Build

Build
By Poornima Vijayashanker
About this podcast
Build is a weekly podcast brought to you by Pivotal Tracker hosted by Poornima Vijayashanker, the founder of Femgineer.

In this show, Poornima hosts innovators in tech and together they debunk myths and misconceptions related to building tech products and companies.
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In the last two episodes of Build we tackled why accessibility needs to be prioritized in product design and the three key tips that are critical and will make a big impact on your product's adoption. This week we’re going to answer two questions that inspired this series from one of our audience members: Jane. We chose these two because we figured they might also be on your mind! Jane wrote: Poornima, Thanks for tackling a wide variety of topics when it comes to building software products. One area that I'm curious about is accessibility. As a user experience designer, I know accessibility is important, but I've struggled when it comes to balancing out accessibility across devices and also making mobile apps interactive and fun without compromising on accessibility. How should I think about web versus mobile and balancing out fun and engaging interactions with accessibility in mobile apps? Sincerely, Jane                     Jane thank you for writing in! Laura Allen who is the Accessibility Program Manager at Google for Chrome and the Chrome operating system is back and together we are going to be answering Jane’s questions in today’s episode. As you listen to today’s episode you’ll learn: What are the similarities and differences when it comes to designing for accessibility on web versus mobile devices How to balance balance out fun and engaging interactions versus accessibility on mobile devices The various types of accessibility testing: manual versus automated and tradeoffs associated with both  Here are links to the resources Laura mentions in the video: Web Content Accessibility Guidelines Android Developers Site  iOS Human Interface Guidelines  Android Accessibility Scanner Lighthouse  -- Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA. -- ## How To Balance Accessibility And Interactivity Across Devices Transcript Poornima Vijayashanker:        In the previous two episodes of *Build*, we talked about the importance of accessibility and we shared three critical strategies that will help make a big impact when it comes to building and designing products. If you missed either of those episodes, I've included links to them below. In today's final episode on accessibility, we're going to talk about what accessibility means across devices for both web as well as mobile. Stay tuned.                     Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, I invite innovators, and together we debunk a number of myths and misconceptions related to building products, companies, and your career in tech.                     We're continuing our conversation on accessibility with Laura Allen, who is the accessibility program manager at Google for Chrome and the Chrome operating system. Thanks again for joining us, Laura.   Laura Allen:        My pleasure. Thank you.   Poornima Vijayashanker:        One of the inspirations for this series on accessibility came from our audience member Jane, so I'm going to start off today's episode by reading the question that Jane posed. Jane wrote, "Poornima, thanks for tackling a wide variety of topics when it comes to building software products. One area that I'm curious about is accessibility. As a user experience designer, I know accessibility is important, but I've struggled when it comes to balancing out accessibility across devices and also making mobile apps interactive and fun without compromising on accessibility. How should I go about thinking about web versus mobile and balancing out fun and engaging interactions with accessibility in mobile apps? Sincerely, Jane."                     Jane, if you're tuning in to this episode, thank you for writing in. Laura, why don't we start by answering Jane's question to begin with. How do we balance out web versus mobile?   Laura Allen:        It's a really great question. When you think about it, a lot of these concepts that we were talking about in previous episodes are actually going to stand true no matter what platform you're actually designing for. Think back to the web content accessibility guidelines, WCAG. They talk about perceivable, operable, understandable, and robust, and those sorts of concepts and principles that go within each of those categories. Just taking one example, color contrast. Color contrast, having really solid contrast between text and its background, that's important no matter what device you're on. It's going to be the same sort of truth for if you're on a mobile phone or if you're on a desktop computer. A lot of these concepts are going to just span across platforms and be really relevant for you to consider.                     One thing that's obviously a little bit different on mobile is that it's clearly more touch oriented for most users. Things like touch targets and the size of your touch targets, that's important to consider. Some people might not have as precise motion or control as they're using their phone or tablet, but honestly, the lines are getting a little bit blurry anyway. Think about all the different devices that are out there now, like laptop computers that also have touch screens or convert and are then used in tablet mode. As designers, we're starting to think about, "How do we just make an app itself accessible on all these different platforms, or a site itself?"   Poornima Vijayashanker:        Let's tackle Jane's second question on how do we balance out fun and engaging interactions versus accessibility.   Laura Allen:        Yeah. That's another really great question. I think something that we should keep in mind when developing for mobile is sometimes we just rely a little bit too heavily on this idea of gestures and touch-based interfaces. I understand why, of course. It's typically being used by using touch. Some users aren't able to actually use touch to operate a phone. There's something called switch access, for example, which basically allows you to pair a one-button, or two-button, or multiple-button switch and control a phone just using those external buttons. That's just one example. Some people might be only using voice to control a device. Some people might be navigating with a screen reader, so as something flashes on the screen, they're not able to actually perceive that and then catch it in time to actually take action. Thinking about what are these things that we're assuming our users can do here, and then offering alternative ways to actually operate.                     For example, if you have an app that you're building where you have cards that you need to swipe away to take action, a swipe can work for some people, but for others, maybe that's not going to be possible. How do we think about things like, "OK. Can we add a hidden close button here so that a screen reader could actually access that and somebody could just simply double tap to activate?" Lots of different things like that. Just, again, removing assumptions about how our users are interacting and then just building to cater to different groups.   Poornima Vijayashanker:        I think your answers are going to be very helpful for Jane and the rest of our audience. Any final words of wisdom that you'd like to share when it comes to accessibility?   Laura Allen:        Sure, yeah, a couple things. First, just thinking again about mobile versus desktop and web and what not, I think it's also really helpful when designing for mobile to be thinking about the platform-specific guidelines. This is like guidelines for more so just the interaction models for that platform. I know there's the Android developers resources and site. iOS has the iOS human interface guidelines. These things obviously go well beyond just the concepts of accessibility, but they're really important to keep in mind because if you think about it. One example of what would be discussed is focus management. When you first open up an app, where is focus meant to go? What is the default? As you think about these concepts that are kind of illustrated through guidelines for each of these platforms, it's really helpful to keep that consistent so that when a user who happens to be using assistive technology interacts with this app, they get a similar experience to what they're used to. It's a similar model for them, and therefore it's an easier ramp-up curve to actually get introduced to your design. That would be one suggestion.                     Another thing to consider, which we haven't really discussed at this point: We talked a lot about auditing and integrating accessibility into your processes, and a lot of what we've talked about so far has been manual testing and the importance of really diving in, trying out the keyboard-only experience, or trying out a screen reader. Absolutely, I think that is so critical. I think honestly...I often get asked about manual versus automated testing, like what can we put in place to run automated tests. There are some great things to do, so there are automated tools, like, for example, there's a tool, there's an Android app called the Android Accessibility Scanner. It's free. It helps to run an audit of your app's accessibility and show you the results for things.   Poornima Vijayashanker:        Oh, great.   Laura Allen:        Yeah. For things like missing labels on a button or color contrast, things like that, which I would imagine to be kind of low-hanging fruit that you look at and hopefully fix rather quickly. There are similar things on the web and desktop. Lighthouse is a great tool, which integrates with the Chrome Developer Tools. There are lots of other types of tools out there that you can leverage to do some automated testing and audits, but in my opinion, automated can only go so far. That's where you use it to kind of see a baseline, track progress over time and your results, but manual is really critical. Again, whether it's you going through or having assistive technology users go through and give you feedback, that's where you're going to capture that more human interface experience. You're going to understand what is the usability of this product, whether on mobile or on desktop. It's just really critical to find that right balance of manual versus automated testing.   Poornima Vijayashanker:        This has been wonderful, Laura, and we'll be sure to include all the resources you mentioned below so that our audience can make sure to get access to them.   Laura Allen:        Great. Thank you so much for having me.   Poornima Vijayashanker:        Yeah, yeah. You're welcome. This has been great.                     That's it for this week's episode of *Build*. Be sure to subscribe to our YouTube channel to receive more episodes like this, and be sure to share this with your friends, your teammates, and your boss. A thank you to our sponsor, Pivotal Tracker, for their help in producing this episode. Ciao for now!                 This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.                   
Feb. 12, 2018
Wasn’t last week’s episode on accessibility in product design enlightening? Well get ready for more! The goal of the last episode was to give you solid understanding of accessibility, and all the things you could think about when designing a product with accessibility in mind. But we understand it might be a lot to tackle, which is why in today’s episode we’re going to boil it down into 3 key tips that are critical and will make a big impact. Laura Allen is back to enlighten us. Laura is the Accessibility Program Manager at Google for Chrome and the Chrome operating system. As you watch today’s episode you’ll learn: Why thinking about accessibility is not just one person’s job, but a team effort How to integrate accessibility into your product development process How to engage users and discover communities that are ready and willing to test products for you!   Here are some additional resources to checkout that Laura mentioned in the video: Web Accessibility Udacity Course A11ycasts with Rob Dodson - YouTube series Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   ## 3 Key Tips To Keep In Mind When Designing For Accessibility Transcript Poornima Vijayashanker:        In the previous *Build* episode, we talked about the importance of accessibility. If you missed that episode, I've included it below. Now, in that episode we talked about a number of things that you could do to improve your product. In today's episode, we're going to boil it down to the three main things that you want to think about when you're designing and building your product, so stay tuned.                     Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, I invite innovators, and together we debunk a number of myths and misconceptions related to building products, companies, and your career in tech. We're continuing our conversation today on accessibility with Laura Allen, who is the accessibility program manager at Google for Chrome and Chrome operating system. Thanks again for joining us, Laura.   Laura Allen:        Absolutely. Thank you for having me again.   Poornima Vijayashanker:        Yeah. Last time we talked about a number of things that our audience can do when they're thinking about designing products or revisiting their products and incorporating more accessibility. In today's episode, I want to focus solely on the top three things you think are super critical and will make a big impact in people's products.   Laura Allen:        Great.   Poornima Vijayashanker:        So, let's start with the first.   Laura Allen:        First.   Poornima Vijayashanker:        Yeah.   Laura Allen:        OK, so I would say the first thing to do is to train your team.   Poornima Vijayashanker:        OK.   Laura Allen:        Thinking about accessibility, it's not just one person's job, and that's something really important to keep in mind. This is a full team effort. There are different roles that different people have to play from design to research to development to just release processes, all of those different things. Everyone needs to play their individual part, to be totally honest with you. A lot of teams just will honestly benefit from just going through different trainings, leveraging resources that are out there. There are a lot of great things, like for example, I know a few of my colleagues actually have put together this awesome Udacity course just all about web accessibility. That's a great resource. There are lots of videos out there. There's this great YouTube series called The A11y Casts, it's like A-11-Y, which is an abbreviation for accessibility. If you've seen that before, it's A, 11 characters, Y, mean accessibility. So, lots of different things out there. We can definitely link some resources for sure.   Poornima Vijayashanker:        Yeah.   Laura Allen:        I would say, yes, training the team. Make sure everyone feels comfortable with the concepts of how to start building this in. That will go a really long way.   Poornima Vijayashanker:        Nice. So, it's not just to put the onus on the designers of the team but really your PMs, your engineers.   Laura Allen:        Exactly. Thinking about, for example, like the designers when you're scoping out a project, let's incorporate accessibility into design docs. Think about, "OK, well what should the keyboard model actually look like?” just as one example. "What should contrast? Am I thinking about contrast in my mocks?" So, bringing it in at the design phase, and then basically working with your engineers as you’re developing, testing for accessibility as you're going along, having PMs to help make sure that that process is happening, it's being managed all the way through. I think it's really critical. Basically, having everyone ramped up on this, everyone understand the fundamentals is really key.   Poornima Vijayashanker:        Wonderful. What's tip number two?   Laura Allen:        Yeah, so tip number two would be to integrate accessibility. Honestly, I understand why a lot of people might get to the end, be ready to release a product, maybe even release it, and then say, "Oh, shoot. We forgot about accessibility."   Poornima Vijayashanker:        Yeah.   Laura Allen:        Maybe they'll get bugs filed against them. That's not the situation that you want to be in. It's also just not an inclusive way to be building your products. I think just working hard to integrate into each step of the way, and that's what's helpful to have each different role on your team understand accessibility, of course. So, integrating so that when you're preparing to launch a product, that's at the phase. When you're actually designing and building it, that's when you're working on these concepts and implementing these principles instead of, "OK, we're ready to go. We're going to launch," and then, "Uh-oh."   Poornima Vijayashanker:        Yeah.   Laura Allen:        So, integration.   Poornima Vijayashanker:        What's the third and final most important thing people should consider?   Laura Allen:        Yeah. I would say to engage the users.   Poornima Vijayashanker:        OK.   Laura Allen:        This is something that's really important, again. So, just understanding how...read a list of technology users or just users with any variety of accessibility needs are interacting with your product. One really simple step that I think is, if you're going out and you're conducting user research in the first place, why not add somebody who's an assisted technology user right to that pool? Add someone who's a screen reader user or someone who can only use the keyboard, for example, and can't use a mouse. Try to diversify that pool, and make sure you're collecting that user feedback, and understand how your product is working for a variety of different users.   Poornima Vijayashanker:        Very nice. Yeah, keeping the user in mind. Are there places that you can try to recruit from? A lot of people might use something like user testing and there's a few other services out there, but anything you would recommend to recruit people?   Laura Allen:        Yeah. I mean, one thing that I know we've seen a lot of success with is partnering with organizations. Just as one example, we're here in San Francisco today, the San Francisco Lighthouse for the Blind and Visually Impaired, that's just one example of a fantastic organization where they're more than happy to partner with teams or with individual researchers just to give feedback. They want to be helping. They want to make these products even better and better. There are lots of different types of organizations that are similar to that, which maybe local for people who are not right here in San Francisco, also national organizations, international organizations. So, just thinking about how do you leverage different communities, and you'll find that oftentimes if you just kind of approach different people and say, "Hey, we'd love your feedback on making this better and making it work better for you. Can you help us out?" It helps if you're going to go and have one of those conversations if you've thought through some of these core concepts and some of the things that are mentioned in the WCAG Guidelines, and you're not showing up without having even considered accessibility. Right? It goes a long way to bring real people in, real users in, and just make the products that much better.   Poornima Vijayashanker:        Well, thank you so much, Laura, for boiling these down into three useful tips. I know our audience is going to get a lot of out this.   Laura Allen:        My pleasure. Thank you so much.   Poornima Vijayashanker:        Now, Laura and I want to know, have you tried one of these three tips when it comes to incorporating accessibility into your product, which of these did you try, and what was the impact it made? If you've got others, be sure to include them in the comments below. That's it for this week's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode, where we'll dive into incorporating accessibility into web versus mobile. Special thanks to our sponsor Pivotal Tracker for their help in producing this episode. Ciao for now.                     This episode of *Build *is brought to you by our sponsor, Pivotal Tracker.
Feb. 6, 2018
It’s a new month and with it a brand new theme for our upcoming Build episodes! When designing products we often think about usability: how easy to use a product is. But we often overlook another aspect of product design: accessibility. So all this month we’re going to dive into accessibility. One reason accessibility gets overlooked is because we think it’s a challenge to prioritize it given a company’s size and resources. We may think accessibility makes sense for a big company, but a startup that is getting off the ground just doesn’t have the resources to incorporate it. Well, actually that’s not true... In fact, accessibility maybe just the differentiator you need when it comes to product design that is going to give your product a competitive advantage and increase adoption! And in today’s episode, we’re going to explore what accessibility is, why it’s important for any size company to incorporate, and show you how to do an accessibility audit for your product. To help us out, I've invited Laura Allen, who is the Accessibility Program Manager at Google for Chrome and the Chrome operating system. You’ll learn: What accessibility is and how it’s different from usability How accessibility influences user adoption of products How companies will benefit by incorporating accessibility into product development process, priorities, and core values Examples of common accessibility issues that impact all of us at various moments in our lives How to do an accessibility audit for your product and the 4 important principles to consider each time Here are some additional resources to checkout that Laura mentions in the episode: Web Content Accessibility Guidelines: https://www.w3.org/TR/WCAG21/ Vox Media Accessibility Checklist: http://accessibility.voxmedia.com/ Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA. ## Product Design: Why Accessibility Needs To Be Prioritized In Product Design Transcript   Poornima Vijayashanker:    We often think about usability when we're designing products, but not accessibility. In today's *Build* episode, we're going to talk about the importance of accessibility and how to prioritize it regardless of being a startup or a big company, so stay tuned.                    Welcome to *Build*, brought to you by Pivotal Tracker, I'm your host, Poornima Vijayashanker. In each episode of *Build*, I host innovators and together we debunk a number of myths and misconceptions related to building products, companies, and your career in tech. Now, one often overlooked aspect of building products is accessibility. In today's *Build* episode, we're going to talk about what accessibility is, why it's important, and how you can do an accessibility audit for your product. To help us out, I've invited Laura Allen, who is a accessibility program manager at Google for Chrome and the Chrome operating system.                     Thanks for joining us today, Laura.   Laura Allen:        Absolutely. Thank you so much for having me.   Poornima Vijayashanker:    Sure. I know that a lot of times people think about usability when they're building products but they don't often think about accessibility. Let's talk about what is accessibility and how is it different from usability.   Laura Allen:        Accessibility is the design of products, services, devices, and environments for people with disabilities. I always like to take that one step further and think about accessibility as really empowering users with disabilities to be productive, to be socially engaged, and to be independent. This is super closely aligned with the concept of usability and also even just universal design and inclusive design. You think about universal design being this idea of building products that are going to be usable by the widest range of people and the widest range of situations. It's so closely aligned with this, that absolutely includes designing for people with disabilities.                     This whole concept of usability, yes it's critical to be thinking about all the time, of course, but we can make products functionally accessible, we can go through checklists, we can incorporate design principles and what not to make things technically work, but if you don't think about how is this actually going to be used, what is the experience for someone with assistive technology—like a screen reader, for example—if you don't think about that experience and usability of that experience it might not be productive or efficient at all. All these things are really closely linked together and they all help to move towards building an inclusive product.   Poornima Vijayashanker:    Why is this even important? I think a lot of people would say, "Oh, we have a really niche customers customer base, we don't think anybody has accessibility concerns so why even bother?"   Laura Allen:        Accessibility is something that impacts everyone at some phase or at some point in their life. Fifteen percent of the global population has some form of disability—that's a huge number, that's over a billion people. We tend to think about a few different distinct groups when we're thinking about design. We might be thinking about people who are low vision or blind, people who are deaf or hard of hearing, people who have motor or dexterity challenges. Then people who are, what we consider to be, neurologically diverse that can be anything ranging from dyslexia, to perhaps being on the autism spectrum, to any forms of intellectual disabilities.                     When you think about these different groups of people, people might be developing disabilities at different phases of their life, different severity levels, different combinations of disabilities, and then you start to think about, what about temporary impairments? Like what if you break your arm and all of a sudden you can't type on your computer for a few months? Situational impairments, like what if you're at a loud restaurant or a loud bar and there’s something on the TV that you want to be listening to, it's too loud to hear and you have to actually rely on those captions that were there specifically for the deaf population but they're helpful to everyone. Then, you take it one step further, and you think about this growing aging population, which thanks to increasing life expectancy, which is great, the aging population of people over 60 is growing, and growing, and growing, and the World Health Organization estimates that by 2050 it'll be over 2 billion people that are over the age of 60.   Poornima Vijayashanker:    Wow, so it's like doubling. Hopefully not, but yeah.   Laura Allen:        As we all age, at any point in our lives, we may experience some slight deteriorations in vision, or of hearing, or of dexterity, so these concepts are really, really critical to be building in, in general.   Poornima Vijayashanker:    That makes sense. Now, some would say that this makes sense for really big companies with hundreds of millions of users, but does it really make sense for our tiny little startup that's just getting started?   Laura Allen:        I would honestly say, accessibility is something that is critical for all companies, at all stages, all phases. To be totally honest with you, it's actually easier to build this in four startup-sized companies, smaller teams, smaller processes. Of course, it's completely doable at large companies as well that have established processes, but at a startup, you're building from the ground up, you're defining what you want your product processes to look like, and it's so much better just to be able to integrate accessibility in at that level, get people understanding what these concepts are, make this just a core part of inclusive design from the very beginning, and it'll be that much easier as you grow, and grow, and grow.                     Another thing to think about here is accessibility because it impacts such a large number of people this presents, honestly, a growth opportunity in many cases. It just opens doors for a lot more business, a lot of growth potentially. One thing that I like to think about, especially for startups and just hiring in general, if companies are focused on actually making their own products accessible then it opens the doors as well for being able to hire a more diverse and inclusive workforce. You can hire assistive technology users and have them come in and be able to use your products and that opens the door.                     A lot of us, obviously, at the companies we're thinking about how do we further diversify? How do we get people in the room who have a diverse set of perspectives? This whole idea of diversity a lot of times we are thinking about race, and ethnicity, and gender, sexual orientation, but disability is a huge part of this. It is a very, very big part of this group and we need a voice.   Poornima Vijayashanker:    Making it into your process, your priorities, your core values can really open doors for you in terms of your customer base and make things, hopefully, easier as you grow.   Laura Allen:        Absolutely. I will say, too, for a lot of people, like I mentioned before, accessibility will touch everybody at some point and in many cases it'll make the experience better, and more usable for many, many users. For someone like me, I happen to be low vision myself—   Poornima Vijayashanker:    What does that mean, “low vision?”   Laura Allen:        Really good question, because it can mean a lot of different things. For me, I basically have a central vision disorder, so if you can imagine all in my peripheral vision is still intact, it's still clear, but anything I'm looking directly at is this blend of flashing lights, and distortion, and blurring, and whatnot. This all happened for me when I was about 14, happened really quickly, really rare condition. I basically went from having typical 20/20 vision to being what's considered legally blind within about a week when I was 14. At that point, it was like I'm getting ready for high school, and all of a sudden I'm going to be moving to a bigger school, and then what happens? I couldn't read a book at that point. I couldn't see a blackboard. I couldn't recognize faces in the hallway. It was a huge period of transition for me, and for my family.                    For a few years there, it was one of those things where if materials weren't actually accessible in formats that I could listen to, for example, instead of visually read, I was stuck. I had to literally come home from school and my parents and my brother would read to me. That, to me, was the definition of dependence and I really, really hated it. I was so fortunate to have a family that was able to help me that way. It was just unbelievable the amount of effort they went through to get me through to the point where then I was able to regain my independence through discovering assistive technology like text-to-speech software, or magnification, or a larger mouse cursor, things like that.                    It was that period of my life that really propelled me into this world of accessibility and usability, because I saw the huge potential of what technology can do for someone's life and I just want to help to make that better for the rest of the world.   Poornima Vijayashanker:    It's great to hear you have a personal stake and it inspires everybody out there, but it also inspires you to realize and relate to people who might also be having these recognitions so that's wonderful to hear.                     For people in our audience out there who are building products, how can they get started? How can they prioritize this and gain the benefits?   Laura Allen:        That's a great question. There are a lot of different things to be considering. One thing that I would recommend is doing an audit, understanding where is your product right now, what's the level? This may vary. If you haven't really been thinking about accessibility yet, that's OK. It's a good opportunity to look at the holistic picture and see what's going on, and what bugs you may have. I would recommend just going through and leveraging a lot of the different resources that are out there and using those to create your own audit, however that works for you.                     For example, there is a great resource out there from the web content accessibility guidelines and we abbreviate that to WCAG. This is a W3C standard guidelines for accessibility. They've been really widely adopted by a lot of designers, engineers, companies, and they're wonderful. They outline different steps and different things to be considering.                     For example, they break it down into four different categories: perceivable, operable, understandable, and robust. Each of these things has a lot of different checkpoints, but just as a brief example, when we think about “perceivable,” what assumptions are you making about your users basically? What are we assuming that they can perceive? Are we assuming they have perfect sight or sight at all? Are we assuming that they can hear? Thinking about how they're perceiving the product and then different design guidelines that go hand-in-hand with that.                     “Operable,” similarly, is what are we assuming about the users, how they're actually operating with the product? Are we assuming they have really fine motor skills? That they can use a mouse, that they can use a keyboard? Are we assuming that they are able to use really quick reaction times, things like that?                     “Understandable,” what is the general understandability of the product? Are you assuming really high language skills to be able to navigate? Or the ability to just remember really complex sequences, all kinds of things like that? Then, “robust” is a little bit different in that it talks about how is your product working with assistive technology? Like a screen reader, for example, which would be leveraged by someone who's blind to be able to listen to the product, listen to the phone, or the computer, whatever it may be, and get that audio output instead of the visual.   Poornima Vijayashanker:    Nice.   Laura Allen:        The WCAG is a great resource. I tend to think when I'm thinking about checklists and working with designers and whatnot, I break down into a few key groups as well. The first around keyboard and focus, just really taking a quick poll of—let's say you've got a site, how does it work with just the keyboard, no mouse whatsoever? It's a great thing for engineers and designers to be able to try that out themselves as well. Just try using the keyboard only and as you're navigating through, can you get to everything that you need to? Can you also see visual focus indication? If you don't see that and you're just tabbing through, you don't know what you can actually take action on. Have you thought about that in the design process, basically?                     Then, I start to think about semantics. How do we actually make it more clear for screen reader users what the page is actually all about or what the app's all about? For example, do we have labels in place for buttons so that as you navigate with a screen reader, you don't just hear, "Button," or, "Unlabeled button," which is not helpful at all. Thinking about how do we just convey that experience and make sure that it's clear for a screen reader.                     Then a third bucket, which I like to call think about in my audits, is just this idea of flexible interface. That can be anything from color contrast—so WCAG actually says we should have a minimum color contrast ratio of 4.5:1 for text against its background color. That's super helpful because for anyone, like me, with a low vision or just anyone who doesn't have the perfect 20/20 vision, it can be really hard to actually distinguish those colors, or a low contrast text, so that's a really helpful usability improvement for a lot of people.                     In this same group of flexible UI, you think about things like how does this interface look with magnification at a 200% zoom level, for example? Or are we using just color, or just sound to convey information? Just color, one example there, is if you have an input field and you type an error and all of a sudden maybe just the text will appear red. In that case, people who can't distinguish color will miss that information, screen reader users, or braille readers will completely miss that information as well. Thinking about how do you go one step further and convey that and make sure there's also error messaging. You can still use the color red and all, that's fine but it can't be the only way that you're identifying that information.                     I like to think through questions like that using the WCAG guidelines and other things that help there—like I know Vox Media has a really great checklist—and just get a sense of where's the current level? From that point, you may have a lot of different bugs, you may have different things that you want to be able to address, and the next step is naturally to work on, “How do we triage this? How do you prioritize?” I think one really helpful thing to do there is just to think about each of these bugs, what is the typical user impact? How critical is this? Would this bug stop somebody from being able to actually interact or take action on your site and your core purpose of your site or your app? I like to think about that, and help to prioritize, and just go from there.   Poornima Vijayashanker:    Wonderful. We'll be also sure to include the resources you mentioned below in the show notes.                     You've mentioned a number of things that happen during the audit. What happens after the audit?   Laura Allen:        I think the next natural step, of course, is going through that triage and prioritization process. Then as you're solving these problems, as you're fixing bugs, continuing to go through and help to honestly integrate accessibility into each step of the process. I think that's the really critical step. One holistic audit is not going to take you all the way. We have to start bringing this into our development process and building it from the ground up. Then, honestly, getting out there and working with users, understanding what the feedback is. I think that's a really critical component to understanding how to improve.   Poornima Vijayashanker:    I know in the next episode we're going to be going into a little bit more detail and boiling it down for viewers out there. Thank you so much today for joining us Laura.   Laura Allen:        Thank you.   Poornima Vijayashanker:    Now, Laura and I want to know: how does your company handle accessibility? Let us know in the comments below.                     That's it for this week's episode. Be sure to subscribe to our YouTube channel to receive the next episode where we'll dive in a little bit deeper and share three key tips that you want to think about when designing for accessibility. Thanks so much to our sponsor Pivotal Tracker for their help in producing this episode. Ciao for now.                    This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.
