Adam Spector's Guide to Building a Fundable Startup

Are you practicing in front of a mirror every day telling your story in 3 to 6 minute chunks, getting your pitch down to perfect? Because as a founder, I think one of the most underrated skills is storytelling. And so your ability needs to be how fast and easily can I tell my story to help everyone understand who we are, what we do, why we do it. And it's not just investors. You need to sell a co-founder or your team. You need to sell customers on that story.

So it doesn't need an introduction, but I'll let him do an introduction in a second here. But serial entrepreneur, over 4 startups launched. Uh, he's the host, uh, podcast host of Entrepreneurial Excellence Podcast. We'll put the link in. It's awesome. They just did an episode actually today. Um, general partner in the Autopilot Fund. as well as, um, Angel Squad member with the Hustle Fund. He's, as an angel investor, has done over 100+ startups, probably close to 200, including 10 unicorns. Um, so I mean, like, the, the amount of exits— Dialog— sorry, Datalog exit, August Smart Log exit, um, Order Ahead exit. Jet.com exit. So some amazing investments, um, based in Silicon Valley, San Francisco, in the Bay Area. Without further ado, please put your hands together for Adam Specter.

Thank you, thank you so much, Jordan. It's, uh, always funny when it's digital, um, since, you know, it— for all I know, it's just you clapping, um, although I'm getting some nice digital emojis. So thank you all, uh, for that. Um, Yeah, I mean, so as Jordan mentioned, just a little bit more about me. I mean, I'm a 4-time founder. I've had the privilege of, by the way, a 4-time founder, 3-time founder who's had VC backing, probably raised, I don't know, at this point close to $30 or $40 million. But my current company, actually, I'm also a founder and CEO of my own company called Levy. We do back office support for startups, so literally run all their operations so founders can go focus on go-to-market and product. And we're actually a bootstrap company, so doing things in a really different way than is standard. I'm happy to talk through all those things, all the investments that I've made, what has led to— I probably need to update that. I think it's more unicorns now at this point as well, but a pretty good number of them. But what I've seen across those companies that have made them the most successful investments, and also frankly, what I've heard from folks who I've talked to in my podcast where really focus on multi-time founders who've been there, done that, seen it all, and what makes them great and frankly different and more successful. We can talk about what that means too for everybody, but I'm here to help out. I hope I can give back and provide some value to everyone listening.

Awesome. So we're going to get into Q&A right away. Maybe just before we launch into that, right off the top, how did you even get into tech and entrepreneurship?

Pretty simple. I was that guy always reading like Wired magazine back in the day when it was in print edition and had always wanted to be in tech. I'm from the East Coast originally. I live in San Francisco now and was always just really into the tech side of things. I was like, I need to be out where it's happening. And actually what really got me into it. So after I finished graduate school, I was working in sort of business development strategy at a mid-sized publicly traded company. It was a cool job, kind of cool first job after grad school, but I wanted to be out in Silicon Valley, I thought, or go do my own startup or something, something smaller. And I ended up meeting with— I got introduced, kind of, I forget who did the intro, but introduced to a Sequoia-backed startup founder who was based in DC, which was very rare at the time and is still pretty rare. Sat down with the guy for, I don't know, 30 minutes, maybe an hour. And the question that stuck with me still to this day was I asked him sort of, you know, he basically was like, I kind of was like, where should I go? Where should I live? Given I'm kind of not— don't want to stay at this company forever and I'm from D.C., wanted to leave. And he said things that just stuck with me, which was basically, if you want to be in politics, go to D.C. If you want to be in finance, go to New York. If you want to be in kind of media, Hollywood movies, all that, go to L.A. And if you want to do tech, go to the Bay Area. And I followed that advice. And in 2010, I moved out to San Francisco and I have not left since. For better or worse, I've seen ups and downs and all the other things in between, but this is a boom and bust city and AI is booming. So this is the place to be right now, I would argue.

Awesome. Okay, let's get right into it. Okay. So Akshay is our producer behind the scenes, just for everyone. So Akshay, Maybe you want to lead with a question and then we'll start going rapid fire right into this. So we'll just give them a second here to pick one. So question, this is from Nate Cater, LA. Nice. So when hearing a pitch, do investors prefer hearing a story or getting right to it?

