entrepreneurs and the investors who funded them.
Speaker: So be sure to subscribe so you don't miss a thing.