Jan. 30, 2018
All this month we’ve been exploring how startup fundraising is changing and why it’s going to continue to change in 2018.   We started off by talking about why you don’t want to reach out to an investor when you just have an idea, how to evaluate if seeking investment make sense for your business, and in the last episode why no matter how great your idea or business is you’re still going to receive a lot of NOs.   After what might seem like endless reality checks, I’ve saved the best episode for last, we’re going to be talking about what it’s going to take to get a yes from an investor. Ooshma Garg and Danielle Morrill are back. Ooshma is the CEO and Founder of Gobble, and Danielle is the CEO and Founder of Mattermark. They've both recently become investment partners at XFactor Ventures, an investment firm that's focused on investing in female founders and mixed-gender teams.   You’ll learn:   Some of the uncomfortable activities you’re going to have to do find that first investor How to approach the topic of check size How to leverage that first check and attract additional investors who may have been on the fence What the investment partners at XFactor Ventures are looking for and the types of startups they have already invested in   Finally, if you are a female founder or are on a mixed-gender founding team and want to pitch your startup to the partners are XFactor you can check out their website here and follow up with them via email: [email protected]r.ventures.   Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   ## What It’s Going To Take To Get That First Check From An Investor Transcript   Poornima:         In the last *Build* episode, we explored all the reasons an investor may say “no” to your big idea. If you missed the episode, I've included a link to it below this video. In today's episode, we're gonna dive into what it's gonna take to get that yes from an investor. So stay tuned.   Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, innovators and I debunk a number of myths and misconceptions related to building products, companies, and your career in tech. Now, it can be very disheartening to hear no after no from investors, and make you wonder whether you're eventually gonna hear a yes. But it is possible, and in today's episode we'll talk about what it's gonna take to get that yes. Today we're back with Ooshma Garg, who is the CEO and Founder of Gobble, and Danielle Morrill, who is the CEO and Founder of Mattermark. And they are both investment partners at XFactor, a new investment firm focused on funding female founders and mixed-gender teams.               So thanks for coming back, ladies. I know last time we talked about all the many reasons that we've received a no. This time let's turn it around and talk about what it's gonna take to get a yes and let's start by reveling in that moment where we each got our first yes. Danielle, when was the first time you got a yes? Danielle:            I got my first yes from Dave McClure. We were sitting on the curb in front of their new office they had just opened in Mountain View. It was my birthday and it was the “you can quit your job now” check.   Poornima:         Awesome.   Danielle:            So it was extremely exciting to kind of put that milestone.   Poornima:         Yeah. What about for you, Ooshma?   Ooshma:            I got my first yes from Ben Ling and Keith Rabois. I remember going to get a physical check from Ben. He was at Google at the time. Now he's a partner at Khosla Ventures. And so we had been meeting and going back and forth and then I showed up there and he just wrote this check that was more money than I had ever seen in my entire life. He's like, "Here you go." I felt like I was this bodyguard...like I needed an armored truck. I felt like anybody who looked at me could see that I was carrying tens of thousands of dollars in my hand. It was really funny. I remember just being so excited, but also funny enough, just so careful and so nervous carrying that check literally all the way to the bank.   Poornima:         Nice. You weren't like Serena Williams, who just hopped into the ATM and tried to put it in the machine or something like that? She did a drive-by with one of her first—   Ooshma:            Oh yeah?   Poornima:         Yeah. With one of her first grand slam winnings. It was like—   Danielle:            I didn't even have a bank account.   Poornima:         There you go.   Danielle:            That sounds awesome.   Poornima:         That's awesome. All right. And then what did you do right after you got that first yes...after you deposited the money in the bank?   Danielle:            I don't think I deposited it for a while. There's all this stuff that has to happen actually, so we also incorporated on that day, just luck of timing. But yeah, I think it's really weird. You get this check and it's like this life-changing thing and then you have to go back to your crappy one bedroom apartment with no windows in San Francisco and it's like, "Get back to work."   Poornima:         Yeah.   Ooshma:            Yes.   Danielle:            Keep coding, so it's bizarre and this thing happens and you wanna shout from the rooftops, like, "Ah!"   Ooshma:            Yes.   Danielle:            But on some level you feel like, "Oh shit, this is real."   Ooshma:            Yes.   Danielle:            Does that resonate for you?   Ooshma:            Absolutely. I think with every great success there's just great responsibility. And so now you have this amazing check and certainly it's time to crack a bottle of champagne and celebrate for a moment.   Danielle:            Yes.   Ooshma:            But with that comes everything that you were planning to do when you told the person you would do with it. And not only that. It's just the first check. Typically you're raising some kind of round and it takes 10 to 15 angel investors to get it all together. So it's a huge milestone that I think people can take a sigh of relief, but still have to carry it to the finish line.   Poornima:         Now, one of my first investors was somebody who understood my niche market. I know we talked about this in the last episode, but once I found him, actually fundraising became super easy because he went out and kind of rallied the other folks who were kind of on the fence, right? It was, "I believe in this market, I believe in this founder, I believe in this idea, I'm gonna write this check and you all would be stupid to not follow." Have you had that experience as well?   Danielle:            Yeah, I think different investors take different approaches. Sometimes they go and create the syndicate and sometimes you do and then they come back you up by adding a voice. But I think they're pretty networked so most investors here talk to each other or they're only one degree of separation away.   Ooshma:            Yes.   Danielle:            So you almost feel like when you're beginning to fundraise, you can kind of feel the Valley talking about your company. There's no trace of it on the internet, but they definitely are asking each other questions and saying, "Have you looked at the deal? What do you think of the price? What do you think of this person? Do you know anything about them? Have you heard anything negative?" Just all those questions. Because there is no diligence tool, and I'm laughing because Mattermark is part of that story—   Poornima:         Right.   Danielle:            —but when we were really early stage, it's really a reputational thing.   Ooshma:            Yes.   Danielle:            And so I think part of it is going out and beating the drum for you and part of it is also they're fielding questions. So as soon as you say, as soon as I said, "Hey, Dave invested in us." Then I should expect Dave is gonna get hit up with people saying, "What do you think of Danielle? Why did you invest?" etc., etc.   Ooshma:            Yeah.   Poornima:         Right.   Ooshma:            But I do think it's important to make sure that when you get some of those first checks that you ask the person who else they would recommend join the round. That would be leaving a lot of value in introductions and referrals on the table if you didn't do that. Because this person has just expressed huge conviction in your vision. And so they'll typically or should be able to bring along at least a handful of introductions.   Danielle:            And also, I've gotta add, I did not know to do that when I first started out. And I think it's because you think you're inconveniencing this person who's just written you a check.   Ooshma:            Yeah.   Danielle:            But actually they just wrote you a check because they wanna make you successful. And so you should ask and ask and ask. They will tell you if you've crossed the line, but you probably never will cross the line. And it's really easy, as an investor now, to just move on to the next thing and get busy. And it's not that I don't want to help, but I kind of assume if you're not asking, you're all right.   Poornima:         Right.   Danielle:            So ask. Because I think it's totally true. And I think I did leave a lot of that on the table and probably made it harder on myself than it had to be at first.   Ooshma:            Yup.   Poornima:         Yeah. They're also protecting their investment by getting their fellow investors to invest, right?   Ooshma:            Yes.   Poornima:         Yeah. So last time we talked a little bit about the stage that investors are at and oftentimes that makes a difference. And Ooshma, you sort of alluded to this. Now there's a lot of different types of investors out there in the market today. There's VC's, angels, super angels, micro funds, and so on. So let's talk through what makes sense at each stage, and let's start with accelerators because both of you have been involved with YC. So when does it make sense to approach an accelerator before or maybe after funding, and what did it take to get in?   Ooshma:            Wow. You know, one secret that a lot of people don't discuss is that many folks that got into something like a YC got in on their third or fourth try. So I did not know that until I started talking to a lot of founders. And YC might've given them feedback, maybe they kept working on their idea and they got to a certain stage. So I think that you might apply but you shouldn't just quit based on getting a no that we talked about. Even getting in to accelerators at an early stage sometimes takes a few tries.   Poornima:         And why would you even recommend people apply? Why does it make sense to do that?   Danielle:            So I think it really comes down to helping you set up the company for success down the road. So what an accelerator or incubator program is gonna do is help you with your go to market, and that doesn't just mean your product go to market. It's also the marketplace they create for financing your company.   So they're gonna help you validate that you've got a venture-backable business and they're gonna help set you up with the relationships and the communication pattern that you need to have in order to be a viable option for those investors. And that's really valuable, especially if you're coming to the Bay Area from somewhere else and you can't really build that network in a few weeks.   Poornima:         Sure.   Danielle:            You really need to be here. And so you're gonna be able to get a lot of time back. Of course, they take equity for this. But I think it's probably one of the best trades you're gonna make because in the beginning it's just so binary. You're either gonna raise that round or your company's probably not going to exist and so early on that's probably one of the best ways to de-risk financing and then you can focus on the product.   Poornima:         So you mentioned that marketplace pulling in intros for you. For the two of you, how did YC facilitate those intros to angels or super angels?   Ooshma:            Well, in my case we were very unconventional. I started the company without YC and I just wanted to build this idea and I felt that there was a problem that needed a solution. So I started prototyping it, I asked my friends for introductions. I was luckily already here for three years after college building a network. So I could just start my own process and seed round and ask for introductions, start raising money, and we didn't need Y Combinator for the first couple years of the company.   Then, it takes a while. First your company has to get funded so you can explore it, all right? And then you have to find product-market fit and you get to a stage of scale. So it took us a while to find product-market fit and I did YC in the middle of our company's story, at a time when we were changing models. Solving the same problem, but with different solutions, and when the fundraising environment was really tough.   So I had to make the decision of, “If it's worth working on, I'm gonna take what I can get.” And at the time that was joining an accelerator. So I think that that's a good example because it shows that you might've been working on something for five years and if YC can help you, or an accelerator can help you, you should still apply and use that as a catalyst for whatever next funding round or whatever growth metric you're—or awareness you're really looking for. But I would also say that you can't let anything like that stop you from building your company.   Poornima:         Right.   Ooshma:            So any investor saying “no” or any accelerator saying “no,” you should be building something because you see a way for the world to be better with something. And you have to decide to just do that and do it anyway, regardless of how you get there.   Poornima:         So let's talk about the mechanics behind this now. So there's obviously angels, there's super angels, there's micro funds, there's VCs. Walk us through what the check size is or who makes sense at what stage.   Danielle:            Right, so, there's a lot of flavors. Generally, if you're talking pre-VC, then there's very few private individuals who are gonna write more than a $50,000 to $100,000 check. Generally, if you think about someone's net worth, they've got some chunk of their net worth set aside for investing, and it's probably like 5% or 10%, so you can kind of begin to understand what's going on there.   But the easiest thing for anyone who's not a VC is just to ask them. What's your check size and how much risk do you wanna take? Will you invest pre-product or no, is question one. And then post-product, it's like what do you need to see from me to invest? There's so many investors now in that pre-Series A stage that I think it would be hard to give a blanket answer. But the most important thing is to just ask them, "Tell me about the last two or three deals you did. How big were they and what stage?" And I would try to not worry about getting them to do something exceptional. People kind of have their comfort zone with their personal money. And what they're doing is probably gonna continue to be the same because they're anchored on their last check.   Poornima:         Yeah. Danielle:            So if they've been writing a lot of $10K checks, that's probably the check size that they're writing unless they come into a huge amount of money and it changes their world.   Ooshma:            Right.   Danielle:            And then the other thing is you're gonna have these weird institutional investors who will invest before Series A. I guess this is super common now. When I started fundraising this was a lot less the case. So these are kind of these super angels, micro VCs, I don't really know what they're called today. Pre...what is it, pre-seed?   Poornima:         Pre-Series A.   Danielle:            They call it all these different things.   Poornima:         Yeah.   Danielle:            But fundamentally no, those check sizes could be anywhere up to, let's say, $500,000. They're generally not leading or pricing a round. No one has to lead a round if you don't have a equity round, so that's—a big part of it is just, again, what size check are you normally writing, do you need control in some way, do you add a board seat, all those things. The good news is once you get to Series A, it's a lot more standardized in terms of ownership. So there's some rules of thumb and I'm gonna say these and then you tell me if you think they're different because I feel like maybe they're not all the same. One big piece of advice is don't sell more than 25% of your company before your Series A. So fully diluted, when you run your own cap table out. You don't wanna be in a position where you've already sold half your company, because what happens is a Series A investor probably needs to have 20% ownership just for them when they come in. So if you've already sold half your company, on top of that, it starts to be pretty demotivating. That can be a little higher or lower, just depending on what's going on with your business. And then you of course have your other investors that might come in. So maybe you sell 25% to 30% of your company total in that round.   And then the B and C and so on. The way to think about it is the better you're doing, the more leverage you have.   Poornima:         Sure.   Danielle:            People generally sell 15% to 20% of their company in the B. And then at the C, D, and onward, it's kind of a sliding scale downwards from there in terms of ownership percentage. And you might be thinking, "Well, doesn't this add up to more than 100%?" And the thing is that you're diluting everybody else as you go. So you're selling a chunk of the whole company at that moment in time. So these investors, it's generally gonna come down to...fund size will line up with check size. And they're gonna say something like, "We raised $150 million fund, we're planning to write $5 million to $10 million checks, and then we're holding on to $5 million to $10 million per company for follow-on." Something like that, and you can just do the math.   Poornima:         Right.   Ooshma:            Or like, in our case with Xfactor, we have a $3 million fund and we're putting $100K in 30 companies. And that's the rubric. So I think to Danielle's point, it's your job to understand everyone's rubrics and appetites so that you are not wasting your time and not wasting their time. And at each stage—and let's take the seed stage for example, because it's one of the only stages where there's so many investors involved—fitting all those puzzle pieces together to get to how much money you need for the next 18 months and a specific material milestone. So I think you start out with calculating that money and you get your friends or blogs or whatever advisors to help you. And then look for people in that stage and then fit those pieces together and ask them to make introductions until you fill the amount.   Poornima:         Yeah, so let's talk about that. How do you actually get these intros? If I'm outside of Silicon Valley, I'm coming in, or even if I'm here and I've been an engineer all my life or a designer or something and then I recently made the switch to a founder, I might not have that network. How do I get those intros?   Danielle:            So, the truth is you're just gonna have to get out there and talk to people.   Ooshma:            Yeah.   Danielle:            And I think the thing is you probably know people who can help you that you might not realize. It's pretty rare, if you live here, even if you just moved here, not to know somebody who works at a startup. So you just have to start asking. And the truth is you're gonna have to give away information to get information.   Poornima:         Sure.   Danielle:            "Hey, I have a startup." OK, everybody has a startup.   Poornima:         Yeah.   Danielle:            "Hey, we're raising." OK, "It's really hard."   Poornima:         Right.   Danielle:            A lot of people immediately are like, "Oh, OK, interesting." "Do you know anybody who invests in startups?" And the thing is you're gonna have to do this at scale. So you're gonna need to go to events.   Poornima:         Right.   Danielle:            You're gonna need to ask the people that you worked with in the past and you're gonna need to do things that you might not enjoy doing, like going on LinkedIn and just doing a ton of research. Nothing is better than a warm intro. So even though this feels really weird and painful to ask, these are gonna generate the introductions that are gonna be the best possible. The next thing is cold after that.   Poornima:         Right.   Danielle:            So anything you can do to get something warm, even if it's many degrees of separation, is gonna help you more. And so that might also mean cold outbounding someone that you wanna then get an intro through.   Poornima:         Yeah.   Danielle:            So portfolio founders are probably the best people to cold outbound rather than the VC themself or the investor themself. So if someone cold contacts me and says, "Hey, I'd love to get to know you and Mattermark, yadda yadda," and maybe their plan is that they'd like to get introduced to Brad Feld, the reality is if they can tell that we didn't click, they're not gonna ask for that intro. And that sounds really, I dunno.   Poornima:         Transactional?   Danielle:            Mercenary? Transactional?   Poornima:         Yeah, yeah.   Danielle:            But it's business, so that's what business networking is.   Poornima:         Of course.   Danielle:            And I think the truth is I wanna send Brad great companies.   Poornima:         Yeah.   Ooshma:            Yeah.   Danielle:            So if you're an interesting company and you pitch me and I get excited, one, I might angel invest in you, which is the absolute best way for me to introduce you to one of my investors.   Ooshma:            Yeah. Danielle:            But the other thing is we all got helped in the same way.   Poornima:         Yeah.   Danielle:            So it sounds transactional, but it's also just kind of how it works.   Poornima:         Yeah.   Ooshma:            It's the culture of paying it forward.   Poornima:         Right.   Ooshma:            Everyone does that. And if they can't...they'll be honest. If they can't give you that introduction and you do click, maybe they'll give you some advice. And then we go back to that whole idea of listening and staying in touch and sending people updates. But I would say leave no stone unturned. If you just landed here, there's Techstars or 500 or Founder Institute or Y Combinator or TechCrunch Disrupt or Golden Seeds or who knows. There's all these things you can apply to. And of course, if you are an island and you don't know anyone, you have to start out cold. But cold will soon become warm.   Poornima:         Yeah.   Ooshma:            And you have to play the numbers game in the beginning.   Poornima:         Sure.   Ooshma:            And so just go to all the meetups, email everybody, send links and product demos. Just be creative. Oh! One hack that I had which actually led to me meeting you is that I would go to talks and sit in the front and come up with really good questions. And I'd strategically go to talks where I really wanted to meet the person and I knew they'd be a great investor or advisor. I would wait until the very end. They would give a talk and then all these people would be crowding around someone like Reid Hoffman. In this case it was Aaron Patzer from Mint. And so people were talking to him for 30 minutes. And I waited until the very end and he was like, "Oh my gosh. Who's this person waiting?" I said, "Hey, I'll just walk you to your car. I have a quick question." And then he became a very early on startup advisor and advocate for me. So there's all these unconventional things I think that you can do to get out there. And they might be uncomfortable but that's how we all did it.   Poornima:         Yeah. It's funny. I actually mentioned this hack to a bunch of people whenever they want my time. I tell them I'm gonna be at this event speaking. Some people take me up, some people don't. Some people have gone so far as to say, "I'll pick you up from the airport." I love those people. Because I'm like, "Great! I don't have to worry about how I'm gonna get from Point A to Point B," right? Or "I'll buy you dinner" or whatever, but yeah, I think it's definitely going out of your way to get that interest and build that network. So let's talk about what you guys are working on now. You are working on XFactor. So let's dive into that. Why did you even think this was important? Ooshma, you just rattled off 10 seed opportunities. So why XFactor?   Ooshma:            Yeah.   Poornima:         Why do you want to put another one in there?   Ooshma:            You know, there was not one female investor in our seed round. And I think...I firmly believe that diversity creates innovation, diversity of thought. And America in and of itself is this diverse nation and considered to be the best in the world. And it's because of all the different perspectives and kinds of people that we have here.   I like to emulate that in the company and I would like that in our investors. I don't think that one perspective is gonna make us this breakout, worldwide innovative company.   So, I think that XFactor is unique and necessary because it's brought together a partnership of nine people and it's all women and we are all operators, founders, CEOs, and active companies. We're not retired. We're extremely current. All these things...fundraising, hiring, strategy, growth, it's all on top of mind. We can add so much value to early stage companies. And we're just approaching it in this very kind of operators helping operators, allowing for bad-ass women to help other women in a space where there just aren't as many.   Poornima:         Yeah.   Ooshma:            And really just adding some more diversity to both the founder pool and the investor pool to build more breakout companies.   Poornima:         So you mentioned you were able to raise capital without having a woman founder. So why is that...why do you think that's important? Right? You did it, you proved it. You did it, you proved it. And I know I've...in my last company I raised from all men, so why is that important?   Danielle:            I think that it's important because it's hard and the reality is we want these products to exist in the world. It's not really that these companies can't get funded. It is harder, but the best ones get funded. And it's just what are we missing?   Poornima:         Yeah.   Danielle:            What are we missing out on in the world that could exist tomorrow?   Ooshma:            Yup. Danielle:            There's so many creative, amazing people who are not getting funded for reasons that have nothing to do with what the company is about. And the bad thing is that this kind of poisons the well too, so there's people who aren't even trying.   Poornima:         Yeah.   Danielle:            And so I think we wanna send this message that, "Look, we shouldn't have to exist." XFactor shouldn't need to exist and if we do a really good job and we make a bunch of money, people are gonna realize that investing in women, investing in men, we wanna invest in the best no matter what. So down the road, hopefully we can't exist.   Poornima:         Nice. Yeah.   Danielle:            But until that happens I think we need to...the only way to change it is to actually create competition.   Ooshma:            Yup.   Poornima:         Yeah.   Danielle:            So we are in competitive deals and we are sending this deal flow, we're creating market for each of these founders because we're gonna need to see a lot more female role models at the top. Ooshma's company is progressing, Mattermark is progressing, but we're still very early stage and there's not a ton of examples of huge exits run by women.   Poornima:         Right.   Danielle:            So I think we're really great examples here, but it's very early days and the best chance we have of seeing those results at the end is to put as much as possible at the top of the funnel. And I wanna say I also think it's just an incredible investment opportunity because it's under-invested so dramatically. Frankly, we should be able to see incredible returns partly because there's just so many opportunities that haven't been taken.   Poornima:         Yeah.   Danielle:            So I feel like not only is it awesome for founders, and I'm so stoked about them, it's awesome for our LPs and it’s gonna prove to LPs that female fund managers can return awesome results as well. And you know what? There's more asymmetrical opportunities like this to take. There's room to create tons more funds focused on women. You can create the exact approach with any minority group.   Poornima:         Yeah. Danielle:            So it's...it shouldn't have to exist, but while it does, we should try to create wealth for all the people involved and then long term, I think create competition in the market.   Poornima:         Yeah.   Ooshma:            And it's so...this is not a not-for-profit.   Poornima:         Yeah.   Ooshma:            It is not a charity. We are looking at people who are the grittiest of entrepreneurs and are in it for the long haul and ready to build multibillion dollar companies, and can answer all the hard questions. And we've got—   Poornima:         So what are some of those?   Ooshma:            Yeah. Well, first of all, we've gotten hundreds of pitches.   Poornima:         Yeah.   Ooshma:            And we've only made about nine or so investments.   Poornima:         OK.   Ooshma:            Since July. So in just the last three months we've looked at so many companies, and I think people assume, "Oh my gosh, there's a female investor, she's gonna invest in a woman." But I think it's out of respect to founders that you...that investors ensure that they are looking for and helping you build huge companies and use your time in the best way possible.   Poornima:         OK. So what are you guys looking for in your...and what's kind of...you said that your check size is $100K, so we're looking at early deals. And what else are you looking for? What's it gonna take to get a yes?   Danielle:            Well, the first thing is that we are definitely looking for a return that's pretty impressive. So even at the early stage if we invest, let's say $100,000 in a $1-million round, I would say the average post-money valuation is $8 million to $10 million.   Ooshma:            Yup.   Danielle:            So right away, to get to a 10x outcome, we need to see a company with really meaningful revenue. The good news is we don't technically need to find the billion-dollar companies to have a really successful fund, but I think the reality is we wanna find those outliers. Poornima:         Sure.   Danielle:            So we're just like any other venture firm at the early stage looking for the most impressive opportunities to deploy their capital. We've got 30 bullets in the gun. So we're also thinking, "OK, we're gonna invest this money over the next two or three years. Is this the best deal that I can do this year for each partner?" Each partner is thinking about this constantly. So you're looking at the entire field and you're saying, "Of all the possible ways to deploy this money, what do we think can get the best return?"   Ooshma:            Right.   Danielle:            And that's what we're focused on.   Ooshma:            And the partners hold each other to a very high bar. We're all CEOs of our own companies and we hotly debate every deal.   Poornima:         OK.   Ooshma:            And it's incredibly smart, active people around the table. So it helps us make great investments. And it helps us keep the bar high because we have a lot to prove to each other and I think we have a lot to prove as a fund. And that we want to. Because this is...it's about the great returns, but it's also, like Danielle said, about setting an example and about proving a point and hopefully making ourselves obsolete.   Danielle:            So I think we should give some specific things for the viewers in terms of what we wanna see because, people listening, we want you to pitch us. So, you gotta have a product. You pretty much have to have revenue I would say for our group, although we would still talk to you, help you get there, stay in touch. We wanna some amount of revenue or customers. I would like to see high margin businesses. I'm looking for software scale. I don't think that that's true for all of my partners, but I struggle because I think we're looking for companies that take advantage of innovations to get the advantage in the market.   Ooshma:            Yes.   Danielle:            I'm looking for people who have some special passion. Ooshma talked about being mission driven. It's really hard. I think we really wanna find founders who are in it for the long haul, so if they're just an arbitrage deal, I don't know that we're quite as excited about that.   Poornima:         Right.   Danielle:            Again, I don't wanna speak for all my partners, but I personally would prefer to talk to somebody who's like, "This is the only thing I wanna do."   Poornima:         Yeah.   Danielle:            I'm looking for patents and technology innovation. I'm looking for stuff that solves problems in the enterprise space and software space for developers, just because I actually think there are a lot of women in those fields and I think there's more bias for women pitching those ideas than any other idea, and I think they—I wanna give them that check so they have the confidence to go do all the rest of the pitches.   Poornima:         OK.   Danielle:            I wanna write the quit-your-job check. That's the number one thing. So if you're watching this video and you're like, "I would have to quit my job and work on this full-time and I need $100,000," we wanna talk to you.   Poornima:         Yeah.   Danielle:            Because the quit-your-job check for me was life-changing. I think we would like to write that, so, sorry I'll let you tell them what you want.   Ooshma:            I mean, man. Yeah, Danielle really covered a lot of it. And I think just the founder DNA and passion and willingness, of course plays a huge role. But the interesting thing is that our partnership is so diverse that we have folks coming at it from retail, from consumer, from enterprise, from hardware. We've assembled this...and from the finance companies and healthcare, finance, SAS, etc., so it's really neat because no matter what your company is doing, there's probably an expert in our partnership that can talk with you, consider the deal, and at least give you feedback, if not invest.   So I think that we are looking for breakout companies in all of those industries. But your...yeah, we—   Danielle:            Our portfolio already has quite a range.   Ooshma:            It has quite a range. I mean, we've invested in fashion, in hardware, in AI—   Danielle:            Developer tools and machine learning and ag tech—   Ooshma:            Yes.   Danielle:            Huge range already.   Poornima:         Well I can't wait to hear when they come out. Ooshma:            Yes.   Poornima:         So, for our audience out there who's eager to get their idea out in front of you, how can they get in touch with you?   Danielle:            An email to [email protected] is perfect. Xfactor.ventures is the domain.   Ooshma:            Yes.   Poornima:         OK, what should they send you?   Danielle:            You can send us a pitch or you can send us a hello and we can set up a phone call. Either one is great.   Poornima:         Cool.   Ooshma:            Yup.   Poornima:         All right, well, be sure to take them up on their opportunity.   Ooshma:            Looking forward to it.   Poornima:         That's it for this episode of*Build*. Be sure to subscribe to our YouTube channel to receive many more episodes like today's and great *Build* tips. Ciao for now.   Announcer:      This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.
