“Opportunity be knockin’.”
Action Bronson, Actin’ Crazy
I just met with a business consultant and I’m feeling really, really pumped. Those are words that I never really expected to see myself typing out.
A few months back I had a meeting with an organization called SCORE. I wrote up the meeting, but never ended up finishing it, but now I’m left with a bit of a continuity discrepancy, so I’m going to briefly summarize:
SCORE is a branch of the Small Business Administration, a government organization that supports small businesses and helps them get on their feet, mainly through mentorship, classes and resources. Literally, it’s a bunch of business people, former entrepreneurs and MBAs who make themselves available for neophytes (like me) and answer all kinds of questions about starting up a business. It’s totally free, you can meet with them as many times as you need to, and they try to cater mentors to your specific business or market.
I pretty much can’t say enough good things about them, except that they’re housed in a Federal Building, with a security checkpoint not dissimilar to those found in large airports (you get to keep your shoes on though), and if you happen to be regular carrier of pocket knives like myself, they will happily strip you of your tools and “destroy” them. Seriously. They won’t even mail it to you. Once you “surrender” it, it’s gone forever. So leave your sharp things at home, kids.
Last time I met with SCORE, I was paired up with two guys: Valentine, a retired manufacturing consultant and business owner, and Billy, a younger guy with a more strictly-business background. I brought in nothing more than a prototype of my original Coconest and a pad of paper to take notes, and they gave me really good advice and encouragement and I went on my way.
Last week I reached back out to Billy because I had some questions about creating a pitch deck for potential investors, and because I was a little unclear on how one goes about working with investors in the first place. He agreed to meet with me this morning at a coffee shop in Cambridge.
I’m not Thad
I showed up early and ordered a cold brew, then went to sit down. I saw a very expectant man sitting alone at a table for two, and because I didn’t 100% remember what Billy looked like, I gave him the slightest lingering look, just to make sure, and he asked me if I was Thad. Turns out he was on a kind of blind-date as well (his words). I told him that I was not, and took a nearby table. A few minutes later Billy came in. The two guys couldn’t look more different.
Over our email correspondence, Billy had sent me some examples of pitch decks on PitchEnvy.com and I used them, in conjunction with the product info from my portfolio, to craft my own rough deck. I’m not totally unfamiliar to the concept; we put together product pitches, portfolios and process books all the time in ID. But for an entrepreneur, there’s a certain mystique (clouded in a haze of awful graphic design usually). A pitch is like a silver bullet. A laboriously crafted combination of rhetoric, actual numbers, assumptions, predictions and outright bullshit (ideally less of that) intended to entice investors. For a list of key elements included in a pitch deck, check this out:
I have my pitch loaded up on my tablet and I start running through the slides. He stops me a couple of times to point out things he thinks I should include, but in general he’s following right along. His input is really interesting. For one thing he recommends getting the text on my slides down which is a classic line from the product designer handbook. For what it’s worth, I fully agree — since I’m presenting, the visuals should mostly support my oratory. However, a pitch is often a static document; a leave-behind that investors can look over later and generate their own opinions. Bottom line – some slides will be very number/text heavy, but most follow simple presentation rules. Got it.
Amusingly, Billy thinks my product renderings are stunning, but finds the usage storyboards kind of unprofessional looking. I totally understand, but it’s not feedback I’ve ever gotten in the product design world. When in Rome.
Generally though he says the deck is looking really good, and even more encouraging, he tells me at the end of the meeting that he’s sparing me a lot of the basic advice because he thinks I’ve got a pretty good understanding already and, if I’m not mistaken, he seems like he genuinely believes in my product. Or at least he believes in me.
He does say a few things that are a little bit scary, number one being that I need to make a financial statement. In Excel. With equations and variables and everything. This document will include forecasts, how much money I’m going to need to raise, where my break even happens, how I survive until then — basically everything that an Angel investor needs to see. One funny thing that I notice is that this document is really, really important as personal validation, and absolutely essential if you go after serious investment, but a lot less important if you go after crowd funding, because they don’t really care how you spend your money.
Another interesting thing he tells me is that the amount you’re going after dictates who you talk to:
<20,000, you’re talking to friends and family
>20,000 – 100,000, you’re in Angel territory
500,000-1M, venture capitalist and angel syndicates
Crowd funding is a crap shoot, anywhere from 30,000 to 1M
Okay, so I’m definitely looking at friends and family and crowd funding, at least at first. But when I ask about how to divvy up shares and whatnot, he tells me something interesting: investments below a certain threshold get treated a little differently. Like, generally not as investments at all. The reason for this is that giving away equity for really small investments isn’t worth the trouble because they get taxed and the legal fees involved in drafting up the documents cancel out a lot of the money. A $500 investment would probably net less than $0 after legal fees. So you can take the money as a handout, or if you’re getting a lot of your money through donations like this, you can have your investors pool together as a syndicate. There’s also something about a convertible note… it got a little complicated, but the important thing is it’s an option that I will look into.
We covered finding partners, hiring employees, the marketing plan, and everything that my pitch deck needs to be in good shape (in general he seemed very impressed, which I attribute to the unusually high level of graphic design more than anything). It’s a super good conversation and as we’re packing up to go and I’m thanking him for all of his help, he mentions something that it’s turning out is kind of a theme in this whole process; it’s impossible to do everything on your own, and at the early stages especially, mentorship is really, really important. You need someone to fill in the gaps in your knowledge and give you insight into worlds that you can only really vacation in.
Billy told me that when he got into business and finance, he didn’t like how much of an old boys club it was, so he got together with SCORE so he could share the little corner of specialized knowledge that he has with people like me with their own specialized corners. Basically, we all need each other.
Next time, on a very special edition of Design Hustle: I graduate from Design School.
Until then, hustle hard