Episode 30 | Part Two: I Love LA

Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard.

Welcome back to my conversation with Alessandro Mariano Antoni. We've been talking about how his M Accelerator program provides students, early-stage, and later-stage founders with the skills to grow their startups. So Alessandro, in my research, I noticed that 51.7% of entrepreneurs fail within the first year of launching. And I'm wondering, in your experience, why do you think that is from your perspective, through your lens? And how does your program help these entrepreneurs avoid those landmines?

That's, uh, that's not an easy question, Greg, but—

I know, all the questions are difficult.

I believe that we, because of, they're building something in, when you are on your drawing board, when you're doing the exercise with the, let's say, the graphics and the building of that, it may be easier. But as soon as things become really practical, it's where we start hitting the real difficulties, right? So I believe that our founders are going through that during our program, being so practical, and ultimately having basically going through so many scenarios will help them. It's a sort of an exercise so that you simulate so many different scenarios and opportunities and then choices that you have to take along your design journey. The design journey doesn't end. It continues even when you are starting, when you're acquiring your initial customers, right? So it's, uh, there's an iteration going over there that is happening, and it's pretty much never-ending. But, uh, I believe that the, the approach— these are practical approach with the multiple iterations approach that we have in our program, our programs, because we have multiple— it helps our founders into testing and rehearsing and evaluating at the end of the day in multiple, uh, funnels, to be more specific, multiple target markets, to be a little bit more specific. So, and I've worked with— we worked with more than 350 founders across all the programs. A lot of, uh, at the beginning were from idea stage, but, uh, over the past 3 years, I would say primarily seed and pre-seed stage startups. And I'm— and I see that it's, it's hard to do this on your own when you're bootstrapping and building. I mean, you really need somebody else where you can talk about your strategy, validate some assumptions. And then after you validated the assumptions analytically, you have to start validating it practically, right? So that's, that's the aspects that I believe contributes the most to the entrepreneur's journeys for our founders, and we can help them the most.

And when you— going back to the question about getting accepted into M Accelerator, when you look at new deals, what are the top 3 things that you focus on when you're interviewing candidates to get into the accelerator?

Yeah, depends on the stage, right? So right now working a lot with pre-MVP, post-MVP, and post-product-market fit, right? So generally at these stages, which are very early regardless of these names, We are looking at will and capabilities, right? Those are fundamental things that I look into the founders, right? So there is— I have a team, I work with them. So we receive, we tend to receive, still receive a lot of decks. So they are going through a first filtering of those decks. Then I end up talking to maybe 100, 150 of these founders every year. And out of those interviews, we select, right? So definitely I want to see real capabilities for the founders. And they can— it's a very, I would say, humble conversations, the open conversations that we are having. I just want them to talk to me about what they're working on in their business, how they did it, and the choices that they needed to take. So I really like to hear them talking about their business. It's really important. And they're really specific, right? Sometimes the words they're picking, the way they're talking about things. So those are the things that I really look at. And of course, then I also look at the verticals and the actual traction, if they have built something, their approach. And sometimes if it's because of the different stages, of course, I'm much more open when it's about idea stage. But still, I'm still selecting participants that are really open and they're really aware of the things that they know and the ones that they don't know. Because that's for sure that there's still a lot of learning, even for somebody that passed the product-market fit, that's just at the beginning of the journey. There is so much work to do after that. That if I don't see some kind of openness into learning, I don't think there's gonna be opportunities for us to work together. Especially at the beginning, I was talking to founders that they felt like they knew already everything. And I said, so if you already know, I mean, there's not really much room for us to work. I mean, there's not—

Right, yeah.

And there are lots of founders that they manage to work on their own without the help of any accelerators. So many companies, right? So, and find access to, let's say, investors. Nowadays is much, much simple. I run, uh, once a month I run a meeting with the founders that are interested in our program, and I even showed them how to find investors on the platforms from Crunchbase up to LinkedIn. So I really tell them, right, you know, it's not our value proposition to do the matchmaking with investors. Uh, we focus on something that happens before. And of course, I mean, we also have a network, right? We've been in the business for 5 years, so we developed organically a network, especially here in Southern California. So I will be more than happy to make that introduction, but definitely it's not the exercise that I'm interested in. I'm interested more in something that is more related to working out their business model. And so those are— yeah, hopefully I answered. Those are the things.