Jan. 24, 2018
Think you’re onto something BIG, and surprised you’re receiving so many NO’s from investors? It can really make you second guess yourself, and shake your confidence... … but it shouldn’t! Receiving a LOT of NO’s is natural. You may be tempted to listen to the feedback after receiving some NO’s and think you just need to launch your product, change your business model, or grow your customer base, and then you’ll be more attractive to investors. Guess again. The reason you receive for the NO and the feedback you get may not be aligned. Why? Because at the end of the day, investors are human. They don’t want to hurt the feeling of a first time founder, and don’t want to seem rude in case they want to invest later. Yes they just might invest later. So how can you tell what is really going on? Well that’s what we’re going to debunk in today’s episode of Build! To help us out I’ve invited Ooshma Garg who is the CEO and Founder of Gobble, and Danielle Morrill who is the CEO and Founder of Mattermark. They've both recently become investment partners at XFactor Ventures, an investment firm that's focused on investing in female founders and mixed-gender teams. We’re going to help get comfortable with receiving NOs and deciphering what they really mean. You’ll learn: How Danielle and Ooshma learned to keep their spirits up despite all the NOs they received How to be politely persistent with investors who won’t bother taking a meeting with you The various tests investors put first time founder through How to maintain a relationship with an investors even after they say NO -- Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA. -- ## Why Investors Keep Saying NO To Your BIG Idea Transcript   Poornima Vijayashanker: In the previous two episodes of *Build*, we talked about why, even if you have an idea, you might not get investment from it, and it needs to be a big idea in order to even attract interest. But even if it's a big idea, chances are investors aren't going to say “yes.” In today's *Build* episode, we're gonna uncover all the reasons an investor may say “no” to your big idea, so stay tuned.   Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, innovators and I debunk a number of myths and misconceptions related to building products, companies, and your career in tech. Now, one misconception that a lot of first-time founders fall prey to is if they have a big idea, some investor's gonna want to put capital and fund it.   The truth is that a lot of funders face nos, and just because they face nos doesn't mean that someone won't eventually invest in them. In today's *Build* episode, we're gonna explore all the reasons that investors may say “no” to your big idea. And to help us out, I've invited both Ooshma Garg and Danielle Morrill.   Ooshma is CEO and Founder of Gobble, and Danielle is CEO and Founder of Mattermark. They've both recently become investment partners at XFactor, an investment firm that's focused on investing in female founders and mixed-gender teams. Thanks a lot for joining me today.   Danielle Morrill: Absolutely.   Ooshma Garg: Thanks for having us.   Poornima Vijayashanker: We've come a lot way since that first South by Southwest where we all shared a hotel room in 2010, and all of us have gone out and fundraised a number of times. I want to start by asking the two of you, what was that first no like that you got from an investor?   Danielle Morrill: I was bummed. I mean, I think the first 10 investment meetings were just nos back to back. First, you're like, "I guess that it would happen. I would get a no," but I'm like, kind of the straight-A's type kid. I keep thinking, “Of course I would get a yes every time," and then after you get them over and over, you're like, "Oh, maybe this just happens. Maybe this is true that you get way more nos than yeses." What do you think?   Ooshma Garg: Man, you know, your company is like your baby. It's a reflection of yourself, so the first no, and even ongoing nos, they're always so personal. I think you get a little bit used to it because you just build some armor and build some strength every day and every year as an entrepreneur, but especially in the very beginning, it's kind of like a survival-of-the-fittest process. You have to be able to psychologically get through the nos, take some feedback, and develop that never-quit attitude early on if you're going to be successful ultimately.   How To Get Over Rejection When Fundraising And Keep Going   Poornima Vijayashanker: Yeah. So, how did you get over that? How do you even know that you should just take the feedback, deal with the rejection, and keep going?   Danielle Morrill: I made a fundraising playlist on Spotify.   Poornima Vijayashanker: OK.   Danielle Morrill: I think it's Jay-Z who says, "On to the next one." I used to blast that song, like after every pitch, actually after the good ones, too. But honestly, you kind of just have to keep living, and I think part of it is just putting it in context with the rest of your life. Having a playlist for me was sort of a reminder of, “Oh, life just kind of goes on.” It's fun with your team too, I think, to just be...I guess not everyone does this, but with my team at the very early stage, it's not like you can hide the fact you got turned down.   Later on when you're raising, maybe you don't tell everybody that you're raising a series A, but when you're raising early stage money, you get your team to cheer you up. They buy you beers. You do silly things. You kind of have to let life keep happening so that it doesn't get too serious.   Ooshma Garg: Yeah, I agree. What's funny is my fundraising song is "Survivor," by Destiny's Child.   Danielle Morrill: How many people do you think have a fundraiser song?   Ooshma Garg: I don't know. This is the first time we're talking—   Danielle Morrill: We need to make a playlist.   Ooshma Garg: We need to make a playlist.   Danielle Morrill: That's a good idea.   Ooshma Garg: We need to make a playlist for our portfolio.   Poornima Vijayashanker: We'll link with the playlist to you guys. So, do you ever go back to the people that said “no?” Because you guys have done multiple rounds now, where you might have had to go back to those early investors who said “no” and ask for more.   Ooshma Garg: Absolutely. In our case, even our first check as a seed investment, it took me three different introductions, multiple follow-ups, to even get in the door before the no. After someone says “no,” it feels very final, but I think that the big secret is that you have to go back and that you should keep following up. Time and time again, I hear friends talk about series As, series Bs, and so on, where they got a no. They were...they kind of welcomed it and took all the feedback. They updated different investors every week for two months, three months, sometimes six months, and then they close that same investor. They might be a Sequoia, or Andreessen Horowitz, or what have you.   All those funds are looking for stamina and looking for breakout businesses. A breakout business has to have someone that's willing to listen, iterate, and improve. So, the funny thing is, you should see that as just the beginning of your relationship. For our venture financings, we had multiple failed fundraising attempts and then ultimately successful ones. Our funds that invest in us now, Andreessen Horowitz, Trinity Ventures, etc., absolutely said “no” once or twice before. But I maintained that relationship.   Poornima Vijayashanker: Yeah. What about—   Why It’s Valuable To Reconnect With People Who Said NO   Danielle Morrill: You have to think about it like sales. Like, would you have never contacted a lead again because they didn't convert at the end of the trial? No. If you are in my database, I am going to be talking to you for the rest of your life. If you're in this business, there's a certain set of investors that you really wanna work with. Frankly, they're looking for the people who don't take it so hard that they never come back, to your point about stamina.   I think also, once you go back to people a few times and kind of...you have that feeling of like, “This feels like it's against the rules to go back.” Then you realize that it's actually respected, and so it's a self-fulfilling thing, and you start to find yourself going back more and more.   How To Push For Specific Feedback   Poornima Vijayashanker: Well, it's great that you got feedback, but I think a lot of times, you get this generic feedback, where it's like, "I wanna see more traction," and you're like, "I'm already at, you know, 10k in monthly recurring revenue," or, "I'm already at, like, a million-dollar run rate," like, "How much more traction do you want to see," right? So, how can you kind of push an investor to give you more directed feedback in that note?   Danielle Morrill: Well, I mean, I think...We sit on both sides of the table now, so I think sometimes it's laziness that causes people to ask for these things. So, for example, the "I wanna see more traction." It's kind of like going into Macy's and being like, "Why isn't this a Dior dress?" It's like, OK, if you want a Dior dress, maybe you should go buy one. If you wanna find a company that has, like, $5 million a year of revenue, and you're at seed stage, sorry, this is what we have, and this is what I'm selling, and if it's not what you're interested in, it's fine for you to turn me down, but I'm not...this is not a buffet where you can come back anytime between 10 and 1. I'm trying to raise a round.   You kind of have to, at least inside, hold a certain amount of entitlement over your time. It's not that you need to be entitled to their money, but you're running a process, and I think that that is really important. So, for a lot of these unclear feedbacks, I think it's more important to say, like, "What do you think of what I'm selling now? And if it's not clear what I'm selling, let me remind you and redirect." Honestly, you have just as much a right to claim your time as they do.   Ooshma Garg: Absolutely. And you have to kind of draft or pick your draft, in a way, with your investors. There are ones that I really wanna follow up with, and I would love to work with, and it's not just from my side of the table. I think, just like with employees or anyone else, or with a relationship, you want it to be good with both sides. So, you might see something that they don't, but they've only known you for 30 minutes. You've done all your homework. You know what they've invested in. You know the other founders.   So, you don't just follow up with everyone. You hear the nos. Sometimes, it's not even worth following up. Sometimes it was an introduction, and you didn't really connect. A no is OK. Other times, it comes with something that says, "Our fund requires x, y, or z. Someone at this stage. We need this much ownership." It's important to know what's a BS no and what's actually a valid no. Sometimes...it took me a long time to learn that funds vary drastically in size, and that actually has a huge impact on who can invest in you at different times in your lifecycle. So, timing is important.   Poornima Vijayashanker: Yeah, hold that thought. We're gonna come back to that in a little bit, the whole fund size, and what makes sense and what doesn't. So, but let's go on to some of the more easy things that you hear and might get rejected. So, I don't know if either of you have faced this, but the whole, "You don't have a technical co-founder." And somehow that's like a gating factor to even get a dollar out of this investor, right? You hear things like this where you're just not meeting a certain checkbox. What's been your response to that sort of stuff?   Danielle Morrill: It depends on the checkbox. Basically, what I would say for technical co-founder or a lot of these is, they're like risk boxes. So, each one...it's almost like if it was a survey, and you added up enough points, then there's too much risk here. It's probably no one reason that's gonna knock you out, but they're trying to figure out where you fit. So, technical co-founder is not necessarily a problem if you nail everything else, but if you don't have a product, and there's no one to build it, then of course, that's gonna be expensive.   So, I think it's—sometimes the way it seems to be coming across to the investor is like it's a checkbox thing, but they're really trying to ask a bigger question. So, I think one thing I've found is that it's good to say, like, "Tell me more about why you're worried about that," rather than just answering the question, making them elucidate more. Cause I've been surprised by some of the answers that I get. The technical co-founder question, I think the assumption is, who's gonna build the product? And they might just be thinking, "Dang, we're gonna need to go raise a big round because you need to hire two or three engineers instead of building it yourself."   They're not actually worried about you not being technical. They don't care that you're not technical. They're more like, "OK, so now I have to assess fundraising risk cause this person's gonna need to go build a team." So, it's easy to think it's about you, and, "Oh, you can't code." And then you kinda like lock down and feel guilty, but I think that's not always the case. A lot of these things are not actually what they seem on the surface.   Poornima Vijayashanker: Right. Yeah, I think another one along those lines is also, "Why are you working on this idea?" Right? So it's, what puts you in that unique position to kind of own domain expertise? Have you guys ever gotten that question, like, "Why this? Why Gobble, Ooshma? Why help people with cooking at the end of their day?"   Ooshma Garg: Right. Well, Gobble is a lucky one for me because it's a mission-driven company, and it started out of my family. What we do is we help people cook home-cooked food in 15 minutes in one pan, and we bring this tradition, and ritual, and love of a household into the modern, busy life. That's something that's very near and dear to me. So, because of that, it shows that I'm just gonna give it my all and not quit.   I think some folks stumble on an opportunity sometimes. You are...you're just a inventor, and you want to tinker around, and you try finding what's gonna fit in today's zeitgeist. Just like founders come in different flavors, I think investors come in different flavors, too. There are investors who are great at investing in arbitrage opportunities. There's investors who really wanna back founders, or social good, or mission-drive folks. Or they wanna back moon-shoots. Or some people wanna back things that have a linear, direct, immediate path to growth.   So, I think having that context when you assess someone's response to you is really important because you kinda, just like with your friends, you have to find your tribe with your investors, as well.   Is The Market For Your Product Big Enough?   Poornima Vijayashanker: Yeah. So, there's definitely this sizing-up thing, and I think one of the early signals is, they don't feel like your market is big enough, maybe because they're not aware of that market, or maybe they don't get the space. Have either of you had that situation where you come in, you've already got traction, you've got the go-to market team, products in the hand of customers, and they're just kind of scratching their head, like, "Oh, is food...do people eat dinner still these days? Is that still a thing?" How do you deal—   Danielle Morrill: Oh my gosh. I actually don't think it's worthwhile to continue to have the conversation, and I have to shout out to Hunter Walk, who wrote an excellent post about this, I don't know if you guys saw, around a woman who was pitching, and someone said like, "Convince me this market's big enough." And she just said, "Look, I don't wanna work that hard. I've already got traction, people eat dinner, right?" I think there are times when you're looking at this investor, and you have to consider, if they don't get it at this point, especially if you're doing something where you have traction, and it's fairly obvious that the market is big...   I mean, most of us...if you're building breakthrough tech, you might find a situation where markets are unclear in terms of size, like Blockchain, for example. But in most cases, these are professional investors, and they may be testing you, and they might wanna know what you know, so it's worthwhile to at least give them a rough answer, but I would take it as serious data, if they need to be convinced that the market's big enough.   The other side is that, not all markets need to be big to be interesting. It's more about if you can create something that can grow. Obviously creating a market that doesn't exist is a really valuable thing. So, again, I think it goes back to flipping the script a little bit in terms of trying to make sure you understand what they're really getting at. Like, do they not know? Are they testing you? Are they gonna be a huge waste of your time?   How To Get To The Real Question They Are Asking   Poornima Vijayashanker: How can you kind of suss that out? Are there questions or techniques?   Danielle Morrill: I would just start getting curious, like, "How much do you know about the market? Have you invested in this space? Obviously you're interested in us. What do you think?" And it doesn't have to become combative. It's much more of just, like, how does this become a dialogue instead of playing 20 questions, where you're doing all the talking? I think about it kinda like a job interview, I think, in both parties are confused about who's interviewing who, and you really wanna make sure that you find a balance where it's not you, as the founder, talking 80% of the time.   Ooshma Garg: The framing is so important. So, if you're getting some feedback repetitively that, "I don't understand your market," or, "I don't understand your path forward, or your path to revenue, or how you're gonna hire," then you do have to take that feedback and try to iterate and improve your pitch itself. I think that every company...it's very hard that you meet a perfect de-risked company at an early stage. They all have some mini risks, and often times, one big risk. So, sometimes it's, "Wow, there isn't a market for this, but we see that being the future."   Other times, there's a really big market, but maybe it's crowded. So, the question is, how are you gonna be, for example, defensible in the food space? Other times, it's...you have something defensible and proprietary. It's a huge market, but no one's willing to pay for it. So, people aren't willing to pay for music, or TV, or whatever. So, how are you even gonna make money for something that everybody's using?   Whether it's revenue, market, defensibility, IP, every business typically gets stuck, I find, on one big discussion. The better you can hone your slide and your couple lines to make sure that your message is getting across properly, and that resonates, it's just to your advantage cause people have such limited time with you and attention span. You know what is gonna be the hot button in your pitch, so identifying that early and practicing that part the most would probably do you well.   How To Get At An Investors Hot Buttons   Poornima Vijayashanker: So, we previously had Marie Perruchet on the show, and she talked about taking your pitch and then seeing how other people reformulate it, or what are the pieces that they extract? That usually becomes these hot-buttons, or the thing that is most memorable that maybe you need to dive into. Are there other ways that you guys have found to extract that information?   Danielle Morrill: I think...reformulating, literally having someone pitch it back to you, is that what you mean?   Poornima Vijayashanker: Yeah. As one technique to, like...what's sticky, what is impactful, but then there's the other case of, yeah, what is the hot button that people are probably gonna step away from?   Danielle Morrill: I mean, I think one of the things that is really interesting is whenever you're opening the conversation with an investor, at the very beginning. If you can get them to tell you, like, "Hey, what do you know about my company?" Because that actually is gonna tell you a ton about what they've already decided you're doing, and it's sometimes really wrong, or it's like...you know, there's a lot there, and then you can kind of work from there. If you notice that, pretty consistently, people are having the wrong idea, I mean, kinda to your point about feedback, it's another way of getting—   The reality is, people act like you setup your pitch, and then you go out. But you actually create your pitch, start to go out, and then you're continuously iterating on the pitch. So, you have so many opportunities to make the pitch better. I actually look at the first 10 pitches or so. I kind of set up pitches with targets where I would be interested in working with them, but they're not my top picks, so that I'm actually running the pitch against those folks. That way, if the first three or four say that their first impression of you is different, then you can realize, “Oh, the market already knows who I am.” Very rarely do you get to just go pitch, and no one knows who you are. That's another tactic that I think can be really helpful.   Finding Investors Who Are a Fit   Poornima Vijayashanker: So, coming back to kind of Ooshma's point around finding investors who fit into one of many opportunities, like arbitrage, moon shots, love the space, etc., there's also people who really get beholden to certain stages, right? They're like, "Oh, come back and talk to me once you've figured out your customer acquisition cost, or your lifetime value," right? Are there ways in which you've been able to address that, even if you don't have those metrics yet?   Ooshma Garg: One concept I keep running back to is that MVP concept, or minimum viable product, or even like a prototype. So, with my first company, the vision was to make this recruiting platform for universities all around the country. I made...I started by making wireframes, and envisioning the product, and keeping it simple, but thinking through those wireframes. But then, an advisor kind of looked at that, told me to scrap the whole thing, and said, "Why can't you just start with a mailing list? You're making a recruiting platform. Why don't we just see if there's people interested in your concept, and can you get 10,000 people, or 50,000 people, or how ever many students on your mailing list?"   At first, I was offended because I thought, "Oh my gosh, a mailing list is not a tech company." But often times, you can think about some scrappy proxy or prototype to prove what the person is asking, even if you don't have that exact number or the software or resources to get what exactly they want.   Poornima Vijayashanker: So, what's an example...yeah, if somebody throws out, like, "Ooshma, early days, three years ago, what was your LTV?" And you're like, "I don't have an LTV because I don't know," what would your response be to that?   Ooshma Garg: You know, I probably do two things. So one is, I would look at comparables in the market, and so, just doing studies of the general food industry, in my case, like how often people order takeout, or how often...what are people paying for SAS for these particular products each day, or whatever's relevant to your market. I mean, I'm assuming that you're...that you have some prototype. Very few companies pitch pre-product, so whatever data you have for three months or six months, there has to be something there, some monthly active users, how many times people are logging in, how many purchases people have made.   So, you just have to...I mean, our seed round was raised off of two to three months of early prototype data. I think that's all you need. It's just some prototype that shows some user willingness to pay or engage for three months, and then you can extrapolate that into your vision.   How To Handle Disagreements   Poornima Vijayashanker: Now, there's obviously times where people may disagree, right? They may say something like, "You know what, Danielle, I don't like your distribution strategy. I really just don't think it's gonna work. So, you know, cause I think it's gonna be expensive. Come back when you've figured out something that's a little bit cheaper. Then let's have the conversation. But, for now, no."   Danielle Morrill: It seems like an opportunity for them to prove their value-add as an investor. You know, I think that's valid for people to challenge strategy, but I think, what I would wanna know in that situation is, "If you were my investor, what would you suggest that I do? I totally hear your concerns." Make sure to show them that you're listening, but I think that's their opportunity to step up and actually offer something constructive. I think if they're gonna be in an investor where they're gonna be critical without being constructive, that's actually data for you.   The truth is that strategy's tough. Strategy often breaks down, and we change strategy all the time in startups. That's a huge part of what you're testing. So, I think being gracious and not taking it personally is important, but also making sure that you're asking them to demonstrate their value. I actually think that's gonna make them want to work with you. If that goes well, that's actually gonna be a way to test out, what would this working relationship be? So, I think that's...see it as an opportunity.   Poornima Vijayashanker: I like that.   Ooshma Garg: Yeah. And most people kind of...they send you that no via email, and I'm sure that the large majority don't even ask further questions. Some may not even respond, and others might respond and say, "Thanks for your time. I'll move on." But some small percentage are asking follow-up questions, and I think that's just making them stand out and starting that relationship that we said is so important.   I think that if you really did like someone, and their no isn't tactical or directional enough for you, to ask for a 10-minute phone call just to get a little bit more detail or their advice on strategy towards de-risking that investor's concern, I think can go a really long way. So, I think folks should just practice embracing the no and getting that 10-minute call and feedback as much as possible because that will help give them building blocks for another three months, if they can, and not just sort of wander aimlessly, wondering what someone was saying, or worse, completely ignoring it.   Danielle Morrill: Right. If you're gonna go and worry a bunch about the feedback but not ask for the follow-up, go round and round in circles over three glasses of wine, it would be much less painful to just have that awkward 10-minute call and just know where you stand. I think I've seen founders go in circles over this stuff. Literally years later, they'll tell these stories. It's just not worth the energy. The investor's also probably super uncomfortable giving the rejection. We're gonna talk a little bit about saying no on the other side. So, they're kinda beholden to you to give you that 10 minutes, honestly, so you should take it.   How To Know When An Investor Isn’t A Fit   Poornima Vijayashanker: Now, there's a lot of times where it's very obvious, you know, they tell you, "Here's the no," but...aside from some of the ambiguous feedback around the traction, there are times, though, where they may see a signal. Maybe it's something that happened in a meeting between you and your co-founder, or something else. Maybe they did some back-channeling, right? How do you handle those situations where they might feel like, “Oh, there's no chemistry,” or “I'm not sure where this is going?”   Danielle Morrill: It's tough cause they usually don't tell you.   Ooshma Garg: Yeah, they usually don't tell you. I think that's quite rare, as well. I think the way...the best way to handle that or avoid that is actually to construct your own back-channeling. So, like I said, some of the biggest investors, they will only invest based upon referral. Then, when you get so, kind of, well-known and in high demand, they'll only invest based upon two or three referrals. So, every single step is just like hard work. You can't ask for one intro. You can't just take the no on face value. You have to ask for three intros. Then you have to ask for follow-ups. Then you go to the meeting. Then you follow up on the meeting, and if they say “no,” you follow up again. There's all those little, little, extra steps that other people are doing that I think more folks should know about.   Poornima Vijayashanker: Yeah, and invest their energy in that versus what Danielle said, around the drama in their heads. So, anything else you guys have heard from your experience? Any other nos that we maybe haven't covered? I know there was some of the stuff that Ooshma was talking about, like the type of investors. Maybe we can dive into that a little bit?   Ooshma Garg: Yeah. I think...Well, with regards to the nos that people give, one of the toughest ones is simply just environmental. There are times when you're starting a company, and it's just a rough funding environment where it's just rough for your market. There might be bigger companies who are...for whatever reason, they're not doing well on the public markets, and that's affecting you. So, like the stamina, managing your psychology, being frugal, focusing on just the minimum prototypes, all of that's so important because the main thing you need to get to yes and get funding is time. You can correct a lot of things in the nos overtime, but there's some environmental factors you just have to weather.   Poornima Vijayashanker: Yeah, let's dig into that a little bit more. What do you mean by like, public companies? "How does that impact me? I'm just a two-person start-up, why should I care what Google or Facebook is up to?"   Ooshma Garg: Yeah. Well, hopefully your aspiration is to be a big public company, or to just be a big organization in general, and to be, one day, going from wherever you are to making hundreds of millions, if not billions, of dollars of value for your shareholders, for your employees, for your customers, and so on. So, investors will look at the current state of the market, at the public market, to understand what's happening in your industry. How are those companies valued? What are your chances of getting there, of breaking out? What is it gonna look like when you IPO? That trickles all the way down and influences your valuation, even as early as at the seed stage. So, it's very well-advised to not be delusional and to take a look at the public markets of your industry—   Poornima Vijayashanker: The landscape, yeah.   Ooshma Garg: —and be able to speak to that. I think people will be very impressed.   Paying For A Previous Founder’s Mistakes   Poornima Vijayashanker: I think another situation is, often, we have to pay for previous mistakes. So, the investor might have invested in a space when it was too young, or maybe the founders that they invested in weren't that knowledgeable or were the first. You know, just a number of factors to where, now, they just aren't willing to look at the space, or even...no matter how amazing you are, they're like, "No, sorry, not interested in the space. You might be amazing, unicorn person, but I'm just gonna say ‘no.’"   Ooshma Garg: I would take that no. It's kinda like in relationships. Someone had some issues with another girl that looked like you, or whatever, like it is not your—   Danielle Morrill: He is never gonna stop saying that.   Ooshma Garg: That is not the best guy for you. So, there are many investor fish in the sea, and I think that's just when the numbers game comes into play, and you have to make sure that you're not just talking to five, you're not talking to 10, but you have a big target list that you're just setting up and rolling through.   Poornima Vijayashanker: Awesome.   Danielle Morrill: I think one other thing that is valid but complicated is, people might say to you, "This isn't venture-backable." I actually think that's very helpful feedback to hear. Whether you agree is sort of beside the point. Find out why they think that. Sometimes, investors know things about markets that you never...can't learn until you're in them for a long time, and they can save you years of your life.   So, part of why people get a bad taste in their mouth often has to do with, like, a poor-margin business that can never get better, or a business that caps out somewhere, and there's this trough of sorrow that seems to go on forever and ever, and you don't get to find out until you're a $50-million company, which is great, except for when you have a huge burn rate and expectations. So, especially if you're entering a market where you're fairly new, maybe you're a software-centric person, but you don't have domain expertise, those types of nos can tell you a ton about things that.   It's easy to say, "I don't care. If I get to $50 million of revenue, I'll deal with that then." And you can still make that decision, but I think the key is to actually make sure you understand that no because they are in the business of billion-dollar outcomes. They might know something that you don't, and they might be able to help you redirect towards something that is worth it.   Poornima Vijayashanker: Alright, well thank you, Danielle and Ooshma, for walking us through all those nos. For all of you out there who are watching, if there was a no that you recently received that maybe we didn't unpack, feel free to share it with us in the comments below this video.   That's it for today's episode. Be sure to subscribe to our YouTube channel where we'll continue the conversation and talk about what it's gonna take to get that yes from an investor. Ciao for now!
Jan. 17, 2018
Ready for more myth busting around startup funding? Let’s get to it then! Last week I shared a number of reasons you should share care fundraising whether you’re a founder or startup employee. Here they are again, and in the Build episode we talked about why it’s a bad idea to reach out to investors when you have an idea. This week we’re going to continue our theme and focus on what compels us to think we need to raise capital like competition heating up, the belief that the business will stop growing, or that the idea we’re pursuing isn’t really BIG enough. We’ll also be diving into the mechanics of investment talking about the nuances of an angel versus a venture capitalist, and why it’s important to look for investors that have knowledge of your marketing or industry. Erica Brescia is back to help us out with this episode. Erica the COO and co-founder of Bitnami. Erica has also recently joined XFactor Ventures as an investment partner. XFactor is an early-stage investment firm that's looking to fund female founders as well as mix-gendered teams. Erica is a founder and investor, and having sat on both sides of the table, she knows how to dispel fact from fiction! As you listen to today’s episode you’ll learn: Why Erica and her partners at XFactor are putting their money where their mouth is and starting a fund to invest in female founders and mix-gendered teams What the XFactor investment partners and other angels look for versus venture capitalists, and how much they are willing to invest Why competitors will come and go, and you cannot let their actions intimidate you or direct your business goals Why only you as a founder, can decide when is the right time to raise for your business In the next two episodes we’ll explore handling all the rejections you receive from investors, how to motivate yourself to keep going, and what it’s going to take to get that first check! --  Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   ## Startup Funding: When It Does And Doesn’t Make Sense To Fundraise For Your Startup Transcript   Poornima Vijayashanker:         Last time, we talked about how as a first-time founder, you don't necessarily need to immediately rush out and get investment to get your tech product off the ground. We discovered some alternate ways of funding your product development and company growth. If you missed that episode, I've included it in the link below this video.   In today's episode, we're going to dive in a little bit deeper, and talk about when it makes sense to go out for that angel investment, and then how do you transition from getting capital from angels to eventually getting it from venture capitalists, and what you need to do in the interim to make sure you're growing your company. So stick around.   Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, I invite innovators, and together we debunk a number of myths and misconceptions related to building products, companies, and your career in tech.   What Compels Startup Founders To Fundraise   One myth a lot of founders fall prey to is the need to constantly fundraise. They're worried that if they don't, their competition is going to swoop right in and outpace them. Or their business is just going to stop growing, and even worse than that, people might not think that they are actually onto a big idea.   To debunk these myths and more, I've invited Erica Brescia, who is the COO and co-founder of Bitnami. Erica has also recently joined XFactor as an investment partner. For those of you who aren't familiar, XFactor is an early-stage investment firm that's looking to invest in female founders and mixed-gender teams. Thanks again for joining us.   Erica Brescia:      Thanks for having me!   Poornima Vijayashanker:         Yeah! I know we talked a little bit in the last segment, but let's just quickly do a refresher, tell us a little bit about your background and what you do at Bitnami.   Erica Brescia:      Sure. Bitnami automates the packaging and maintenance process for server software for containerized, cloud, and behind-the-firewall deployments. We're most known right now for the Bitnami Application Catalog, which contains over 150 different pieces of server software, ranging from business schools, like content management systems, more project management systems, to development tools like GitLab and Jenkins for building out your development processes and pipeline, to stacks of things for building applications, like Node, or Rails, or Django. We work with all of the major cloud providers, and have over a million deployments a month of the apps we package across all the platforms that we support.   Poornima Vijayashanker:         Awesome. In addition to Bitnami, you recently joined XFactor as an investment partner.   Erica Brescia:      I did, yes.   The Difference Between Angel Investors And Venture Capitalists   Poornima Vijayashanker:         Yeah! We talked a little bit about that last time, and I want to pick up the conversation from our last time and dive a little bit more into not only what does XFactor do, but this whole position between angels and venture capitalists. How do you guys think of XFactor? Are you considering yourselves as angels or VCs? Would it help to start with defining angels and VCs?   Erica Brescia:      Sure. I mean, I tend to think of angels as primarily investing their own capital, and VCs are investing other people's capital. We all actually have our own funds in the fund as well, so we're LPs in addition to being the investment partners.   Poornima Vijayashanker:         What does that mean?   Erica Brescia:      That means that we're the people who put money into the fund, as the limited partners, who just put money in the fund, and then they step away, and they entrust, basically, the team of investment partners to invest that capital in companies that will produce ventures that yield returns.   Poornima Vijayashanker:         Where is that money coming from? Is that your own hard-earned money, or is that from somewhere else?   Erica Brescia:      In the case of the LPs for the XFactor fund, it's from a range of different people. Some of them have just been very successful in business. Some may be managing endowments or trusts, or other investment vehicles, and they invest both in the stock market and in VC and angel funds as part of their diversification strategy.   Poornima Vijayashanker:         Got it. I think some of you have also contributed personal funds, right?   Erica Brescia:      Yes. We have put our own funds into the plan as well.   Poornima Vijayashanker:         That's important to note. Yeah.   Erica Brescia:      You've got to put your money where your mouth is, right?   Poornima Vijayashanker:         Great! No, I certainly appreciate you guys doing that.   Erica Brescia:      Plus, honestly, I think we're going to make money off of it! So why would you not do that?   Poornima Vijayashanker:         Exactly!   Erica Brescia:      That is the whole point.   Poornima Vijayashanker:         Yeah. You guys are operating a little bit like angels, but a little bit like VCs as well, but let's dive into more of a traditional VC model. What does that look like?   What Seed Stage Investors Are Really Looking For And The Size Of Check They Write   Erica Brescia:      Sure. The distinction there is interesting, because I would say there's seed-stage financing, which a lot of people think of as coming from angels a lot, but VC funds do as well. Those are typically much smaller rounds and much earlier stage. The company probably has something built, probably has some users, probably can show some traction, but they're usually not raising huge amounts of money, at least not by Silicon Valley standards, which are different than the rest of the world.   Poornima Vijayashanker:         Yeah. Let's get some ranges. Because I know some seeds can get crazy.   Erica Brescia:      Huge. Yes.   Poornima Vijayashanker:         So let's do a more middle-of-the-road seed. What would that look like?   Erica Brescia:      These days, I would say they're usually between $500K and $2 million. I know that's a wide range, sometimes it's smaller, sometimes it's bigger, but the fundraisings that we're participating in are usually somewhere around there. We have had some companies raise significantly more than that, and we've almost gone in more at like a Series A stage. But typically you're raising $1 million or $2million to get your idea off the ground and show a little bit more traction, before you go and raise at a Series A. Those used to be maybe $2 or $3 million. Now, most of the time, you're looking at maybe $6, $7, even $10 or $15 million as a Series A, which we certainly see in the cloud and container space in particular, which is where I'm focused with Bitnami.   Poornima Vijayashanker:         OK. That makes sense. Now, I'm not going to dive into microfunds and syndicates, and all that stuff. We're going to do that in a later episode. But let's go back to you, and let's talk a little bit about how you initially funded Bitnami.   How To Initially Fund Your Startup When You Cannot Attract Investment   Erica Brescia:      Customers.   Poornima Vijayashanker:        Customers!   Erica Brescia:     We sold stuff. Yeah.   Poornima Vijayashanker:         Yeah. When was this, by the way?   Erica Brescia:      We started with a company called BitRock over 10 years ago, and BitRock built some really interesting technology around application packaging and deployment, which has become the foundation of Bitnami. We're very unique, I would say, for a Silicon Valley company. We developed a package software product. We sold it to customers, and we generated money that way.                     Then we started providing a subscription service to a lot of software companies that needed us to build, we called them "stacks" of software, so their products could be installed and distributed very easily, and we worked with a lot of the biggest names in open source, in those days. So we had that money coming in—   Poornima Vijayashanker:         If you don't mind sharing, how big were some of those contracts?   Erica Brescia:      They were in the tens of thousands of dollars a year. So reasonably sized, but we now, in retrospect, we charged far too little. But that's one of the lessons that you learn as a founder, you're always underpricing yourself in the early days.   So we did that, and built up the company that way. Then we decided to evolve into Bitnami. We went through Y Combinator in 2013—   Poornima Vijayashanker:         So before you did that, you actually had revenue coming in?   Erica Brescia:      Yes.   Poornima Vijayashanker:         Give us a range of how big you were at that size?   Erica Brescia:      We had 12 people, and seven figures in revenue, when we—   Poornima Vijayashanker:         Oh! That's fabulous!   Erica Brescia:      —went through Y Combinator.   Poornima Vijayashanker:         Yeah. OK. So why even bother going to—   Erica Brescia:      That's a great question! It was a subject of much debate, but again, interesting story, I suppose. My co-founder's wife had gone through Y Combinator with her own company, and had a great experience with it. And we knew that we wanted to send the company on a different trajectory—   Poornima Vijayashanker:         Which was?   Erica Brescia:      Growth.   Poornima Vijayashanker:         OK. OK!   Erica Brescia:      We wanted to build a huge business, and the model that we'd had previously was really what we talked in the last episode about, more of a lifestyle business. Right? We built a solid business, but that's not what we were there to do. We wanted to build a huge and very meaningful company. And we felt like Y Combinator was the right way to do that.                  It gave us a lot of focus, and helped us make some interesting and difficult decisions. It also helped us a lot with hiring in the early days, and bringing more folks to the team. We've been on a pretty healthy  trajectory since then. Over 75 people. I don't give out revenue numbers, but we're profitable and growing, and doing well.                     All of that money, except for a million dollars, which we still have sitting in the bank, has come in through customers. And that million dollars we raised after going through Y Combinator. We brought in some angel investors whom we really liked, for different reasons. Some of them have a lot of experience in building companies, specifically in our space, and we felt like they could help us a lot with that.                     A couple of them are VCs who invested personally in us, because we didn't want to raise a VC fund, and a few were overseas venture investors, but they make seed stage investments. One from Japan, and one from China. And that was purely because we plan on going into those markets, and we thought it would make sense to have some people over there with a vested interest in our success.                     Y Combinator served as a good catalyst to bring that round together-   Poornima Vijayashanker:         How big was that round?   Erica Brescia:      It was just a million dollars?   Poornima Vijayashanker:         Oh! OK. But you were already in the seven-figure revenue at that point, when you raised that million.   Erica Brescia:      Exactly.   Poornima Vijayashanker:         OK.   Erica Brescia:      And that money is still sitting in the bank, and we've added a healthy amount to it, and—   Poornima Vijayashanker:         That was what year?   Erica Brescia:      2013.   Poornima Vijayashanker:         Oh! It's been a while. It's been four years.   Erica Brescia:      Yep.   Poornima Vijayashanker:         Now, interestingly enough, you have that million, you're raising revenue, and you had grown without a lot of outside capital. I mean, you were already growing, so in that span of time, weren't you afraid that some competitor was just going to swoop right in and go out and raise $10 million or $100 million dollars, and put you out of business?   Don’t Let Competitors Intimidate You Into Fundraising For Your Startup   Erica Brescia:      What's actually funny about that question is we had a bunch of competitors do that, and they all went out of business..   Poornima Vijayashanker:         Oh, OK! Yeah!   Erica Brescia:      OK! Some spectacularly so. One raised $40 million, had huge names. One of the people on their board tried to come and intimidate me, and say I could never compete with—it was actually a woman running that company, too. But I won't name her, because that's not good for anyone.                     Yeah. We had a lot of companies come and raise money, but the model wasn't there yet. And that's why we didn't raise, either, right? There's a time, and we talked about this in the last episode. It's my belief that in most cases, you're better off raising when you have product-market fit. We had that at small scale, but we hadn't found what was really going to fuel exceptional growth of the company. It took us a while to get there, and a bunch of other companies tried to come in and do that, and they all went bust.                     I mean, there is a time and place when I think it does make sense, and when you do have to worry about competitors, because the truth is, once a big name competitor raises a big round, it's really hard to get anyone else to invest in you. I think Docker's a pretty good example of that in my space, right? They have tons of money. Nobody's going to invest in another container startup. Why would you do that? It doesn't make sense for investors.                     It is something to consider, but I think a lot of people spend way too much time worrying about their competitors, and not enough time worrying about their own business.   Poornima Vijayashanker:         Yeah. Or their customers.   Erica Brescia:      Yeah! Or their customers. Exactly. So, yeah, that matters, but you need to do what's right for you, and what's right for what you want out of your life and your business. You should ask yourself those questions. Taking on VC is taking on a lot of additional responsibility, too—   What Kind Of Return Venture Capitalists Look For   Poornima Vijayashanker:         Like what?   Erica Brescia:      Well, they're expecting a certain level of return, right? A $100 million exit is not something a VS wants, where it might be completely life changing for you, if you don't have venture capital in the company. If you're taking venture capital, you're committing to running the company for at least 5–10 years, providing they don't push you out, which happens sometimes, too, if you're not doing things the way they want.                     You're committing to managing a board, with outside parties who are going to have sometimes divergent interests from you. It could even be the case that the fund cycles are usually 10 years, and they have to return the capital to their limited partners, which we talked about earlier. They might need to get out, and want to push you to sell when you don't want to. They might want you to sell to somebody you don't want to.                     There are a lot of great things that come from venture capital, if you partner with the right people. Obviously, you get the capital you need to fuel the growth of your business, and that can be incredibly important, especially to support go-to-market activities, or SaaS business models, where customer acquisition costs might be high, but the LTV is huge. There are reasons to take money.                    I'm not against that. But you also need to understand what you're signing up for, and what it really means, and that there may be an alternative path for you if that's not the path that makes the sense for you. If you don't want to run this company for 5–10 years, and you don't expect to sell it for hundreds of millions, if not billions, of dollars, don't take venture capital. Startups That Focused On Growing Their Business First   Poornima Vijayashanker:         Yeah. Some folks in our audience might be thinking, "Erica, that's fabulous for you and Bitnami, and all of the success, but I could never do that. I couldn't just sit and wait for my business to grow organically." Are there other examples of companies here in the Valley, that you're familiar with, who have done a similar approach? I know I can think of a couple, but I'm curious—   Erica Brescia:      Absolutely! Well, Atlassian, they're in the Valley now, but they came from Australia, and that's a spectacular story. They really couldn't raise, because they were in Australia, and especially back then, the VC climate in Australia was almost nonexistent. They raised very late, and a lot of it was secondary to the employees, and they've done spectacularly well. GitHub's another example. They raised very, very late in the process, in a very big round, and that gave them a lot of flexibility to do other things.                     We've seen that happen a lot. It really depends. Again, I think, going back to what I said before about product-market fit. It's my view that the best time to raise is when you just need fuel for the engine. You already know how the engine works, and it's already built, and the machine is there, and you know, "If I put X in, I'm going to get Y out." Right? That's when you can really take advantage of venture capital, and that's when it can really make a difference.                    I'm not saying take a long time to build your company like I did. I would certainly do a lot of things differently this time around, but a lot of it just has to do with where the business is, and what the capital's going to be used for.   Poornima Vijayashanker:         It's been a four-year period, right? Where you haven't taken outside investment. You took the initial million. But in that period of time, how has not taking capital, or not thinking about fundraising, how has that helped you and Bitnami?   Erica Brescia:      Well, several ways. I think the most important thing is focus. Not having $10 or $20 or $50 million in the bank makes you focus on what's really going to move the business forward. It's really easy, and I have seen this countless times with companies that I will not name. They raise a ton of money, and they go out and hire a ton of people, and everything falls apart.                     Because humans are humans, right? These are not just cogs in the machine, especially when you're trying to build a breakthrough or game-changing product. You need incredibly smart people. They're going to have strong personalities. They're going to have past experiences from other companies. And you need to be able to get those people to work well together. So many startups have failed in doing that, and it's led to their own demise, or at least slowed them down a lot, and really burned a lot of bridges with fantastic employees.   I'd say it's allowed us to build out the infrastructure to responsibly scale the team, and it's helped us to focus, again, on making the right investments in terms of where we're spending our time. It's also great for negotiating business deals, I will tell you. That doesn't come up a lot—   How To Compel Customers To Do Business With Your Startup   Poornima Vijayashanker:         How so?   Erica Brescia:      I was in meetings, even earlier this week, and these are quite big, multimillion-dollar-a-year deals, and they were asking some questions about what the business model looked like, and I could look at these people with a straight face and say like, "Look, we're not VC backed. My company needs to make money. You want me to be around. This needs to make sense for us, financially."                     That drives a lot of my decision making. I'm very, very involved in the corporate and business development stuff that we do. I need to do deals that make sense for my business. For some reason, it's a lot easier for people to get their heads around that when you don't have venture capital, which is kind of a funny thing, right?   Poornima Vijayashanker:         Well, people understand where you're coming from, and what resources you have at that level.   Erica Brescia:      Yeah! I'm not BSing them. "I have to pay people, and you're going to get a lot of value out of this, and you need to pay me, and I'm not going to do it on a bet that the relationship itself is going to benefit me enough, because that wouldn't be responsible business." That's what I go to all the time. It's not responsible business, you're not doing it. I think being bootstrapped and funding through customers really helps you think through that and make very good business decisions. We say no to all kinds of things, too. And I think that's easier, as a result of that.                    The one other aspect I'd say is, we don't have to manage investors. It takes a lot of time to build investor relationships, which I do do that anyway, because we may raise in the future. But also just to raise funding, to go through the diligence process, and then to manage a board of directors that involves VCs, again, who might have competing priorities, or other things going on.                    Again, we don't get some of the pixie dust you might get if you're VC funded, and sometimes we have to have interesting conversations with procurement departments, and show them our financials, to prove that we've got a great business, and that they can feel comfortable working with us, but it saves a lot of time and overhead.   Poornima Vijayashanker:         Yeah, that's interesting. So you feel, because you're in the B2B space, the enterprise space, some companies may feel like, "Oh, you're not VC backed, so you might go out of business sooner." But what you're saying is, "Actually, we've got customers. We're going to stick around because we've got real revenues coming in, so no need to worry about this."   Erica Brescia:      Yeah. And I can point to, we do business with Microsoft, Amazon, Oracle, Google. All these big companies. It's gotten a lot easier, now.   Poornima Vijayashanker:         Right. You've got the credibility.   Erica Brescia:      Exactly. And we've got a track record. We've not just been around for a year, and we have an established team of senior people, and we've proven that we can execute, and we can deliver. And what often happens is we'll start with a smaller relationship, and it grows over time. After you get your foot in the door, what they care about is do you deliver on your commitments, not whether or not you have a VC in the company.   Keeping Your Options Open When It Comes To Investment   Poornima Vijayashanker:         Awesome. Now, I know you said, "Never say never." So you are thinking about capital, and then your future. How are you thinking about attracting that VC capital?   Erica Brescia:      Let me be clear: we haven't decided to raise capital, but it's a discussion that we're having currently between my CFO, my co-founder, me, and some of the other people on the executive team, because we're launching this new enterprise business. We're incredibly lean as a company right now.                     I told you we have in the mid-70s in terms of employees. Over 50 of those are in engineering and product. So the business team is quite lean, and we have very, very little sales on the sales side. Building on an enterprise business means I need a whole new go-to-market plan that involves field people, inside sales, solutions architects, and support people, and a bunch of other folks. Account executives, all these things.                    That's very capital intensive to build. We can do it off of cash flow, actually. We're in that fortunate position, but at the same time, we might grow a little bit more slowly, and especially hire more slowly, than we would if we had, say, $15 or $20 million in the bank. So we're starting to think through the tradeoffs, and what might make sense there.                     I've been in the Valley now long enough, I know a lot of VCs. There's several whom I like and respect quite a bit, and I still develop relationships with them, and we talk about the industry in general, and Bitnami, and where we're going. I think it's a little bit different than a company that's just coming out of nowhere. We have people who know us, who know the business, who have said that they're interested. So when the time comes, it's more of a matter of sitting down with people who are already friendly and interested in the company, and talking through what makes the most sense.   Poornima Vijayashanker:         It's a partnership.   Erica Brescia:      Mm-hmm, absolutely.   Poornima Vijayashanker:         Yeah. Wonderful. Well, thank you for sharing your experience with us today, Erica. I know our audience is going to get a lot out of this episode.   Erica Brescia:      Thank you so much!   Poornima Vijayashanker:         That's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode, where we'll dive in deeper with some of Erica's co-investors and explore more topics around funding your startup. Ciao for now!   Voiceover:          This episode of *Build*is brought to you by our sponsor, Pivotal Tracker.  