Yeah, no, I mean, that's fantastic. I mean, you know, a lot of the things that Personally, sort of, I guess, gets on my nerve is when I see all of these entrepreneurs going into some of these accelerators who their value proposition is almost solely based on raising cash for them. And these entrepreneurs not understanding that there's a lot of work to be done before you go raise cash. And that is what's key to getting the round. It's not just going out there and pitching a bunch of people, but it's what you say, how you say it, and who you're talking I wanted to ask you another question with regards to the cohorts that graduate. After they graduate and then they go out into the field and they start running their business, can you give me 3 things that you see that they make mistakes on when they leave the accelerator and they get out on their own?

Accountability, it's a big thing, I would say. Of course, I mean, I've seen idea stage teams leaving the program not having somebody like us, like, that would keep them accountable on milestones and work that needs to be done.

Mm-hmm.

But also I've seen also startups much later stage after the fundraise or just before the fundraise when they were ready. So during the program, in a way, we kind of spoiled them a little bit too much with having us available, right? And we spend a lot of time with them in having conversations. Sometimes it sounds like brainstorming sessions, right? Where there are ideas that they are bouncing off to us and we are helping them out in clarifying it. And I believe that that's something extremely valuable. But at the same time, we're trying also to give, put on their availability, our framework, right? So, but still accountability, I believe it's one of the main things that it's It's hard to maintain. Also, founders, I mean, especially even more at the later stage, they are organically receiving a lot of opportunities because of current customers, future partners, investors, from so many angles. When you pass some of the early, very early stages, you start getting a lot of distractions because it's hard to kind of validate all of the opportunities.

Right.

It's getting kind of your brainpower and time at the end of the day distributed across too many things. It's also another issue.

What would you say, you know, one of the things that I, you know, in the book I talked about this a lot. It required a tremendous amount of research. I did 1,200 in-person interviews with entrepreneurs, accelerators, investors, and so on. And during that process, One of the things that I was trying to understand is the difference between a good accelerator and a bad accelerator. You know, the entrepreneurs in the interviews, you know, I had a tremendous amount of data come in from the other people on the team for the research that had conversations with entrepreneurs that said, oh, they charged me $10,000 and they took 5%, or they gave me $100,000 and then I had to give all the money back to them for fees, or whatever. And, you know, in all of these sort of stories and some of these scenarios, it was like, okay, well, you know, they introduced you to people or they, uh, they took the, the $100,000 that you invested and gave it back to them for trade shows or participation in, you know, the accelerator or whatever it is. Some of these things had, you know, positive things, but a lot of them, you know, the entrepreneurs were saying, you know, I don't feel like it helped me. And I wish that somebody had told me, you know, the difference between a good accelerator and a bad accelerator, you know, some sort of delta between, or some sort of red flags or signals or something that would help me, you know, decide if I'm a brand new company and never done this before, you know, they're not all the same. And what's the difference and how do I choose? And I wonder if you could, you know, talk to the listeners, the entrepreneurs out there about How they should go about the selection process of who they apply for in the first place?