Jan. 9, 2018
It’s the start of a new year, which is an exciting time all around. You’re probably excited about new opportunities, starting a company, or building product in 2018!   While I’m all for optimism, I’ve also gotta stay true to them theme of Build: debunking myths and misconceptions when it comes to building tech product, companies and your career in tech ;)   So we’re going to spend the next four episodes of Build debunking themes around fundraising for startups.   I know what you’re thinking: “Poornima, is this really necessary?! Can’t we just focus on product and engineering? How about some Build Tips with those friendly product managers, designers, and engineers from Pivotal Labs?”   Don’t worry we’ve got plenty of those in store for you! Before we dive back into the fun and friendly banter of Ronan and his team, I thought it was necessary to start 2018 debunking myths around fundraising.   Here are my reasons for doing this:   Reason #1: If you want to be a founder and start a startup in 2018, you need to know how to control your own destiny.   Gone are the days of a quick and easy seed deal. If you don’t believe me, then here are two posts from very active investors Fred Wilson and Jason Calacanis with compelling data spanning the past 5 years. They show you that investment in early-stage companies is indeed slowing down, and why the trend is going to continue. #byebyebubble   Reason #2: If you want to be a founder and fundraise, you need to know what it’s really going to take to get the first check that gives you the freedom to quit your day job.   I know I previously explored what it takes to raise capital from investors and how investors add value beyond the check. But times are changin’! As I went back and reviewed the episodes I realized that while much of the advice still applies, there are new challenges founders, especially first-time founders face.   If you’re going to be one of them, then you need to be aware of them as you build your startup. There are also going to be a lot of sacrifices that you will need to consider making. As you’re faced with them, you might feel like you’re doing things wrong, when others have had an easier time. But you cannot compare when the market is in flux.   Reason #3: Don’t want to be a founder? Even if being a founder is the furthest thing from your mind, you might be thinking about joining a startup as an employee at any stage — garage to growth.   Well you need to be able to tell fact from fiction. You don’t want to get lured into visions of billion-dollar exits, only to discover that they are going to be cutting health care benefits, won’t be able to make payroll next month, or all that equity won’t help you buy my 2005 Honda Civic!   You need to be able to ask tough questions to understand the real health of the company, and market opportunity, so that you can decide if it’s worth taking the risk.   Reason #4: As an employee at a startup, every quarter you are going to be tasked with challenging milestones.   Metrics matter more and more these days, and every department has a funnel.   For engineering, it’s making sure the team is continuing to build and ship a quality product, balancing out features with infrastructure and keeping an eye out for that pesky tech debt to avoid slowdowns.   For product, it’s making sure there is a good balance of attracting new customers, while engaging and monetizing existing ones. And holding the engineering team accountable to spending time on paying down product debt.   While marketing has to keep growing traffic no matter what!   Teams are also staying lean longer, and founders are looking for employees with generalist backgrounds who can #GSD.   Everyone’s contribution matters to achieving metrics, which makes you feel wanted as an employee. But it also means that you need to be good at prioritizing, understanding tradeoffs, and a fast learner!   At the end of the day, you need to know and understand that what you are doing is actually moving the needle and going to help attract investment and customers.   There is no point in building product or marketing just for the sake of it.   Hopefully my reasons have convinced you why learning about fundraising is integral to your own success at a startup, and we can move on to the first episode of the year! In it, we’re going to tackle the first misconception a lot of first-time founders fall prey: thinking they need to reach out to investors the moment they have an idea.   It turns out you actually don't need to reach out to investors and you can get started by funding your idea on your own. You’ve probably heard this a lot already…   Quite frankly, investors won’t even take meetings if you do reach out. I can count on two hands the number of investors who I had successfully raised from in previous years that wouldn’t even return my emails recently! Why? Because it’s getting really competitive out there and they want to make sure startups have substantial progress before they are willing to take time to meet.   To help us out, I've invited Erica Brescia, who is the COO and co-founder of Bitnami. Erica has also recently joined XFactor as an investment partner. XFactor is an early-stage investment firm that's looking to fund female founders as well as mix-gendered teams.   I choose Erica and her peers to come on the show because they are ALL founders first and investors second. Meaning they have sat on both sides of the table.   As you watch today’s episode you’ll learn:   Why investment may not be applicable to the type of business you are building and alternate approaches to funding your startup The questions investors ask themselves before they will respond to a meeting request or write a startup a check When startups are “too early” to fundraise and why the definition of “too early” is inconsistent — who really gets funded early and why The work that startup founders and teams must do, if they are keen on attracting investment In future episodes we’ll dive into topics like why raising capital won’t help you outdo competition, how to get over the constant rejection, and what it’s going to take to get that first check. Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA. Episode Transcript Poornima Vijayashanker:           Got an idea for a tech product that you want to scale into a big business? You probably think that you need to go out and raise capital from an investor, right? Well, it turns out that you may not need to. In today's *Build* episode, we're going to explore when it makes sense to reach out to investors.                     Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each *Build* episode, I invite innovators and together we debunk myths and misconceptions related to building products, companies, and your career in tech. One misconception a lot of first-time founders fall prey to is thinking they need to reach out to investors the moment they have an idea. It turns out you actually don't need to reach out to investors and you can get started by funding your idea on your own. In today's episode, we're going to dive in deep to understand some of the mistakes that first-time founders make when it comes to funding their idea. We'll also talk about what investors are looking for and when it makes sense to reach out to them. To help us out, I've invited Erica Brescia, who is the COO and co-founder of Bitnami. Erica has also recently joined XFactor as an investment partner. XFactor is an early-stage investment firm that's looking to fund female founders as well as mix-gendered teens. Thanks for joining us today, Erica.   Erica Brescia:              Thanks for having me. It's great to be here.   Poornima Vijayashanker:           This is the first time that you and I are meeting. Thanks for being here. I want to know a little bit more about you. Let's start with your background. What got you interested in tech?   Erica Brescia:              I've always been very interested in gadgets. It started out actually with mobile phones way back in the day, but I've always been curious about learning more about technology and gadgets and how things work. I really wanted to understand how mobile phone networks worked back in the day. Don't ask me why. I went on to study investment finance. A different path than a lot of people in Silicon Valley take. My father is an entrepreneur and I always had it in the back of my mind I wanted to start my own company. I got introduced to my co-founder and decided I was just going to help him work out a few kinks in the business and get it off the ground. Here I am now running a software company. It's really a case of being open to new opportunities, but also just having this lifelong interest in understanding how things work and learning new things.   Poornima Vijayashanker:           Let's talk about Bitnami, your current company. What exactly does Bitnami do and what inspired you to start it?   Erica Brescia:              Bitnami is a catalog of open-source applications that you can deploy on servers. It's primarily like B2B software. Things like maybe Moodle or Druple or WordPress, if you're familiar with that. We also package up a lot of development environments and development tools, things like Jenkins and Get Lab or Anode or Rails or Django Development environment. We have over a million deployments a month of the applications that we package. We publish them both through Bitnami.com as well as on all of the major cloud bender platforms. Users choose Bitnami because they know everything is going to work right out of the box every time, and they get a consistent experience wherever they deploy the software. If I can just add one more thing to that, one thing I'm particularly excited about is up until now we've been bootstrapping through our relationships with cloud vendors, but we're about to launch a new product for the enterprise. We're essentially taking the next step in the company's evolution by productizing all of the automation that we've built to deliver this catalog of applications so that others can take advantage of it, too.   Poornima Vijayashanker:           It sounds like Bitnami has been going strong for a long time. How long have you guys been around?   Erica Brescia:              We've been working on the Bitnami part of the business since 2013, but the technology dates back about ten years to when we started Bitrock, which is the predecessor. We do have several years in now.   A Day In The Life of a Startup COO   Poornima Vijayashanker:           That's great. As a COO, what's your day to day like?   Erica Brescia:              It was funny, when I thought through that question, there's no day to day. I spent Monday and Tuesday in some really key BD meetings. In Seattle yesterday, I was in LA for an open-source conference. I'm obviously here today. The way that we have our leadership roles between my co-founder and I might be different than a lot of other companies. I run everything except for product and engineering. That means that marketing, sales, BD, legal, finance, everything rolls up to me. That basically keeps things running and make sure that the company is growing and bringing on the right people and has revenue coming in and all those good things. Obviously as a quickly growing startup that's very, very tech heavy, I'm still involved in everything including product and engineering, too. There's never a typical day. It varies a lot and the days are long, but a lot of fun.   Poornima Vijayashanker:           Very good. Now you have actually taken on another role. If Bitnami isn't enough, you decided to join XFactor as an investment partner. Tell us a little bit about XFactor and why the decision to go into investment.   Erica Brescia:              Absolutely. I'll start with XFactor and tell you about the fund. Then I'll talk about why I joined. XFactor is a $3 million seed fund. We're making $100K investments in 30 companies. Pretty easy math. The genesis was really a woman named Anna and a guy named Chip. Chip is a partner with Fly Bridge. They got together and wanted to find a way to fund more women in technology because they had read some of the statistics about how difficult it can be for women to raise funding. The truth is, it's really an untapped opportunity. There's a ton of brilliant women building some very interesting companies. They were having problems in some cases getting through the traditional VC process because of some of the biases that we've all read about. We probably don't need to go through that. The idea was that they were going to get together a group of operating female founders. I think that's really the key is we're all women who have built and scaled our own businesses across a variety of sectors. I have a lot of experience in B2B and closing very big BD deals.                     I've acquired companies and things like that. Some of the other women are very heavy on the consumer side and they're great at branding and rolling out new products. We got a really diverse team of women, but who are actually still on the ground running businesses, very in touch with the problems that founders have in getting new companies off the ground. We think we have a pretty unique perspective and also an edge in terms of what we can offer founders because we're so close to the challenges that they're experiencing. We're very focused obviously with that check size on pretty early-stage companies and helping set those founders up for success. We do expect most of them will go on to raise for their venture capital. We're there to support them in doing that. I actually haven't raised VC for my company, but all the other women have. We have a good diversity of experiences and opinions around that too.   Being A Startup Founder And Angel Investor   Poornima Vijayashanker:           Why'd you join?   Erica Brescia:              It took a lot of thought. They came to me. At first, I thought they just wanted to run the idea by me back in February. Then I get an email a few days later saying, “We'd love to have you join us.” I really did spend some time thinking about it and talking to my co-founder and my husband about whether or not I'd be able to balance everything, because it is a big commitment. If I make a commitment, I want to come through on it and make sure that I'm not letting the founders and my fellow investment partners down. It really came down to the opportunity both for personal growth for me and to give back. There's a financial opportunity, too, which is fantastic. I really saw that we have a pretty unique angle into both deal flow. Several of us are YC founders as well. We have access to the YC network and obviously just good networks in Silicon Valley and outside as well. I felt like we could do something really interesting. I could meet a lot more women in technology. Also, I really do think there's a huge untapped opportunity there. I think we'll be able to produce above-average returns. It really came down to me asking the question, “Do I have time for this?” I'm going to get less sleep for sure. That's definitely been the case.   Poornima Vijayashanker:           Sure. You can make time.   Erica Brescia:              It was just too good to pass up. This is one of those things that I just couldn't say “no” to because the opportunity is so big and it's something that I'm enjoying doing so much.   Poornima Vijayashanker:           Wonderful. As soon as I saw the news, I wanted to reach out to you guys because I thought it was fabulous and needed to be spread to everyone else. Let's talk about your investments then. I know everyone has probably got different things that they want to invest in. We're going to talk to some of your partners later on. Let's talk about what you like to invest in.   Why Angel Investors Focus On Making Investments In Markets and Business Models They Are Familiar With   Erica Brescia:              Sure. I right now am very focused on things that I am passionate about. I think about whether or not the company keeps me up at night thinking about it later. I am usually receiving on the deal flow that it's on B2B and enterprise sales in particular because that's where my expertise and experience is. I found myself drawn to some other things, too. One of the investments that'll be announced soon, I wish I could name some of them.   Poornima Vijayashanker:           That's OK.   Erica Brescia:              I think we're about to announce that we've made eight investments in the first two months.   Poornima Vijayashanker:           Oh, awesome.   Erica Brescia:              We've been very busy and we've met some amazing women. One of the investments that I've led so far is very much a technology, cloud-focused company, which is absolutely my bailiwick. The other one is a fin-tech company. I was really drawn. I loved the founder. Was very impressed by her and the team that she's put together. Also, it was just the problem that they were solving, I could see it so clearly. It was palpable and I was staying up at night and I was talking to my husband about what they were doing and why I thought it was exciting. When I start thinking about how they can make the business successful and what they should be thinking about, that's a very good sign to me. I know it's not direct answer. I invest in this list of companies, but that's really not the way that it's worked out so far. I've looked at a variety of med-tech companies, fin-tech companies, more women in technology and sourcing and recruiting companies. Some people doing interesting stuff with NLP. It's really been a very diverse range of companies.   Why Women Founded Tech Companies Are Broader Than Gets Portrayed                     One of the things that I think you'll see us talking about more, which is very cool, is a lot of these companies are not what you would typically think of as the women-in-tech companies. A lot of people think all we want to work on is beauty. I like makeup and clothes and everything as much as the next person, but I don't know anything about those businesses. A lot of the deal flow that we've had, it's coming from all kinds of very hardcore tech, a lot of VR stuff, too, and AR. We've seen a broad range. Right now we're looking for the next billion-dollar businesses really. Any other VC it's, “Is this something I'm passionate about and can it be huge and can I add value in helping them make it so?”   Poornima Vijayashanker:           Actually, that's a good segue into talking about I think one of the things that confuses some folks in our audience and even first-time founders is, what qualifies as a tech product and then what—let's start there and then we can talk about maybe what a big idea is.   Understanding If Your Startup Is A Tech Enabled Business Or A Tech Product   Erica Brescia:              Sure. Almost anything these days is tech enabled. If it's not, you might have a scalability problem. I don't think we have very strict definitions as to what is tech or not. If excelling in technology and in the technical underpinnings of the product is going to give people an advantage, that's probably a tech company or something that we would think of as such. Some of the subscription businesses or there's a food device I can't talk too much about, but that we're looking at. A really novel subscription business around it. Another two companies have come through that are working on breast pumps for women. They're hardware companies but there's a lot of technology obviously that goes into the hardware. Obviously a lot of tech powering how they're approaching the businesses. It's really a pretty loose definition of what a tech company is. Even some of them are physical spaces now that we're looking at. It's a pretty broad range. It's not like we're only investing in software or we're only investing in sass or something like that.   Poornima Vijayashanker:           That's good to know. Tech enabled but there's probably some conversation that needs to be had around, “Are you really just selling water online or is there a distribution model that is tech enabled and it's cool if you sell water online.”   Erica Brescia:              Exactly.   Why Finding An Investor Isn’t Good Enough — You Need To Find THE Investor Who Understand Your Market and Business Model   Poornima Vijayashanker:           Got it. Then let's talk about I think another area, though, which is—you've already started talking about you enjoy the deals that are B2B, more enterprise, and maybe a little bit more saas heavy. I think one of the concerns that a lot of first-time founders have is, “I just need to find an investor.” I just need to find one investor, but they may not necessarily find that right investor. It's interesting because it's not just limited to tech. I was reading Barbara Lynch's memoir, who's a restaurateur, and she talked about going and finding the investors who invested in restaurants for her nine restaurants. Talk to me a little bit about what it means to be vertical focused as an investor.   Erica Brescia:              You want investors who understand your business or at least have the capacity and time to learn about it and who are upfront if they don't understand things, too. There's several things that make people good investors. One is, don't be an asshole, if I can say that on your show.   Poornima Vijayashanker:           Sure. Of course.   Erica Brescia:              I just don't want to work with people who are not good people. To me, some people don't care about...I've actually had people come to me and say, “It doesn't matter. All VCs are going to be assholes, you just need to accept that and move on.” I'm like, “Uh, uh. No. No, I don't. There's a lot of great VCs out there.”   Poornima Vijayashanker:           That's the normal assumption.   Erica Brescia:              There are a lot of good people out there, men and women in venture capital. I do think it's important that you understand somebody who understands your business and the cycles. Before, example, we've had a lot of very hardware-centric businesses come through. Those are difficult to invest in. In particular, if you don't have experience in hardware because you don't have a really good understanding of how long it's going to take and what the development cycle should look like and how capital intensive that you're going to be. It's harder to make good investment decisions. It's harder to be helpful for the founder, because if you have unrealistic expectations for the type of business they're building, nobody wins. It's the same, we've seen a lot of robotics companies doing super cool stuff, but I've told them, “Look, I'm not an expert in robotics. I'm going to have to go out.” We do have an associate who does some work for us, but we have to go out and be willing to invest our time to get up to speed in those industries in order to feel comfortable making an investment.                     It's good advice. I think what you're alluding to is, find an investor that actually knows what they're talking about in your space because otherwise they could really do damage by slowing you down, refusing to fund a second round or something like that. A follow on or just inundating you with questions all the time. The last thing you want to be doing is just educating your investors on the market when you have a company to build.   The Sacrifices Founders Have To Make To Get Their Startup Off The Ground   Poornima Vijayashanker:           Exactly. No, that's a good point. Let's talk about the other side of this, which is also, it's very tempting, as a first-time founder or somebody who’s green, to have an idea, whether it's hardware or anything that we feel is capital intensive or sometimes we just don't even have the capital as a founder. We haven't quite got to the financial point of our life. It's tempting to immediately say, “Oh my gosh, to get this thing off the ground I need to go and get investment. That might not be the right time.” Let's talk about what time horizon makes sense. I know it's going to be product specific, but I think it would be helpful to just—   Erica Brescia:              It really depends on so many different variables. One of them I think is important is to be realistic about where you are in your life and what kind of sacrifices you're willing to make. The reality is, if you have a family and a mortgage, it's a heck of a lot harder to stop taking a salary—particularly if you were to work in Silicon Valley because the salaries are quite high here right now—and go and start something from scratch. If you're 22 and right out of college and have none of those financial responsibilities, you might have more flexibility. My vote is do as much as you can before raising funding. Build as much as you can. First of all, there's so many good investment opportunities right now that I think most investors, they want to see...first they want to see that you're committed. If you just go out with a pitch deck—like I took two weeks of holiday for my job to put together a pitch deck and if you fund me, I'll go do this—you're never going to get funded because we want to see conviction.   We want to see that you quit your job, you're committed, you've been working on this with somebody else preferably for six months. You have the personality and the skills and the charm or whatever it may be, the conviction to actually get other people to join you. That's important, too. Unless you absolutely can not do it without raising money up front, I would say get at least to a prototype or as far as you can to be able to go show people and prove to people that you're there for the long haul and that you're willing to make sacrifices to make something happen. I will also plug incubators, like Y Combinator. Obviously I'm biased because we went through the program. That was a great experience for us in terms of helping us just build some momentum and we did rebranding of the company and accomplished a lot during that period. It's not about the funding necessarily, but it can give people who are cash wrapped a bit of cash to fund those first few months. It really helps you to accelerate that initial process and sets you up very well to raise from VCs after the fact.                     We've certainly sourced a lot of our deal flow from YC. We try at XFactor to be very broad and we've had people from all over the world, in fact, contacting us. Of course, we're going to look to YC because they've already been through that filter. They've achieved something during the period that they're in Y Combinator. It's a three-month sprint. We've found that looking at people that have at least gotten to the point where you would be if you've gone through a Y Combinator or similar. They've got something to show. That's when it makes sense. I will say, this is really the approach that we've taken with Bitnami is try to find money from customers. Let's not undervalue the fact that people will pay you for what you're building. Hopefully if you're building something valuable, and you're much better off going through that experience, learning what it takes to sell to people and collect their money—there's a lot of details there—and try to build your business that way. You don't need to go for VC right away. There are great examples of companies that have been hugely successful doing that like GitHub and Atlassian.   Why It’s OK To Build A Lifestyle Business   Poornima Vijayashanker:           I'm going to have you hold that thought because we are going to talk about that in a little bit. Now, the other thing I want to point out because you said customers, but I think also bootstrapping with a pay check to get off the ground. A lot of times people are worried about quitting their job and having a source of income, so using that especially for businesses that a little bit more capital intensive early on. Want to throw that out there. I want to dive a little bit deeper into this whole idea of, “I do want to get investment eventually.” Let's say I have gotten to a point, maybe I've gone to an incubator or I've gotten it off the ground, I have some customers. Then there comes that period where you're talking to an investor and they may not really understand how big your idea is. It's oftentimes that thing that people nitpick over and over again that, is this a big idea? Is this a big market? Or sadly people like to say, it's a lifestyle business. There's a stigma here in Silicon Valley against that. Let's talk about what exactly defines a big idea—if we can even define it because I know it's a little amorphous—versus a lifestyle businesses and maybe even break that stigma of that lifestyle business.   Erica Brescia:              Sure. First I'll say I don't think there's anything wrong with a “lifestyle” business. There have been a lot of deals that we looked at. There was this one amazing woman, I won't name the company, but she came through my network actually. She developed some really interesting technology. It was my belief after talking to a lot of people that she's going to sell the company for somewhere between $30–50 million within two years. Awesome for her. Not a great VC investment?   Why Venture Capitalist Don’t Invest In Lifestyle Businesses   Poornima Vijayashanker:           Why?   Erica Brescia:              Because we can't produce the kind of returns that we're looking for. We have LPs just like any other VC fund. We have a responsibility to them to generate returns. I told this woman I want to help her in any way I can. She's incredibly bright. I just couldn't see a path to them building a billion-dollar business. That's really what it needs to be. There needs to be a path that you can understand for how this can be huge. It's going to be very risky. I should say we always know that businesses are going to change and evolve and you're very much betting on the founders. That's absolutely true, but at the same time, if they have conviction around a specific idea and we don't see how it can get to be a huge business, and some of the great hardware companies we're looking at are like that. I think they will have fantastic businesses and fantastic exits. I certainly wouldn't call them lifestyle businesses because they're life changing in terms of the returns that they'll create for the founders. They may not be appropriate for a VC fund. I don't think there's anything wrong with that.                     You need to take a dispassionate look about what you're building, how big the market really is, how much of it you have an opportunity to grab, and be realistic about that. Then think about the kind of funding that makes sense. You might be able to find a family office or something or angel investors who are not looking for the same VC-style risk and returns. They'll be totally happy with the company selling for $10, $20, $30 million. In a couple years, they'll double their money and everybody's fine.   Where Do Venture Capitalist And Angel Investors Get Money To Fund Startups   Poornima Vijayashanker:           On that note, let's actually define what an LP is and why VC versus angels that people understand if they're not familiar.   Erica Brescia:              Sure. An LP is limited partner and they're the people that put money into the funds. They're often wealthy. They always have some money coming from somewhere. Often wealthy individuals, but depending on the fund, they might also be pension funds or endowments and things like that from universities or different trusts and things like that. Basically the people who put money into the hands of the venture capitalists who are the people who actually invest that money. In the case of angels, angels I think have evolved a lot. Now we have the super angels.   Poornima Vijayashanker:           We'll get into that in a future episode. I keep saying this, but it's gonna happen. It's gonna happen guys.   Erica Brescia:              I won't take us to off course then. There are a lot of different kinds of angels. I was an angel investor before joining XFactor. I mean, not at a huge scale, but I'd made a few investments myself.   Poornima Vijayashanker:           What's the scale?   Erica Brescia:              I was writing like $10,000 checks.   Poornima Vijayashanker:           Perfect.   Erica Brescia:              Smaller checks. Then there are people like—I'll take my father, who's one of my closest friends and heroes and has inspired me to do all of this. He built a brick and mortar contracting business that did quite well. He's been making tons of angel investments and all kinds of different things. Some tech, some very, very nontech. You have people like that. Then you have people like Eric Han for example. My company did raise a bit of angel funding primarily to get some really great folks involved with the company. Some of these people were like Eli Gillin, Eric Han. Eric Han was the CTO of Netscape. He went on to be a very early investor in Red Hat. Since then, has been one of the first checks into a ton of companies that have IPO'd. He was on the board of Red Hat after they IPO'd. Eli Gillin is running his own company now, but he started and sold a company to Twitter and ran a bunch of stuff there. These are people who have done well in their career, typically understand tech. They make a lot more investments than somebody like maybe me or my father who might've written a couple of checks a year. These people are doing several key deals a year, usually only investing their own funds. That's one of the big differences. They don't have LPs. It's their own money. They might be doing it more at scale. We call them usually professional angels or super angels.   Poornima Vijayashanker:           Business angels.   Erica Brescia:              Exactly. Who are making a lot of investments, but they don't have LPs to answer to.   When Does It Make Sense To Approach An Investor With Your Startup Idea — First Know What You Are Going To Do With It!   Poornima Vijayashanker:           Great. Let's end with this question. When does it make sense then when you think you have this big idea, to approach an investor? I know you guys said early, but what is maybe too early and what's a reasonable early to get a meeting?   Erica Brescia:              It depends on what you need. Let's start with why do you need the money? That's the first question you should be asking yourself. Where is this money going to get you? You better have a good answer before you go talk to VCs. What milestone are you going to hit with this? Then the second question you should ask is, could I get it from anywhere other than VCs? Do I have friends and family who might want to just give me some money? Could I even take out a loan? Sometimes these other things make sense. There are a bunch of diverse opinions on this, but my view is you don't take VC unless you absolutely need it. Until it's holding you back from scaling. In the particular case of Bitnami, for example, we've primarily bootstrapped. We've only taken a million dollars in outside funding in total. I have over 70 employees in 12 countries. We're cash-flow positive. We've built quite a stable and steady business. We are starting to talk about potentially raising venture capital because we're launching this enterprise product that I mentioned before.                     That involves building out an entirely new part of the business. I can do that off of cash flow, but I'll probably go a lot slower and we see that there's a limited window of opportunity here. I think it really depends on your specific case and whether you can do it any other way. Or if there's an investor that you can feel or that you feel can add a lot of value. There are certain investors who might have a ton of experience in your space. Maybe they started an earlier company and exited it and are just itching for the chance to do it better now that the technology is evolved or what have you. If you find people like that, I think they can be really helpful to building the business. Otherwise, it's like, you should raise when you need to raise. If you feel like you could run out of money in the near future and not be able to actually execute on your plan.   Yes There Is Such A Thing As Being Too Early To Fundraise For Your Startup And Yes It’s Inconsistent!   Poornima Vijayashanker:           Let's admit. There is a time that's too early.   Erica Brescia:              Oh yeah. There always is. It's funny. We funded a company that was quite early and quite a high evaluation. That's one of the deals I led actually. I knew the founder and he'd already built a successful company.   Poornima Vijayashanker:           There you go.   Erica Brescia:              You're much more willing then, almost eager, to get in because this is a male, female team. I happen to know the male better than the female. I told him I wanted into that deal because I think this guy has a ton of potential. Even though it was early, I would write him a check, but he's proven. That matters.   Poornima Vijayashanker:           Exactly. I think that's a big stigma, or rather a big misconception around who's getting a deal, who hasn't built a product yet, or it's not on the market. It's great that you mentioned that. I think for most other folks, they need to see something. They need to see product. They need to see at least a concierge-style minimal bible product or service, some cash flow, some customers. They really want to...those who don't have a track record need to step up their game and show a little bit more credibility.   Questions Investors Ask Before They Take A Meeting Or Write A Check To A Startup Founder   Erica Brescia:              Yeah. The things I look at is, are they committed is the number one thing. Starting a company is hard and a lot of people underestimate how hard and how many sacrifices you make. You can do a whole episode on what's involved in that. Are they committed? Can they build a team? I look at that a lot. That's one thing where people who want to move to Silicon Valley who have no connections there, that's one of my questions. How are you going to find people and convince them in a highly competitive job market to join your team? If you can do that, it also speaks pretty highly of you and your ability to convince people and help them see the vision. Then can they build the product? Is it something that people will pay for? Those are the checklist items that I have. The more that you can demonstrate, the easier the time you're going to have with fundraising.                   If you can't prove that people will pay for your product, if you can't prove that people will use it, especially if you can't prove that you can build it, that's when we're going to have a lot of challenges getting to the next step. That's when I try to give people a clean “yes” or “no.” Sometimes it's like, “You're just not there yet. If you do these things, then I might be interested. I'm sorry. I need to see more before I can make the call.”   Poornima Vijayashanker:           Yeah. I think that's fair. Thank you so much Erica for sharing all this information with us today.   Erica Brescia:              Thank you for having me.   Poornima Vijayashanker:           That's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode where we'll continue the conversation and talk about when it makes sense to transition from angel investment to seeking investment from venture capitalists and what you need to do in that interim period. Ciao for now.   This episode of *Build* is brought to you by our sponsor Pivotal Tracker.   Blog Post 2 Subject: When It Does And Doesn’t Make Sense To Fundraise For Your Startup Title: Startup Funding: When It Does And Doesn’t Make Sense To Fundraise For Your Startup Subtitle: Interview with Erica Brescia COO and Co-Founder of Bitnami and Investment Partner at XFactor Ventures   Ready for more myth busting around startup funding? Let’s get to it then!   Last week I shared a number of reasons you should share care fundraising whether you’re a founder or startup employee. Here’s they are again, and in the Build episode we talked about why it’s a bad idea to reach out to investors when you have an idea.   This week we’re going to continue our theme and focus on what compels us to think we need to raise capital like competition heating up, the belief that the business will stop growing, or that the idea we’re pursuing isn’t really BIG enough. We’ll also be diving into the mechanics of investment talking about the nuances of an angel versus a venture capitalist, and why it’s important to look for investors that have knowledge of your marketing or industry.   Erica Brescia is back to help us out with this episode. Erica the COO and co-founder of Bitnami. Erica has also recently joined XFactor Ventures as an investment partner. XFactor is an early-stage investment firm that's looking to fund female founders as well as mix-gendered teams.   Erica is a founder and investor, and having sat on both sides of the table, she knows how to dispel fact from fiction!   As you watch today’s episode you’ll learn:   Why Erica and her partners at XFactor are putting their money where their mouth is and starting a fund to invest in female founders and mix-gendered teams What the XFactor investment partners and other angels look for versus venture capitalists, and how much they are willing to invest Why competitors will come and go, and you cannot let their actions intimidate you or direct your business goals Why only you as a founder, can decide when is the right time to raise for your business     In the next two episodes we’ll explore handling all the rejections you receive from investors, how to motivate yourself to keep going, and what it’s going to take to get that first check!   Listen to the episode on iTunes! You can listen to this episode of Build on iTunes.   Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   ## Startup Funding: When It Does And Doesn’t Make Sense To Fundraise For Your Startup Transcript   Poornima Vijayashanker:         Last time, we talked about how as a first-time founder, you don't necessarily need to immediately rush out and get investment to get your tech product off the ground. We discovered some alternate ways of funding your product development and company growth. If you missed that episode, I've included it in the link below this video.   In today's episode, we're going to dive in a little bit deeper, and talk about when it makes sense to go out for that angel investment, and then how do you transition from getting capital from angels to eventually getting it from venture capitalists, and what you need to do in the interim to make sure you're growing your company. So stick around.   Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, I invite innovators, and together we debunk a number of myths and misconceptions related to building products, companies, and your career in tech.   What Compels Startup Founders To Fundraise   One myth a lot of founders fall prey to is the need to constantly fundraise. They're worried that if they don't, their competition is going to swoop right in and outpace them. Or their business is just going to stop growing, and even worse than that, people might not think that they are actually onto a big idea.   To debunk these myths and more, I've invited Erica Brescia, who is the COO and co-founder of Bitnami. Erica has also recently joined XFactor as an investment partner. For those of you who aren't familiar, XFactor is an early-stage investment firm that's looking to invest in female founders and mixed-gender teams. Thanks again for joining us.   Erica Brescia:      Thanks for having me!   Poornima Vijayashanker:         Yeah! I know we talked a little bit in the last segment, but let's just quickly do a refresher, tell us a little bit about your background and what you do at Bitnami.   Erica Brescia:      Sure. Bitnami automates the packaging and maintenance process for server software for containerized, cloud, and behind-the-firewall deployments. We're most known right now for the Bitnami Application Catalog, which contains over 150 different pieces of server software, ranging from business schools, like content management systems, more project management systems, to development tools like GitLab and Jenkins for building out your development processes and pipeline, to stacks of things for building applications, like Node, or Rails, or Django. We work with all of the major cloud providers, and have over a million deployments a month of the apps we package across all the platforms that we support.   Poornima Vijayashanker:         Awesome. In addition to Bitnami, you recently joined XFactor as an investment partner.   Erica Brescia:      I did, yes.   The Difference Between Angel Investors And Venture Capitalists   Poornima Vijayashanker:         Yeah! We talked a little bit about that last time, and I want to pick up the conversation from our last time and dive a little bit more into not only what does XFactor do, but this whole position between angels and venture capitalists. How do you guys think of XFactor? Are you considering yourselves as angels or VCs? Would it help to start with defining angels and VCs?   Erica Brescia:      Sure. I mean, I tend to think of angels as primarily investing their own capital, and VCs are investing other people's capital. We all actually have our own funds in the fund as well, so we're LPs in addition to being the investment partners.   Poornima Vijayashanker:         What does that mean?   Erica Brescia:      That means that we're the people who put money into the fund, as the limited partners, who just put money in the fund, and then they step away, and they entrust, basically, the team of investment partners to invest that capital in companies that will produce ventures that yield returns.   Poornima Vijayashanker:         Where is that money coming from? Is that your own hard-earned money, or is that from somewhere else?   Erica Brescia:      In the case of the LPs for the XFactor fund, it's from a range of different people. Some of them have just been very successful in business. Some may be managing endowments or trusts, or other investment vehicles, and they invest both in the stock market and in VC and angel funds as part of their diversification strategy.   Poornima Vijayashanker:         Got it. I think some of you have also contributed personal funds, right?   Erica Brescia:      Yes. We have put our own funds into the plan as well.   Poornima Vijayashanker:         That's important to note. Yeah.   Erica Brescia:      You've got to put your money where your mouth is, right?   Poornima Vijayashanker:         Great! No, I certainly appreciate you guys doing that.   Erica Brescia:      Plus, honestly, I think we're going to make money off of it! So why would you not do that?   Poornima Vijayashanker:         Exactly!   Erica Brescia:      That is the whole point.   Poornima Vijayashanker:         Yeah. You guys are operating a little bit like angels, but a little bit like VCs as well, but let's dive into more of a traditional VC model. What does that look like?   What Seed Stage Investors Are Really Looking For And The Size Of Check They Write   Erica Brescia:      Sure. The distinction there is interesting, because I would say there's seed-stage financing, which a lot of people think of as coming from angels a lot, but VC funds do as well. Those are typically much smaller rounds and much earlier stage. The company probably has something built, probably has some users, probably can show some traction, but they're usually not raising huge amounts of money, at least not by Silicon Valley standards, which are different than the rest of the world.   Poornima Vijayashanker:         Yeah. Let's get some ranges. Because I know some seeds can get crazy.   Erica Brescia:      Huge. Yes.   Poornima Vijayashanker:         So let's do a more middle-of-the-road seed. What would that look like?   Erica Brescia:      These days, I would say they're usually between $500K and $2 million. I know that's a wide range, sometimes it's smaller, sometimes it's bigger, but the fundraisings that we're participating in are usually somewhere around there. We have had some companies raise significantly more than that, and we've almost gone in more at like a Series A stage. But typically you're raising $1 million or $2million to get your idea off the ground and show a little bit more traction, before you go and raise at a Series A. Those used to be maybe $2 or $3 million. Now, most of the time, you're looking at maybe $6, $7, even $10 or $15 million as a Series A, which we certainly see in the cloud and container space in particular, which is where I'm focused with Bitnami.   Poornima Vijayashanker:         OK. That makes sense. Now, I'm not going to dive into microfunds and syndicates, and all that stuff. We're going to do that in a later episode. But let's go back to you, and let's talk a little bit about how you initially funded Bitnami.   How To Initially Fund Your Startup When You Cannot Attract Investment   Erica Brescia:      Customers.   Poornima Vijayashanker:        Customers!   Erica Brescia:     We sold stuff. Yeah.   Poornima Vijayashanker:         Yeah. When was this, by the way?   Erica Brescia:      We started with a company called BitRock over 10 years ago, and BitRock built some really interesting technology around application packaging and deployment, which has become the foundation of Bitnami. We're very unique, I would say, for a Silicon Valley company. We developed a package software product. We sold it to customers, and we generated money that way.                     Then we started providing a subscription service to a lot of software companies that needed us to build, we called them "stacks" of software, so their products could be installed and distributed very easily, and we worked with a lot of the biggest names in open source, in those days. So we had that money coming in—   Poornima Vijayashanker:         If you don't mind sharing, how big were some of those contracts?   Erica Brescia:      They were in the tens of thousands of dollars a year. So reasonably sized, but we now, in retrospect, we charged far too little. But that's one of the lessons that you learn as a founder, you're always underpricing yourself in the early days.   So we did that, and built up the company that way. Then we decided to evolve into Bitnami. We went through Y Combinator in 2013—   Poornima Vijayashanker:         So before you did that, you actually had revenue coming in?   Erica Brescia:      Yes.   Poornima Vijayashanker:         Give us a range of how big you were at that size?   Erica Brescia:      We had 12 people, and seven figures in revenue, when we—   Poornima Vijayashanker:         Oh! That's fabulous!   Erica Brescia:      —went through Y Combinator.   Poornima Vijayashanker:         Yeah. OK. So why even bother going to—   Erica Brescia:      That's a great question! It was a subject of much debate, but again, interesting story, I suppose. My co-founder's wife had gone through Y Combinator with her own company, and had a great experience with it. And we knew that we wanted to send the company on a different trajectory—   Poornima Vijayashanker:         Which was?   Erica Brescia:      Growth.   Poornima Vijayashanker:         OK. OK!   Erica Brescia:      We wanted to build a huge business, and the model that we'd had previously was really what we talked in the last episode about, more of a lifestyle business. Right? We built a solid business, but that's not what we were there to do. We wanted to build a huge and very meaningful company. And we felt like Y Combinator was the right way to do that.                  It gave us a lot of focus, and helped us make some interesting and difficult decisions. It also helped us a lot with hiring in the early days, and bringing more folks to the team. We've been on a pretty healthy  trajectory since then. Over 75 people. I don't give out revenue numbers, but we're profitable and growing, and doing well.                     All of that money, except for a million dollars, which we still have sitting in the bank, has come in through customers. And that million dollars we raised after going through Y Combinator. We brought in some angel investors whom we really liked, for different reasons. Some of them have a lot of experience in building companies, specifically in our space, and we felt like they could help us a lot with that.                     A couple of them are VCs who invested personally in us, because we didn't want to raise a VC fund, and a few were overseas venture investors, but they make seed stage investments. One from Japan, and one from China. And that was purely because we plan on going into those markets, and we thought it would make sense to have some people over there with a vested interest in our success.                     Y Combinator served as a good catalyst to bring that round together-   Poornima Vijayashanker:         How big was that round?   Erica Brescia:      It was just a million dollars?   Poornima Vijayashanker:         Oh! OK. But you were already in the seven-figure revenue at that point, when you raised that million.   Erica Brescia:      Exactly.   Poornima Vijayashanker:         OK.   Erica Brescia:      And that money is still sitting in the bank, and we've added a healthy amount to it, and—   Poornima Vijayashanker:         That was what year?   Erica Brescia:      2013.   Poornima Vijayashanker:         Oh! It's been a while. It's been four years.   Erica Brescia:      Yep.   Poornima Vijayashanker:         Now, interestingly enough, you have that million, you're raising revenue, and you had grown without a lot of outside capital. I mean, you were already growing, so in that span of time, weren't you afraid that some competitor was just going to swoop right in and go out and raise $10 million or $100 million dollars, and put you out of business?   Don’t Let Competitors Intimidate You Into Fundraising For Your Startup   Erica Brescia:      What's actually funny about that question is we had a bunch of competitors do that, and they all went out of business..   Poornima Vijayashanker:         Oh, OK! Yeah!   Erica Brescia:      OK! Some spectacularly so. One raised $40 million, had huge names. One of the people on their board tried to come and intimidate me, and say I could never compete with—it was actually a woman running that company, too. But I won't name her, because that's not good for anyone.                     Yeah. We had a lot of companies come and raise money, but the model wasn't there yet. And that's why we didn't raise, either, right? There's a time, and we talked about this in the last episode. It's my belief that in most cases, you're better off raising when you have product-market fit. We had that at small scale, but we hadn't found what was really going to fuel exceptional growth of the company. It took us a while to get there, and a bunch of other companies tried to come in and do that, and they all went bust.                     I mean, there is a time and place when I think it does make sense, and when you do have to worry about competitors, because the truth is, once a big name competitor raises a big round, it's really hard to get anyone else to invest in you. I think Docker's a pretty good example of that in my space, right? They have tons of money. Nobody's going to invest in another container startup. Why would you do that? It doesn't make sense for investors.                     It is something to consider, but I think a lot of people spend way too much time worrying about their competitors, and not enough time worrying about their own business.   Poornima Vijayashanker:         Yeah. Or their customers.   Erica Brescia:      Yeah! Or their customers. Exactly. So, yeah, that matters, but you need to do what's right for you, and what's right for what you want out of your life and your business. You should ask yourself those questions. Taking on VC is taking on a lot of additional responsibility, too—   What Kind Of Return Venture Capitalists Look For   Poornima Vijayashanker:         Like what?   Erica Brescia:      Well, they're expecting a certain level of return, right? A $100 million exit is not something a VS wants, where it might be completely life changing for you, if you don't have venture capital in the company. If you're taking venture capital, you're committing to running the company for at least 5–10 years, providing they don't push you out, which happens sometimes, too, if you're not doing things the way they want.                     You're committing to managing a board, with outside parties who are going to have sometimes divergent interests from you. It could even be the case that the fund cycles are usually 10 years, and they have to return the capital to their limited partners, which we talked about earlier. They might need to get out, and want to push you to sell when you don't want to. They might want you to sell to somebody you don't want to.                     There are a lot of great things that come from venture capital, if you partner with the right people. Obviously, you get the capital you need to fuel the growth of your business, and that can be incredibly important, especially to support go-to-market activities, or SaaS business models, where customer acquisition costs might be high, but the LTV is huge. There are reasons to take money.                    I'm not against that. But you also need to understand what you're signing up for, and what it really means, and that there may be an alternative path for you if that's not the path that makes the sense for you. If you don't want to run this company for 5–10 years, and you don't expect to sell it for hundreds of millions, if not billions, of dollars, don't take venture capital. Startups That Focused On Growing Their Business First   Poornima Vijayashanker:         Yeah. Some folks in our audience might be thinking, "Erica, that's fabulous for you and Bitnami, and all of the success, but I could never do that. I couldn't just sit and wait for my business to grow organically." Are there other examples of companies here in the Valley, that you're familiar with, who have done a similar approach? I know I can think of a couple, but I'm curious—   Erica Brescia:      Absolutely! Well, Atlassian, they're in the Valley now, but they came from Australia, and that's a spectacular story. They really couldn't raise, because they were in Australia, and especially back then, the VC climate in Australia was almost nonexistent. They raised very late, and a lot of it was secondary to the employees, and they've done spectacularly well. GitHub's another example. They raised very, very late in the process, in a very big round, and that gave them a lot of flexibility to do other things.                     We've seen that happen a lot. It really depends. Again, I think, going back to what I said before about product-market fit. It's my view that the best time to raise is when you just need fuel for the engine. You already know how the engine works, and it's already built, and the machine is there, and you know, "If I put X in, I'm going to get Y out." Right? That's when you can really take advantage of venture capital, and that's when it can really make a difference.                    I'm not saying take a long time to build your company like I did. I would certainly do a lot of things differently this time around, but a lot of it just has to do with where the business is, and what the capital's going to be used for.   Poornima Vijayashanker:         It's been a four-year period, right? Where you haven't taken outside investment. You took the initial million. But in that period of time, how has not taking capital, or not thinking about fundraising, how has that helped you and Bitnami?   Erica Brescia:      Well, several ways. I think the most important thing is focus. Not having $10 or $20 or $50 million in the bank makes you focus on what's really going to move the business forward. It's really easy, and I have seen this countless times with companies that I will not name. They raise a ton of money, and they go out and hire a ton of people, and everything falls apart.                     Because humans are humans, right? These are not just cogs in the machine, especially when you're trying to build a breakthrough or game-changing product. You need incredibly smart people. They're going to have strong personalities. They're going to have past experiences from other companies. And you need to be able to get those people to work well together. So many startups have failed in doing that, and it's led to their own demise, or at least slowed them down a lot, and really burned a lot of bridges with fantastic employees.   I'd say it's allowed us to build out the infrastructure to responsibly scale the team, and it's helped us to focus, again, on making the right investments in terms of where we're spending our time. It's also great for negotiating business deals, I will tell you. That doesn't come up a lot—   How To Compel Customers To Do Business With Your Startup   Poornima Vijayashanker:         How so?   Erica Brescia:      I was in meetings, even earlier this week, and these are quite big, multimillion-dollar-a-year deals, and they were asking some questions about what the business model looked like, and I could look at these people with a straight face and say like, "Look, we're not VC backed. My company needs to make money. You want me to be around. This needs to make sense for us, financially."                     That drives a lot of my decision making. I'm very, very involved in the corporate and business development stuff that we do. I need to do deals that make sense for my business. For some reason, it's a lot easier for people to get their heads around that when you don't have venture capital, which is kind of a funny thing, right?   Poornima Vijayashanker:         Well, people understand where you're coming from, and what resources you have at that level.   Erica Brescia:      Yeah! I'm not BSing them. "I have to pay people, and you're going to get a lot of value out of this, and you need to pay me, and I'm not going to do it on a bet that the relationship itself is going to benefit me enough, because that wouldn't be responsible business." That's what I go to all the time. It's not responsible business, you're not doing it. I think being bootstrapped and funding through customers really helps you think through that and make very good business decisions. We say no to all kinds of things, too. And I think that's easier, as a result of that.                    The one other aspect I'd say is, we don't have to manage investors. It takes a lot of time to build investor relationships, which I do do that anyway, because we may raise in the future. But also just to raise funding, to go through the diligence process, and then to manage a board of directors that involves VCs, again, who might have competing priorities, or other things going on.                    Again, we don't get some of the pixie dust you might get if you're VC funded, and sometimes we have to have interesting conversations with procurement departments, and show them our financials, to prove that we've got a great business, and that they can feel comfortable working with us, but it saves a lot of time and overhead.   Poornima Vijayashanker:         Yeah, that's interesting. So you feel, because you're in the B2B space, the enterprise space, some companies may feel like, "Oh, you're not VC backed, so you might go out of business sooner." But what you're saying is, "Actually, we've got customers. We're going to stick around because we've got real revenues coming in, so no need to worry about this."   Erica Brescia:      Yeah. And I can point to, we do business with Microsoft, Amazon, Oracle, Google. All these big companies. It's gotten a lot easier, now.   Poornima Vijayashanker:         Right. You've got the credibility.   Erica Brescia:      Exactly. And we've got a track record. We've not just been around for a year, and we have an established team of senior people, and we've proven that we can execute, and we can deliver. And what often happens is we'll start with a smaller relationship, and it grows over time. After you get your foot in the door, what they care about is do you deliver on your commitments, not whether or not you have a VC in the company.   Keeping Your Options Open When It Comes To Investment   Poornima Vijayashanker:         Awesome. Now, I know you said, "Never say never." So you are thinking about capital, and then your future. How are you thinking about attracting that VC capital?   Erica Brescia:      Let me be clear: we haven't decided to raise capital, but it's a discussion that we're having currently between my CFO, my co-founder, me, and some of the other people on the executive team, because we're launching this new enterprise business. We're incredibly lean as a company right now.                     I told you we have in the mid-70s in terms of employees. Over 50 of those are in engineering and product. So the business team is quite lean, and we have very, very little sales on the sales side. Building on an enterprise business means I need a whole new go-to-market plan that involves field people, inside sales, solutions architects, and support people, and a bunch of other folks. Account executives, all these things.                    That's very capital intensive to build. We can do it off of cash flow, actually. We're in that fortunate position, but at the same time, we might grow a little bit more slowly, and especially hire more slowly, than we would if we had, say, $15 or $20 million in the bank. So we're starting to think through the tradeoffs, and what might make sense there.                     I've been in the Valley now long enough, I know a lot of VCs. There's several whom I like and respect quite a bit, and I still develop relationships with them, and we talk about the industry in general, and Bitnami, and where we're going. I think it's a little bit different than a company that's just coming out of nowhere. We have people who know us, who know the business, who have said that they're interested. So when the time comes, it's more of a matter of sitting down with people who are already friendly and interested in the company, and talking through what makes the most sense.   Poornima Vijayashanker:         It's a partnership.   Erica Brescia:      Mm-hmm, absolutely.   Poornima Vijayashanker:         Yeah. Wonderful. Well, thank you for sharing your experience with us today, Erica. I know our audience is going to get a lot out of this episode.   Erica Brescia:      Thank you so much!   Poornima Vijayashanker:         That's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode, where we'll dive in deeper with some of Erica's co-investors and explore more topics around funding your startup. Ciao for now!   Voiceover:          This episode of *Build*is brought to you by our sponsor, Pivotal Tracker.    