Yeah, that's definitely interesting for founders that are dealing with accelerator for the first time, right? I think that it's like when you're purchasing, right, any other thing. What happens today is that before buying something, eventually you go and if you have a little bit of time, you go and look at the reviews, right? So it's the same thing can be done for accelerators. At the end of the day, regardless of the business model, it's not going to be for free, right? It's either equity or cash or fees or so many different ways on agreements. It's never going to be for free. So you're giving your, you know, you're taking this service in exchange of certain, some value. So I would, I would go and check out other multiple accelerators at the same time. Our founders in our— and I've learned this one through running an accelerator— that at the same time founders are taking, especially nowadays, multiple programs. Maybe there is one remote program and then an in-person program, or maybe they are an international— this happened often to me— there are international businesses taking a local accelerator, but then also taking for example, our program because we focus on the go-to-market in the US. So there are, right, each accelerator has its own specific value proposition and benefits that could help founders. So it's always good to have an idea of what is in the market, what you can find in the market. And in general, I would say if it's equity, I mean, you want to be aware of What equity means when there's somebody helping you in the role, in an advisory role. So typically, I wouldn't give more than 0.5% equity to an individual and no more than 3% to an accelerator. But there are other aspects, right? Are you, like I said before, what's your goal? Are you at the idea stage? Are you at the I would try to frame it based on the stage that you are at. What I don't like is to charge for accessing the network. It's something that I suffered a lot with growing up, especially in Italy in the mid-'90s and then later. That's why we don't focus on the matchmaking with investors, right? Try to build more like an organic approach.

I think that's really wise.

The quick answer is that I would look at I would try to do a little bit of an accelerator before applying. So I would try to do what is it that I'm really looking for to find in an accelerator. Actually, this is one of the questions we have in our application. What are you looking for and what are you expecting to achieve at the end of the program, right? It's kind of a reverse question because if we find something that we have, we know what is the correct answer, but— Of course, we are not giving it. And when we find it, it's kind of, okay, we're interested, let's talk. For example, something that I don't like, there are information and education is accessible many places nowadays. Think about what Google has done with the startup program, I think they're calling it, right? So many thousands or hundreds of hours of sessions for free over there. So if you're looking for a a very base-level education, there are so many sessions available over there. But then the question is, what are you really looking for, right? I'm sure that if you're considering an accelerator, you have a specific goal, you have already an understanding of the business you want to build. And on the other side, there should be the right fit in terms of where are the— what stage are the companies, what is the stage of the companies that are gonna find in my— the same cohort, right? Are we on the same stage? I mean, are we all going for fundraise or for go-to-market? What is the problem that I'm trying to solve?

So I guess in closing, one of the things I wanted to just, you know, ask you about is when you're out there and you've been doing this for like 5 years and, you know, there's different types of advice, right? There's advice that has to do with What should you watch out for when you're choosing the accelerator, which we spoke about? And there's advice on, you know, what are the 3 things that, you know, an entrepreneur does wrong after they leave the accelerator that causes them problems? But there should be some overall advice. So if you are, you know, sitting down, let's say you're in an elevator and you're riding in an elevator with an entrepreneur and they click the button on the elevator and they have until the next floor. for you to give them some advice on what to think about as an entrepreneur, what advice would you give them in that short amount of time?

I like to think about the entrepreneur journey as the journey of somebody helping someone else, right? That's what really triggers my passion and enthusiasm. And if you don't have enthusiasm in helping your target market, it's really tough. I mean, if you don't have that enthusiasm, then you're not gonna be able to hire. Then you're not going to be able to find investors, right? And then you're not going to be able to solve those problems for certain people, right? So I think that you really have to be somehow in love with your target market. If you don't have that passion, you don't have the energy, the enthusiasm in helping that group of people, probably you're not looking at this right, right? Maybe you're not looking at the right target market or maybe the problem I would say that the combination of the 2 things is not the best match.

Alessandro, I really appreciate your time and energy and wisdom. I know you're a busy person, so thank you so much for the time you took to be on the podcast.

Thank you, Greg. Hopefully it was useful. I mean, it's hard to listen to myself when I'm talking, so hopefully it ended up being an interesting podcast for you and for your audience.

Absolutely. He's Alessandro Marianne Antoni, the founder of M Accelerator. And that wraps up this episode of the Boss Podcast. If you enjoy the show, make sure you take a second to subscribe so you automatically get notified of when new shows drop. Also, if you have a minute, I'd love it if you could leave a review so more folks like you could discover the show. Until next time, namaste, my friends.

Learn more about the Boss Business Operating Support system at bossstartupsience.com, or you can reach Gregory Shepard at gregoryshepard.com. This has been a production of Forbes Books.