Dec. 18, 2017
I don’t know about you, but I cringe at the thought of having to commute. The traffic, road rage, not to mention having to find parking… it was enough to make me throw in the towel 7 years ago!   Since then I have been managing remote teams around the world, and as I continue to scale my team I learn best practices from companies who have been doing it for longer than I have like Olark.   But, I know there are a lot of people out there who just don’t know if they can do it.   Maybe you’re one of them. You worry if you’ll be productive, able to communicate effectively and fit into the company culture.   One of my employees, Meghan Burgain felt the same way about a year ago. She had a number of reservations having never worked remotely before.   In today’s Build episode, Meghan and I are going to dive into some of these reservations, how you can get over them, and of course the wonderful benefits aside from working in your jammies ;)   You’ll learn:   The tools and processes to use to stay productive and on top of your projects and tasks How to handle working across multiple time zones How to communicate more effectively with your teammates across a number of channels How to train new hires when you can’t sit right next to them How you can cultivate a great company culture across continents   Here’s another great source to check out on managing your day-to-day when remote working, from our friends at Skillcrush.   Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   Transcript for Remote Working: How To Succeed In Your First Remote Working Position    Poornima Vijayashanker:        Hey, guys. I'm hanging out here in beautiful Bordeaux, France, and taking you behind the scenes this week to show you what remote working is like at Femgineer. If you've been on the fence about taking a remote position, stay tuned for a number of tips in today's *Build* episode.                     Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. For the past seven years, I have been managing remote teams around the world for my startup as well as other companies. Today, I'm joined by Meghan Burgain, who is the mother of twins and expat who lives here in Bordeaux, France, and is Femgineer's community manager. For the last year, Meghan has been working remotely and she's going to share some of her favorite tips to help you get over any reservations that you might have when it comes to taking on a remote position. Thanks for joining us, Meghan.   Meghan Burgain: Thanks for being in France, Poornima.   Remote Working Reservations   Poornima Vijayashanker:        I know a year ago when I approached you about remote working, you were on the fence. Let's talk about what some of your reservations were.   Meghan Burgain:     Yeah. My education and a lot of my experiences are in education. I was actually a teacher before I moved here. I was a little concerned about getting up to speed, getting trained at Femgineer. That was one of my concerns was getting trained.                     The other one of course was that Bordeaux is nine hours ahead of San Francisco. I knew that there was going to be some difficulty there. Would I have to stay awake at night to get all of the work done or not? Those are my two concerns.   How To Handle Time Zones When Remote Working   Poornima Vijayashanker:        While you got over the hurdle and joined the team, I know there was that first hiccup that you had where you missed a meeting due to the time zone. What did you learn from that experience?   Meghan Burgain:     Time zones are really tricky. I learned that basically communication is paramount, especially when you're working remotely. You need to be explicit, very clear, search for the clarification, ask the questions that you need and really just be polite when you're dealing with people through email. With chat, it can be difficult to maybe misread something so just to be polite and that avoids 90% of the issues.   Poornima Vijayashanker:        Then you eventually got over that and learned a number of things over the last year. Let's start with the first thing that you learned.   Recommended Tools And Processes To Stay Productive As A Remote Worker   Meghan Burgain:     Right. The first thing I learned basically was the importance of the tools that we use. Being that we're not in proximity, we use the tools like Trello and Slack. Trello is great because obviously for communication you can see who's doing what, if it's done or not, but also allows for transparency. You can see the bigger picture: what we're focusing on at Femgineer, what the priorities are, and how that should affect how I prioritize my own tasks as well.   Poornima Vijayashanker:        Now, I know another thing you've learned that is even though we're a remote team we still do weekly check-ins where we sync up. Walk us through how weekly check-ins have benefited you.   Meghan Burgain:     Weekly check-ins are really important. In startup plans, especially, products change, priorities change, and the weekly check-ins really help me, us both I feel, to stay focused and to stay in the same page working towards the same goal.   Training New Remote Hires   Poornima Vijayashanker:        Now, I know the third thing is that you were concerned about training, getting trained, training other people. I know as we've scaled the team, you had to train others. How have you gotten over that hurdle?   Meghan Burgain:     It's funny that that was one of my reservations and that's actually something that I've been doing at Femgineer. Well, I've realized that training someone via Zoom or Slack, it's not that much different than training someone in person and, in some cases, can actually be better because we can record the training and use it in the future which is what we've done a lot. I've also been relying a lot on our handbook.   Poornima Vijayashanker:        What's our handbook?   Meghan Burgain:     Our handbook is basically a recipe book for anything that's recurring at Femgineer so whether it's daily or just a certain time of the year, if it happens more than once, it's in the handbook. It's outlined. There's helpful tips and there are links to any outside resources that we might need.   Remote Working Benefits   Poornima Vijayashanker:        Great. Walk us through what a typical day is like for you.   Meghan Burgain:     A typical day I wake up. We get the girls ready. Send them off to daycare. Then I have the majority my day to do the daily tasks that I need to get done, answer emails that came through to do all of my tasks. Towards the end of the day, when the States wakes up, I'm able to schedule phone calls, have meetings and that sort of thing. It's where I base the first part of my day, I didn't have any of those interruptions. I was able to just do whatever I wanted at my own pace. At the end of the day, I have all the things that I need to interact with people. Then I do my to-do list for the next day and it's off to get the kids.   Poornima Vijayashanker:        Nice. It sounds like you have a lot of flexible hours.   Meghan Burgain:     Oh, yeah. Well, for sure. I have deadlines just like anyone else, but I do have a lot more flexibility with how I get those things done.   Poornima Vijayashanker:        What do you think are the key benefits that you've experienced by remote working?   Meghan Burgain:     You mean besides being able to work anywhere in the world and in my own kitchen and in my own sweatpants?   Poornima Vijayashanker:        Yes. Those are great benefits, by the way.   Meghan Burgain:     I would say that the biggest benefit of working remotely is that I've really been able to find a work-life balance that works well for me. I'm able to not only be there for my kids and my family but to provide for them as well. I think that that's just an invaluable thing. It's a win-win.   Remote Company Culture   Poornima Vijayashanker:        I know for some folks out there they might be on the fence about remote working because of the culture. They might feel like, oh, it's isolated or distant. How have you managed to manage that?   Meghan Burgain:     I could see how it could be lonely. You don't have someone just next to you to talk to or whatever but I haven't felt that way and I think to go back to the weekly check-ins, that that's really one of the reasons is that we do get that face time. Also we have Slack which we can talk to all of our team members. I would say when it comes to the culture and the team feeling, you get what you give. It can be tempting in any working relationships, especially in remote working, whenever you find someone that's available within your timezone to just ping them with the 20 questions that you have or to ask a hundred things of them. But, I would suggest to all of you that the first thing that you do to someone should really be to ask them how they're doing, to find out what their interests are. It goes a long way towards creating the spirit and creating a team.   Poornima Vijayashanker:        Building a rapport maybe through a water cooler channel on Slack.   Meghan Burgain:     Yes. Yes. That's what we have.   Poornima Vijayashanker:        Wonderful. Well, thank you, Meghan. This has been really helpful. I know our audience out there is going to benefit from these tips.   Meghan Burgain:     It's been my pleasure.   Poornima Vijayashanker:        Wonderful. Well, that's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode where you'll get more helpful tips like this.   Meghan Burgain:     Ciao for now.   Poornima Vijayashanker:        Ciao for now.                     This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.                     Hey, guys. I'm hanging out here in beautiful Bordeaux and I'll just start again. All right.                    In today's Build episode, we're going to talk to you about ...   Meghan Burgain:     Remote working.   Poornima Vijayashanker:        Yeah, I know. I forgot what I should introduce you before I ... I think I do need to. OK. Take two.
Dec. 11, 2017
Did you share last week’s Build episode on product design sprints with your teammates?   Wait! Give me two chances to guess what the outcome was...   … you did and you faced some pushback? Well, kudos to you for putting it out there!   … or maybe you didn’t because you were afraid of the pushback you’d get? That is OK too!   Charbel Semaan and I are back this week and prepared to help you get over the pushback you received or will receive once you bring up the idea of product design sprints to your teammates.   You’ll recall Charbel Semaan has been a product designer for the last 20 years and recently launched his brand, Made in Public.   Charbel and I have built a lot of products, and we know that even if our teammates hate the current process and the outcomes it produces, they will still find comfort in it and resist adopting a new one because there’s a lot of fear when it comes to change.   But no one is going to willingly admit to being scared, so they’re going to couch their fear in remarks that are skeptical, just say no, or create excuses like: “Now is not a good time.” “We just don’t have the money to run extra experiments.”   Then there’s my personal favorite: “Prove to me that this is going to work!” But the whole point of an experiment is to test assumptions by following a process, and then seeing if they were right or wrong. You can’t prove anything until you do the experiment! #chickenegg   Because we want you to be really prepared for all the excuses and pushback around a design sprint, here are a few more excuses that you’ll hear when it comes to product design sprints from our friends at Invision. There are also some guidelines and prerequisites that we recommend you consider mentioned in this post to make sure a product design sprint is right for your team.   By the time you finish watching today’s episode you will have learned how-to:   Get people to adopt design sprints Convey the number # 1 benefit of a product design sprint What to do if all else fails and you just can’t get over the pushback Make product design sprints work for larger teams Convey who does and doesn’t need to be involved in a product design sprint Highlight how a product design sprint is different from lean startup methodologies and Agile   Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   Transcript: Product Design Sprints: How To Get People To Adopt Product Design Sprints   Poornima Vijayashanker: In the previous episode of *Build*, we shared how you can use design sprints to help you test ideas out faster and get that much-needed feedback. If you miss the episode, I've included a link to it below this video. And of course, anytime you want to institute a new process in your organization, there's going to be some pushback, so in today's *Build* episode, we're going to tackle how you can evangelize design sprints within your organization. So stay tuned.                                 Welcome to *Build*, brought to you by PivotalTracker. I'm your host Poornima Vijayashanker. In each episode, innovators and I debunk a number of myths and misconceptions related to building products, companies, and your career in tech. Today we're continuing our conversation with Charbel Semaan, who has been a product designer for over 20 years, and most recently launched Made in Public.   How To Handle The Pushback When It Comes To Trying Out Product Design Sprints                                 OK, Charbel, you and I have built a lot of products, and we know that even if our teams hate our current process, and we give them a new one, they're still going to be reluctant to adopt that new one because there's that fear of change.   Charbel Semaan: Sure.   Poornima Vijayashanker: And we're going to get pushback. So how do we handle that pushback?   Product Design Sprints Aren’t Meant To Replace Existing Product Development Process   Charbel Semaan: I think one of the ways I found to handle it successfully is to emphasize it's not a replacement to your existing process. It's a way to supplement, complement, or augment. And if you can run a design sprint in parallel and you're really doing it as a side branch to what you're already doing, and it gives you an opportunity to learn quickly in five days, and then be able to integrate that back into your existing processes. It's super helpful.   Poornima Vijayashanker: OK. So that's great in theory. But I know having to run a parallel process oftentimes for either a small team or even in a large organization can be a lot of setup. It can mean trying to carve out that time, so one of the key things to consider is what are going to be the benefits. Someone's going to come and say why should we do this, how is it going to help?   The #1 Benefit of Product Design Sprints: Speed of Execution   Charbel Semaan: Great questions. Why should we do it, how is it going to help. I think there are two key areas. One is speed of execution.   Poornima Vijayashanker: OK.   Charbel Semaan: And what comes along with that, with the sprint, is constraints. And through those constraints you get clarity. So you're moving quickly, you're going from thinking to action in a quick way, and you're also constraining yourself so you don't have an infinite amount of time to decide what features, what angle, should we try it this way or that way, so you get to move quickly and you constrain yourself, so you get to clarity faster.   Poornima Vijayashanker: OK. So I'm sure for our audiences out there, there's probably going to be some pushback around, ah that's great on like a nimble team of maybe five, six people—but I've got 10, 20, 30 decision makers or stakeholders. I'm not going to be able to mobilize my team fast enough. So how do we get to handle those folks?   Can product design sprints work for larger teams?   Charbel Semaan: Yes. I think you can work with those 10 to 20, or even 30 people to understand what are some big problems that you're facing, that you'd want to solve, that are top priority, or they're really affecting and impacting your productivity and your flow, your ability to ship.   Poornima Vijayashanker: Even if they're conflicting?   Charbel Semaan: Even if they're conflicting. I think you first start by gaining an understanding. So with a team that large, I've got 20 to 30 product managers and squads of teams of PMs and developers and designers, etc. You gain an understanding, if you're that org leader, gain an understanding of what are some of the top big, immediate problems that are affecting the team and affecting shipping and product and affecting the business. And prioritize those. And then think about if I can run a sprint, if I could run something within five days and gain clarity and be able to unlock some blocker that's going on across those 10 to 20, then who of that large group, who would make most sense to bring into this sprint.                                 We're not going to stop the presses on everyone's workflow. But we can at least prioritize, run a sprint with some key players, see how that goes. In some ways it's a look at like an 80-20 perspective of 80% of the orgs, when you continue going as-is, there's going to be this 20% or even 90-10, there's going to be this small experiment we're going to run. And if that's successful, then we can see if we can apply it to other areas or aspects of the org, no matter how large.   Poornima Vijayashanker: Of course there's fragile egos. So some people are going to want to be in that special pool.   Charbel Semaan: Sure.   Poornima Vijayashanker: Why wasn't I picked?   Charbel Semaan: Sure.   Poornima Vijayashanker: So how do you message that?   How To Convey Who Does And Doesn’t Needs To Be Involved In A Product Design Sprint   Charbel Semaan: Not easily. Not easily. It's not always easy. I think one thing I've found a bit helpful is to communicate openly that we understand we have X-Y-Z challenges. We're all clear on that. And there's...hopefully you have consensus, you have agreement. And from there it's...we can't tackle them all at once. We all agree to that. And so I think you're gaining that consensus and that understanding. That mutual understanding. And then communicating, we want to try something that might help us start to chip away at the stack of challenges that we have. We're going to run small experiments. As those turn out to be successful and we learn from them, we want to continue embracing and permeating through more teams and more people in the org.                                 So it's coming and if it's going to work, they know it's coming, if you have a deep interest and you have a really...you're raising your hand and you really want to be a part of this, please come to tell me. If you're the org leader or the business leader, whoever you are. I think that kind of openness and communication starts to also be a signal for you to understand who are the people who, as you mentioned before, who are the people who can become those evangelists and those change agents in your organization as influencers to adopt something new like design sprints, and then be able to take it to their parts of the org as well.   Poornima Vijayashanker: I think it also serves as a signal to see how open your organization is, right?   Charbel Semaan: Absolutely, absolutely.   Poornima Vijayashanker: So I think maybe some people may get disheartened as they do this exercise and find out that they're not getting a lot of interest, so how should they take that? It's not a reason to send in your resignation letter.   Charbel Semaan: No, no, not at all. Don't do that yet. I think one thing though, is just discussing with a CO of a global manufacturing business, is people need to feel involved. In my experience, in org development and innovation with an organization, especially large ones that no one really wants to have something just told at them, and that this is the way we're doing things now. So introducing something like a design sprint into your organization, that can foster and cultivate innovation throughout all your people. Doing so by involving them.                                 So first it just starts with communicating that. We're thinking of doing something new. Who has some initial interest? They're like you said, you'll start to see if there is or isn't. That might be an indicator that are you really getting that kind of engagement from your folks, and as you test and as you do small experiments and you see who continues to raise their hand and want to be more and more involved. And when you're not seeing that engagement, it may actually be an opportunity to run a design sprint on internal communications.   Poornima Vijayashanker: OK, yeah.   Charbel Semaan: So that's the beauty of it for me is, I think you can sprint on any kind of challenge you have.   Poornima Vijayashanker: Right.   Charbel Semaan: It may not always be a business challenge in the product sense, or in the service sense. Sometimes it may be about your internal organization.   Poornima Vijayashanker: And what happens if you get too much interest? Everyone's like, “Oh yes, I want to participate,” and all of a sudden you've got your 5,000-person organization and it's like, “I've got things to say. I see things that are broken.” Yeah, I get this a lot when I go into places.   Charbel Semaan: Sure, sure. I think for starters, I think that's a great problem to have. I think you want that level of engagement, that employee engagement, and your people care about solving challenges in your business. It's far better than the opposite. Two, there is such a thing called mega sprints, and Jake Knapp actually runs mega sprints, which were pretty interesting, where there's simultaneous sprints happening in one large room.                                 Short of that, the—to your point about the question is to get to a place where there's an opportunity for people to raise their hand, have a voice, to be able to add to the mix and add say, “Here's the challenge I'm facing,” and then it's really, I think, an opportunity to create a culture of that mindset. So I go back to design sprints not just being this rigid five-day process, and the irony is it's...it can be viewed as some rigid five-day process even though it's a sprint, it's meant to move quickly. The reality for me is that when you embrace it as a mindset, and that people in your organization, no matter if you have 5,000 people with 1,000 problems each, it's an opportunity to think, “How could I solve this problem or test a new idea quickly, and can I use the framework of the sprint, can I use the elements of the sprint to take action faster?”                                 And I think anybody who's leading an organization, no matter how small or large, would love for their people to have that type of empowerment and to be able to feel enabled and equipped to take action.   How Product Design Sprints Different From The Lean Startup Methodologies And Agile   Poornima Vijayashanker: Now there's also a lot of skeptics out there who might say, “Yeah, you know, I hear what Charbel's saying but I've tried something like this a year ago, or like five years ago we tried lean or agile—how do I know that this is the new thing?” So a lot of times the concern is how is this going to be any different from what we tried in the past that failed miserably, and in the wake of it, caused a lot of destruction.   Charbel Semaan: Yes. Great question. This has actually been coming up recently for me and I've been doing more and more review and research on this. I think for starters it's valid. It's absolutely valid to be wondering, “Great, this is just the methodology du jour. This is now the new thing, and everyone's going to jump on this bandwagon.” I completely understand that.   Product Design Sprints Are All About Constraints And Speed Of Execution                                 What I come back to though is the corner about the mindset. Lean can be thought of as a mindset. Agile can be thought of as a mindset. It's a way to knock down blockers that otherwise impede you from trying something, learning from it, and iterating on it. So whether it's this model, that model, or this or the other. I think the nice thing about sprints is that for me as a designer, because it's rooted in design thinking, and it provides this construct to float through five days—and again I mentioned clarity through constraints and that speed of execution—it gives you an opportunity to go from empathy all the way to testing the idea. And prototyping is of course in there, inside of that.                                 Whereas lean is focused on build, measure, learn. So you just start out by building and you're going to put it out and then learn from the reactions. As a designer I am a big believer in that initial upfront step of empathizing and understanding. When you understand what that problem is and who you're solving it for, and it carries you through that initial slice of the prototype that's just enough to get in front of users, and I have a hard time imagining folks who wouldn't want to move faster and learn more, and be able to then iterate.                                 And this is one way of doing it. It's a methodology that I've embraced that I...it gets me out of my own decision deadlock as well.   Poornima Vijayashanker: Yeah. So in the wake of that kind of feedback around, “Hey, how is this going to be any different, you're saying treat it as a mindset,” hopefully people are willing to adopt a new mindset or at least test it out. But there are also those who start to get kind of nitty gritty, right? They might say something like, “Oh, I don't even know where to get customers to test this prototype,” or, “I don't want to bother our existing customers.” How do you get over some of those more practical hurdles?   Charbel Semaan: Sure. That's a great question. On the customer front, I think, on one hand, you hopefully have a pocket of customers who have a major interest in everything you're doing. They want to be those early adopters. They want to test new features. They're your biggest fans. And so on one front you can always start with them and then treat them right, treat them in a way where you have this open communication that we appreciate coming to you because you're such a fan of ours and we're a fan of you, and we want to come bring you our latest and greatest to see are we doing right by you. Are we solving the problems that you need solved, are we getting the jobs done that you need done through our software or through our product or service?                                 So I think on that front you build those ongoing and sustainable relationships with them.   Poornima Vijayashanker: And if it's a new customer base?   Charbel Semaan: If it's a new customer base, I think going back to that understanding the problem and understanding who. When you understand those two things, it's surprisingly simple to find where they are. If you understand their habits, you understand their desires and their pains and their struggles, you understand where they seek the solution to this problem elsewhere, you can go to those places.   Poornima Vijayashanker: So do you have an example of a situation where a lot of these practicalities started to add up and people just completely lost sight of making a decision on design sprints?   Case Study of A Product Design Sprint   Charbel Semaan: Yeah. Great question. There's an example where...come back to the internal learning development team at Medallia. We had big needs, we had problems to solve in terms of scaling, training, especially for the growing sales team, the growing engineering team, which are very common teams that start to spark and grow quickly. And especially globally. So how do we scale the training? And practicalities like, well, video's going to be expensive. Getting all the equipment. Having the studio. Do we even have time to shoot video and do that. People don't watch online learnings. A lot of the common...what might be common sense or these truths that we think we have in our businesses, and the reality was when we ran a sprint, it was actually a colleague of mine and we ran a sprint.   Poornima Vijayashanker: So how did you get over that hurdle to actually get them to run the sprint given these practicalities?   Charbel Semaan: That's a good question. There were a couple of people who were advocates. They wanted to embrace it.   Poornima Vijayashanker: OK.   Charbel Semaan: And the challenge was showing that running the sprint and the output of the sprint...the output of the sprint was actually more important than the sprint itself in a way. So because the output...and first they wanted to embrace the approach. They embraced the approach. They wanted to try it. And they wanted to get to that output. So we shared that video with the entire HR organization, and the output, the video itself, was what people focused on. Then when they wondered, “Well wait a minute, when did you do this and how did you do it so quickly?” That's when we were able to say, “Well, we ran a sprint on it.”   Poornima Vijayashanker: Interesting.   Charbel Semaan: And we just shortcut a lot of the decision deadlock, a lot of the concerns and a lot...we did it with an iPhone on a makeshift tripod in this corner office that we blacked out the windows and we were able to just run with it. And it's not the greatest-looking video but it's a prototype. Then people realized, “Wow, we can go this quickly and this nimbly, why don't we embrace this and actually try to do more?”                                 And the greatest part about that—I love the outcome here—is that, the head of the team said, “Great. Here's a budget to go get the equipment you need, on a reasonable amount of money, and why don't we use this corner room more frequently for these videos and let's run with this.”   If All Else Fails: Show People The Output of The Product Design Sprint   Poornima Vijayashanker: So that's pretty cool. You basically turned design thinking on its head. Instead of trying to get people to adopt the methodology, just show them the output, tell them about the outcomes, and then when there's a curiosity for how did this all come about, then you can say, “We used design thinking.”   Charbel Semaan: That's right.   Poornima Vijayashanker: Cool. And I think then people are going to start to embrace it in more sections of the organization, or on more projects.   Charbel Semaan: That's right.   Poornima Vijayashanker: Well, that is an awesome insight, Charbel. So for those of you out there who are stuck, feeling a lot of pushback, maybe instead of trying to get people to adopt the methodology, present them with the output and the outcomes and use that to strike the conversation.                                 Thank you for joining us, Charbel, and for our audience out there, how can they get in touch with you?   Charbel Semaan: Great. Thanks for having me on. This has been blast. You can reach me at [email protected], and visit madeinpublic.com, and see the projects that I'm working on, the sprints that I run publicly to help teach and empower to run sprints themselves. And sign up for the newsletter as well.   Poornima Vijayashanker: That's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive more great episodes and short build tips. Ciao for now.                                                                                   This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.
Dec. 4, 2017
How many times have you and your team spent countless hours building, bug fixing, finally releasing a new feature only to hear feedback from a customer that it’s not what they wanted?   Or worse, they don’t say anything…   Why?   Because they aren’t even using the new feature!   Back to the drawing board…   Yet again it again takes weeks or months to build and tweak and nothing changes. You just keep missing the target, asking for more time, money, and resources.   But it doesn’t help, and people just end up burning out building the wrong thing.   What if I told you that the problem in your product development process is that you are spending too much time, money, and resources and need to cut back?   OK, I’ll give you a minute to shake your head at me...   Sometimes when we have too much it causes us to go in a lot of different directions. Or worse no direction at all because we’re stuck in a decision deadlock!   We lose sight of our customers and end up building just for the sake of building, thinking that we know what problem we are solving, but we don’t.   As a result, our product debt keeps growing and a redesigns don’t help.   So how can we stop building the wrong thing and solving the wrong problem?   We can start by constraining the amount of time we have to help us focus on uncovering and solving one problem at a time.   And in today’s episode, we’re going to dive into the framework behind this new approach called product design sprints.   To help us out, I've invited Charbel Semaan, who has been a product designer for the last 20 years and recently launched his brand, Made in Public.   If you’re eager to get an idea out, worried about how long it’s going to take your team to execute, and concerned about wasting time, money and other resources, then you owe it to yourself to watch today’s episode!   Here’s what  you’ll learn:   What is a design sprint When does it make sense to a product design sprint What do each of the days look like How constraining the time, energy and money you spend on a problem leads to clarity How a product design sprint can benefit your overall product development process   Build is produced as a partnership between Femgineer and Pivotal Tracker. San Francisco video production by StartMotionMEDIA.   ## Product Design Sprint: How a Product Design Sprint Fast Tracks Testing Your Ideas Transcript   Poornima Vijayashanker: Eager to get an idea out there but worried about how long it's going to take you and your team to execute? Well, in today's *Build* episode, we're going to show you how you can embrace design sprints as a way to test your ideas and get your prototype out there faster. Welcome to *Build*, brought to you by Pivotal Tracker. I'm your host, Poornima Vijayashanker. In each episode, innovators and I debunk a number of myths and misconceptions related to building products, companies, and your career in tech.   One misconception a lot of us fall prey to is this need to do a massive build out before we launch a product. The results, unfortunately, are that we end up spending a lot of time, money, and energy possibly building the wrong thing. As a result, customers don't want it, teams burn out, and companies lose sight of their business goals. In today's episode, we're going to tackle this misconception, share with you how you can embrace design sprints to help you iterate faster and get your prototypes out there, and in future episodes, we'll talk about how you can evangelize design sprints within your organization and handle any pushback that you might get from your teammates or stakeholders. To help us out, I've invited Charbel Semaan, who has been a product designer for the last 20 years and recently launched his brand, Made in Public. Thanks for joining us today, Charbel.   Charbel Semaan: Thanks for having me.   Poornima Vijayashanker: Yeah.   Charbel Semaan: I'm excited to be here.   Poornima Vijayashanker: Yeah. For our audiences out there, let's start by digging into your background a little. I know you've been a designer for the last 20 years and recently started Made in Public, but walk us through that evolution.   Charbel Semaan: Sure. I started out as a designer, self-taught, when I was 15 and fell in love with it. I continued to design through college, would dabble with side projects, and never formally studied it and was formally trained, but continued to develop my skills as much as I could. I've had this interesting blend of design specialties throughout my career. I've done product design, brand design. I've done curriculum design for training programs. Bringing all of that together, I've realized I've broadened my career or widened my career. What I enjoy most is using design as a way to solve problems as a methodology, and I also enjoy teaching it. I enjoy teaching designs so people can embrace it in whatever area of work they do.   Poornima Vijayashanker: Yeah, that's great. Now, what does Made in Public do?   Charbel Semaan: Made in Public now combines all of that and I get to run my own side-project design sprints. I run sprints publicly so people can see what it's like to go through the process of going from idea to action in a very short amount of time.   And then in that way, as well, I use it as a way to teach. I really like to teach design through live experiments.   Poornima Vijayashanker: Let's dive into today's topic of design sprints. Before we talk about what design sprints are, let's maybe start with that product design background that you have and showcase what you saw was broken and why the need, maybe, for a new process.   Why Do We Need A New Process For Designing Products   Charbel Semaan: Sure. I think part of it is...there may not always be something that's broken, per se. I think design thinking has influenced my career heavily, and I've learned a lot through what IDEO has put out into the world and other great design firms out there. I think design sprints, in some ways, is a derivative of design thinking. It's another way of thinking about the design process.   What it can help guard against or help avoid are things like decision deadlock. Or it helps guard against overthinking what the big thing should be and helps you pair down because of constraints. You have five steps, and according to the Google Ventures-inspired design sprint and Jake Knapp and the author, the co-authors, the five-day approach constrains you so you're not trying to build something that could take you five months.   Poornima Vijayashanker: Right.   Charbel Semaan: Really, you're trying to create something in five days.   What Does A Product Design Sprint Look Like   Poornima Vijayashanker: Let's talk about what that looks like. What is that design sprint over those five days?   Charbel Semaan: Sure. The first step of the five steps, or five days depending on if you want to compress it even further, the first step is to understand. Map and understand and unpack the problem you're trying to solve and for whom you're solving it.   I think for anybody who's creating any kind of product, it's always essential to get down to: what problem am I solving, and who has the problem?   Poornima Vijayashanker: Yeah.   Charbel Semaan: And do I understand that person and their journey and how they first might interact with my product all the way through to the interaction and to the end result, or what I like to call the desired outcome? What's the desired outcome that they want after using your product? What is it solving?   Poornima Vijayashanker: It's one person. A lot of times, we have multiple users or multiple personas, but in this design sprint, we're going to limit ourselves to one persona.   Charbel Semaan: You can. It's important in that unpacking and understanding to understand: who might the other people be?   Poornima Vijayashanker: OK.   One Key To A Successful Product Design Sprint Is To Pare Down The Problem And Who You Are Solving It For   Charbel Semaan: If there are multiple people, acknowledging that and having an understanding and awareness of that is great. Then you might, through the rest of the course of the sprint, you might say, "We're only going to focus on this one particular person or particular user of the product, because that's basically the breadth that we have." We can't really do much more. We know we've got other folks, but we're at least going to focus this sprint on this person.   Poornima Vijayashanker: Got it.   Charbel Semaan: And then that leads to, when you understand the problem, and you understand that person and how they're facing that problem, then the second step is to sketch. This is a fun part where...this is where most people want to get into brainstorming and get a lot of ideas on the table. One of the things I like to say—and I borrow this from what I've learned through IDEO—is to think with your hands.   Now you get to actually get pen to paper, pen to Post-its, and you get to sketch a variety of solutions. If you've got about six or so people in this room with you, even if you're running it with a co-founder or you're running it solo, this is where you get a chance to get a number, a variety of sketches out on the table or out on paper.   Poornima Vijayashanker: OK.   Charbel Semaan: The third step is to decide. You go through all the sketches that you've laid out, and through a number of exercises, like noting and voting and dot voting. There are a number of different ways to approach it...you actually decide: what will the blueprint be for your prototype?   Poornima Vijayashanker: Yeah.   Charbel Semaan: And then the prototype is the fourth step.   Poornima Vijayashanker: Yep.   Charbel Semaan: That's where you actually get to create a realistic version of what you want this product to be, or the service, for that matter, and you get it out to real users by the fifth step or the fifth day. That's where folks get to interact with what you've created, the prototype, and then you can learn and observe and understand what you can improve, or did you—and this is a key part—did you validate your hypothesis? Did you validate or invalidate what you had sought out to figure out?   How Dot Voting Works In A Product Design Sprint Gets Rid Of Decision Deadlock   Poornima Vijayashanker: There's a few things going on. Let's kind of unpack them in more detail. The first is, you mentioned this concept of voting and dot voting, which I like the concept a lot. I've started implementing it. But maybe for our audience out there who's not familiar, we can shed some like into what that is.   Charbel Semaan: Sure. One of the exercises after you've gone through sketching...let's say you're in a room with about six people. You're running the sprint with six people.   All six people have generated really interesting ideas and really interesting concepts or mock-ups of what the product might be. Dot voting and noting and voting, especially if you've decided ahead of time—and hopefully you have—who the decider is. There will be one person who's going to be the decider, and they get the majority vote, or they get extra votes.   Poornima Vijayashanker: Right. Two votes.   Charbel Semaan: Or extra dates. Exactly.   Poornima Vijayashanker: Yeah.   Charbel Semaan: One of the things that's fun is doing what's called a museum gallery, where everyone's mock-ups on their 8-1/2 x 11 sheets of paper and Post-its go up on the wall. Everyone has a chance to review everyone else's mock-ups. You can vote with dots, like a marker and dots, on the elements or aspects that you find compelling or you find interesting. When it comes to decision time after the voting and whatnot, you actually get to distill the best ideas from the entire group. That's one of my favorite aspects of the sprint, is that...some people say, "Oh, I'm not very creative."   Poornima Vijayashanker: Right.   Charbel Semaan: Or, "I'm not the designer." Or, "I'm not the engineer. I'm a technical person."   Poornima Vijayashanker: Yeah.   Charbel Semaan: What I have found is when you bring a collective creative together like that, then sometimes the best ideas come from someone you might not expect to come from.   Poornima Vijayashanker: Right.   Charbel Semaan: Then the voting allows for decision making, because you can't do all the features. The voting helps you distill it down to some of the key elements that you want to focus on for the prototype.   Who Needs To Participate In A Product Design Sprint   Poornima Vijayashanker: Let's talk about who needs to be involved in this process. We've already kind of mentioned that designers, engineers are great, people who are going to be building out that final prototype, but who, aside from them, needs to be involved?   Charbel Semaan: Great question. I found what's very important is to have someone who is part of the overall decision-making process. That can either be one of the founders or any of the founders or all of the founders, someone who's at a VP level or a C-suite level, depending on the structure of your organization and how large your organization is.   Poornima Vijayashanker: So maybe whoever understands the business goals?   Charbel Semaan: The business goals, for sure, and anyone who is even involved in sort of the direction and vision of the overall business.   Poornima Vijayashanker: OK.   Charbel Semaan: Certainly the people who would be doing the building itself and the designing itself, and definitely folks who are involved in the business side of things.   Poornima Vijayashanker: Why? I mean, doesn't that feel like they're micromanaging? Shouldn't they just trust their designers and engineers and let them run free?   Charbel Semaan: Yeah. It's a great question. One of the key principles of design that I've embodied and believe in so much is this two-part or two-fold aspect of inclusivity and collaboration.   You want to be inclusive and collaborative, and that avoids this waterfall effect where...if just the engineers and the devs and the designers are in the room, and the so-called business folks are out of the room, then it becomes this, "Now let's go back and take it to them and show them this, get approval, and then..." But when folks are in the room together, that's when those ideas can come out. More often than not, an idea gets sparked from one person, and especially if you embrace this yes/and approach.   It's like, "Oh, that's a great idea. You know, what if we also did this." Or, "Could we also try this?" "I didn't think of that. That's great. OK." And then you get back to that voting and say, "Great. We can't do it all, but let's distill them." You actually have a richer conversation and a richer collaborative experience when you include more aspects of the business.   Poornima Vijayashanker: Yeah. I think that's great that you're bringing all these people to the table, involving them in the process. Now, that's obviously a lot of overhead, right, for a founder or for a VP or some of these people to come in and sit in on a five-day design sprint. I'm sure there's going to be some pushback around it, which we're going to get to in the next episode. But for the purpose of this episode, how do we kind of constrain the time so that they don't feel like they're sitting in on a whole-day session?   Charbel Semaan: Right. I think there are a couple of ways of approaching it. One is to think about design sprints more as a mindset, or an approach. The pushback I hear a lot is this five-day—"We don't have five full days to have six critical members of our team..." I completely understand that. It makes a lot of sense. The response I often share to that is, "Would you rather invest up front in those five days, where all five or six of you or seven of you can come in, and you're investing that time, which is money. I understand. Would you rather invest that and have the opportunity to come out with something that yields you a real opportunity to engage with a real prototype with real people in five days instead of five months?"   Poornima Vijayashanker: Yeah.   Charbel Semaan: Instead of five months of a bloated product that you're not even sure is actually something that the people want or are going to use or pay for.   Poornima Vijayashanker: Right.   Charbel Semaan: You haven't validated. You may have those silos that you mentioned earlier. There tends to be tension. I mean, we've experienced it where there's tension between engineering and design and product and marketing and sales, etc. And you mentioned earlier about the business folks. It can be the founders. It can be the head of sales. It can be anyone who's involved in key elements of the business. When you bring them together for those five days, you tend to circumvent a lot of wasted money, wasted time, and I come back to decision deadlock. That's a key thing I've noticed, is the inability to get through that decision, that blocker, that keeps them from—   Poornima Vijayashanker: Yeah. Let's talk about that. Yeah.   Charbel Semaan: Sure. The key thing about the sprint...and whether it's five days...sometimes it can be compressed to three if done well. I've tried one. It's very hard.   Poornima Vijayashanker: Yeah.   How Having Constraints In A Product Design Sprint Leads to Clarity   Charbel Semaan: It's extremely challenging to do it in one day. I don't always recommend that. But the key part about the decision deadlock in the sprint—when you're using the sprint as a methodology, as an approach and a mindset, as opposed to fixating on the number of days and time—is it's going so fast, and there are so many constraints, that constraints lead to clarity.   You don't have a whole lot of time to spend on, should it be this way, or should it be that way? You're simply saying, "Here are the ways. Let's pick one, and let's try it. We're going to find out if it's validated or not—”   Poornima Vijayashanker: Right.   Charbel Semaan: “—and then we can run another one again."   Poornima Vijayashanker: I see. That's great. Yeah, because I think that's actually...I was going to ask the question around scope creep, but it sounds like if you're whittling things down, it becomes very obvious what that particular thing is that you're building, whether it's a feature or whatnot, and what the problem is that you're solving versus all these other problems that might be tangential.   Charbel Semaan: Right.   Poornima Vijayashanker: Yeah, you get that real level of focus, but I'm sure unifying people around what that one thing is is a challenge.   The Role Of The Facilitator In A Product Design Sprint   Charbel Semaan: It is. That's why it's important at the start of the sprint for me, as a facilitator, to first get permission and to get that commitment from everyone that I'm here to facilitate. I'm here to guide the process and really help extract or be able to foster and cultivate their ability to create and to go validate what it is they're trying to find out. The second part is having that decider in the room. When everyone agrees and commits to who the decider is...and for that decider to be convicted in their decisions and to truly commit to, "Lot of these things are great things we can do. We could save them for another sprint. We're really going to hone in on and focus on this particular aspect."   Poornima Vijayashanker: I could imagine that whoever the decider is needs to have done their homework and be really wedded to the customers, the problem. Are there ever times where they're not sure? They may need to say, "Oh, you know what? It's two problems here. Not really sure which one. I need another day to go back and do research, or a week," in which case, now you're holding up the sprint.   Charbel Semaan: Yes. Great point. Again, the beauty here is, because you're aiming for that fifth step or that fifth day to get the prototype in front of users, to take another day, which will turn into a week, as you said, is not helping anyone.   Poornima Vijayashanker: Yeah.   Charbel Semaan: Instead, note that you've got this second thing that you might want to do, or you think you have a hunch that maybe that's also a problem. It very well could be, and that's perfectly fine. Just let it be there.   Poornima Vijayashanker: Yeah.   Charbel Semaan: Pick one and go with it, and get to that fifth day or get to that fifth step. Get the feedback. Learn from it. And observe how folks are interacting with it, whether it's a feature, like you said, or it's the entire mock-up of a product, and then iterate and do it again.   Poornima Vijayashanker: OK. Yeah, so then there's not a lot of leeway for ambiguity, and you have to get comfortable making those firm decisions to keep the sprint moving forward.   Charbel Semaan: Absolutely. I think that's the key part, is to be convicted in your decisions and to keep moving forward, because this is a sprint.   Poornima Vijayashanker: Yeah, yeah.   Charbel Semaan: You're just getting to that finish line.   Poornima Vijayashanker: We've talked about these five days. Day one is sort of this brainstorming session.   Charbel Semaan: Day one's actually unpacking and understanding.   Poornima Vijayashanker: OK.   Charbel Semaan: You want to have a good understanding of the problem and who has the problem. Then you go into sketching a variety of solutions. The third day, you decide what you're going to prototype. The fourth day is the actual prototyping. And the fifth day is getting that prototype in front of real people.   How To Measure Success For A Product Design Sprint   Poornima Vijayashanker: OK. How do you know, once you've done these five days and put something out there, whether or not the sprint was successful?   Charbel Semaan: That can vary sometimes from team to team and people to people, and depending on the product and service. What I like to anchor to, though, is, did you get some level of a lightbulb moment or an a-ha moment?   Poornima Vijayashanker: Yeah.   Charbel Semaan: Did you learn something? If you didn't learn anything by the end of the sprint, then you may not have understood the problem as deeply as you thought you did, and you may not have understood the person for who you're solving it for.   Poornima Vijayashanker: Nice.   Charbel Semaan: I like to measure it in terms of, on one hand, there's the analytical side.   Poornima Vijayashanker: Sure.   Charbel Semaan: Like, do we get buy-in, or do we get people who are turning into customers saying, "If you're going to launch that and that actual product in the next two weeks or month, OK, here's my preorder"? Great. On the other side of it, have you learned something from it?   Poornima Vijayashanker: Mm-hmm. Even if it's an epic fail here, nobody likes it, they thought the feature was just crap, there's insight there where it's like, "Hey, we're not going to be building that."   Charbel Semaan: Right.   Poornima Vijayashanker: Or, "We're not going to flesh that out in greater detail."   How Product Design Sprints Help You Fail Faster And Cheaper!   Charbel Semaan: Like the majority of my products and ideas. I've learned something, though, or the team has learned something. If it's an epic fail, great. And this goes back to what I mentioned earlier. Would you rather have the epic fail and realize that in five days, or five months later after you spent tens of thousands of dollars or more? If you're outsourcing it, tens of thousands or more. If you've got an internal team, and you've got all your engineering and design and development time and dollars, that a-ha moment can go on the positive. Let's keep moving forward with this. We're onto something...or it's the, "OK, start over. But at least we only spent five days doing it."   Poornima Vijayashanker: Right. Yeah. I think that time investment is great. I think even in those epic failures, a couple things develop. You now have a process with your team. There's some comradery and some communication barriers that have been broken down. Then there's still some interesting customer insights. A customer telling you, "Hey, I didn't like this feature. What I was really looking for was X, Y, Z," that's a valuable conversation to have.   Just kind of developing, like you said, that confidence around, "OK, I'm going to practice active listening for what it is they're looking for."   Charbel Semaan: Great point. There are two things that...   Poornima Vijayashanker: Yeah.   How Product Design Sprints Bring Teams Together And Improve Communication   Charbel Semaan: You just triggered a couple of thoughts for me. One is on the team communication and bonding front. What I've noticed is the team ends up developing a common language and a common baseline or foundation to work with. The next time, I'll hear something like, "Well, why don't we go sketch this? Let's go sketch some...we're talking about a lot of ideas or a lot of ways that we could do this feature. Let's just sketch them out, and let's vote on them." Right? "And let's make sure one of us is the decider," or whatever it might be. The other part that you mentioned around the lessons that you'll learn from the actual people who are interacting with is, more often than not in my experience, folks don't simply say, "I don't like that feature."   Poornima Vijayashanker: Yeah.   Charbel Semaan: Or, "That didn't solve my problem. Thanks. Bye."   Poornima Vijayashanker: Right.   Charbel Semaan: They're usually walking through. And if you're facilitating that empathy interview and that observation time, you're asking questions like, "Could you walk through, think out loud, while you're engaging with this?" More often than not, they're going to say something like, "Well, this confuses me. I'm not sure what this does. I kind of wish it would do this."   Poornima Vijayashanker: Yeah.   Charbel Semaan: Or you could ask, "Well, what do you wish it would do for you?" You're going to learn so much more. It's not a binary: they didn't like it and you're going to walk away.   Poornima Vijayashanker: Right.   Charbel Semaan: You're still going to learn so much, like you said.   Poornima Vijayashanker: OK. We've run a sprint. We got some feedback. Maybe it was successful. Maybe it was not successful. But what's the next step?   Charbel Semaan: The next step, I think, is to understand: what did you get out of this? What was the yield? Did you learn something about what's working, and you want to double down on that?   You can double down on that in your existing product development methodology, whatever you have. Maybe it's agile, or whatever it might be.   If it's something that turned out to not work out so well, it was a failure—if you want to call it that—then you could think about, "Well, could we run a sprint on one of those other ideas that we sketched out?" Or taking what we learned from the people who interacted with it, it turns out, we had that in some of the sketches. Why don't we incorporate that next?   Poornima Vijayashanker: Oh, nice. Yeah.   How Product Design Sprints Help With Your Existing Product Development Process   Charbel Semaan: You may not run another five-day sprint the following week, but you now are so much more informed about your existing product development cycle that you could start to pull in some stories, if you run agile, or whatever your approach is.   Poornima Vijayashanker: OK. The idea is to use design sprints for moments where you've got a lot of ideas, you're not sure which one to execute on, and really for that quicker design feedback, but not as a standalone methodology for every week, we're doing a design sprint.   Charbel Semaan: I don't think so.   Poornima Vijayashanker: Yeah.   Charbel Semaan: Yeah. I think it works out better in the way you described it. I think, particularly, sprints are great when you start to notice a little bit of that clog.   Poornima Vijayashanker: OK.   Charbel Semaan: You're getting to that decision deadlock, or you've got a problem you want to solve, but you're just grinding on it.   Poornima Vijayashanker: Right.   Charbel Semaan: The sprint allows you to just get moving. It allows you to go from thinking to action.   Same when you have a new idea. You've got lots of new ways that you think...well, we think we might be able to roll out a feature that could generate another hundred grand in revenue. Or we think we could branch off the product. There's this whole other market, and that could be a million-dollar product on its own or more. Well, run a sprint on it instead of thinking about it or figuring out, “could it be? Should it be? What do we do with it?”   Poornima Vijayashanker: I'm sure other teams—maybe marketing, sales, customer support, all these other teams out there—are probably going to start embracing design and using it. Have you seen the design sprints used for other things?   Charbel Semaan: Yeah. Actually, this is my favorite part.   Poornima Vijayashanker: Yeah.   Why Product Design Sprints Aren’t Just For Product Teams   Charbel Semaan: It's not just for product teams, at least anymore. Two favorite examples of mine, where teams that you might not expect have used design sprints and they've used them successfully: learning and development team at Medallia used a design sprint. We ran a design sprint to think about: how could we start scaling training across the entire company through video and through online learning? We ran a sprint where we had a scrappy video set up in one of the small corner offices, and we got out an example, a prototype, of a training video on a completely low, tight budget. It showed a proof of concept to the team and the entire organization what's possible.   My other favorite example is my friend Brian Bautista at SoundHound. He's the customer support person and customer success for SoundHound, and he's been transitioning, actually, and has officially transitioned to the product marketing team because of a prototype and a sprint that we ran.   Poornima Vijayashanker: Cool.   Charbel Semaan: Not necessarily on the product itself, but he was helping educate on the product and wanted to ensure that people were using SoundHound and Hound in the best possible way. What he wanted to do was test a new type of video. It was more personable. Could showcase a little bit more of the humanity of the brand and the personality of the brand. In eight hours, believe it or not—   Poornima Vijayashanker: Oh, cool.   Charbel Semaan: —ran a prototype on what that video could be, takes it to his VP of marketing, and she loved it and greenlit more videos.   Poornima Vijayashanker: Well, thank you so much, Charbel, for teaching us about design sprints today.   Charbel Semaan: My pleasure.   Poornima Vijayashanker: Yeah. For all of you out there who are watching and listening, Charbel and I want to know, is there something that you've been stuck on? Maybe a decision deadlock when it comes to a product or a service, or even something in your personal life. Let us know what it is in the comments below this video. That's it for today's episode of *Build*. Be sure to subscribe to our YouTube channel to receive the next episode, where we'll dive into how you can evangelize design sprints at your organization. Ciao for now.                                                   This episode of *Build* is brought to you by our sponsor, Pivotal Tracker.