It depends a little bit what stage you are to some extent. So I would say probably what they care about is sometimes you got to keep it concise. I mean, the sad fact is VCs, but frankly, all of us have a relatively short attention span. So given your attention span, you need to get to the point quickly. However, making that point is just as important as getting to it. So how do you make a point quickly? Well, you tell a story. Humans live in stories. We love stories. What we, how we communicate is with stories. So if you tell a quick story, we're talking like 30 seconds, um, that can lead to hopefully then a really good pitch of why you exist and who you are. So like, I'll give you an example. I don't pitch my company Levy, but I'll give you an example of what I would do for telling that story. So here's my, like, my story maybe for Levy, and hopefully this helps you, right? Which is, so I'm a 4-time founder. You guys heard me say that I'm an investor in lots of companies, in every single company in the world. Has a simple problem. They need to run their operations, and no founders start their company because they want to do operations, right? I'm guessing all of you here are like, I want to go build X, Y, or Z. You don't do it because you want to run operations, but you need to run operations. So this needs to be solved. That is why we exist. And it's the pain that I've experienced directly myself as a founder. All the companies I've invested in experience this, and therefore this is the problem. And then I can go on to how we solve it. But that's very personal story. I've lived it, I've done it, I've been in trenches, I've built this, and man, it was a pain. Um, but I happen to love it too. So hence lovey. So I, I would say you need to do both. The story has to be clear and has to resonate, but concise and get straight to the point of the problem that you have and the, and what you're, and then how you solve it.

Of course, just maybe doubling down on that, was there a story that stood out for you the most out of all the pitches that you've heard?

It's really different. I would say some of the ones that have been the most successful companies we've invested in, one was a company called Human Interest. So it's a 401(k) company. In Human Interest, I sat down with Roger Lee, their founder, and they used to be called Captain 401. I told him it was a bad name at the time, and he did end up changing it. But he basically said, I have this problem at my own company right now. He had a different company. We can't barely get a 401k for everyone in our company. We're a small business. We need to get this for folks. It's a freaking mess. And by the way, I've also taken this Series 8 or whatever the crazy financial test was that he had to take. He's like, in the 10 most populous states in the United States. And I like learned it all in like 2 weeks or a month or something crazy, which for those who are in the finance space, like doing that in one state in New York is insanely difficult. He did it in 10. And he was like, this needs to be solved. And so like, I've always like stuck in my head, like he was so obsessed with solving this that he got out there and did that work and told a really clear story for why he felt that pain.

Yeah. It's almost like pursuit of happiness in the Rubik's Cube. I knew this, uh, we interviewed this one guy who he could solve a Rubik's Cube blindfolded in less than 10 seconds. And then he could solve a Rubik's Cube in 3 seconds. It was crazy. Incredible. Okay. Next question. Actually, if you want to get one queued up. So what's the importance of a prototype when pitching to an investor? In my use case, the resources needed for the prototype aren't available without investment. So it's maybe it's deep tech, that type of thing.

Yeah. Great question. Short answer. I think prototypes are worthless. For pitching, at least for a few reasons. One, if you're early enough, they're investing in you as a founder. So you better be pitching your story and why you, what is your background that makes you perfect for founding this company, which makes you utterly obsessed with solving this problem, right? The story I just gave about Roger in Human Interest and with my own company, Levy. Why am I doing this after 4 different startups? Because I've experienced these 3 times, times plus another 200 for the companies I've invested in. Literally one of the companies invested called me immediately right before this and said, we had this major issue, can you help us? And so they're not going to be a customer. So you want to tell this personal story about why you, why now. A prototype won't help. Arguably, a prototype would actually hurt because it's going to be a prototype. It's going to suck. It's going to be janky. It's going to break. It might make you look worse. You want to be able to sell a hope and a dream in the earliest stages. And that's what you're selling. The final part is you really need to have something to show because there's people do like to see things. You can make a wireframe that should show off what the product should do just as well, if not more frankly beautifully than any prototype. So I'd build that if you really feel like it's required.

Yeah, I kind of agree. It's like really good UX/UI mockups. Can go a long way to sell things. Okay, let's jump into another one. So actually, if you want to queue one up here. So this is from Dom Klemmer. Just looking for advice for SWE looking to stop coding and do what it takes to raise money. What are those things to be focusing on besides coding?

Yeah, I mean, The things to focus on besides coding is get really good at telling your story. Are you practicing in front of a mirror every day telling your story in 3 to 6 minute chunks, getting your pitch down to perfect? Because as a founder, I think one of the most underrated skills is storytelling. And so your ability needs to be how fast and easily can I tell my story to help everyone understand who we are, what we do, why we do it. And it's not just investors. You need to sell a co-founder or your team. You need to sell customers on that story. So you need to be on point with that. So I would be spending, you name the amount of time, an hour a day practicing that pitch. It could be in front of potential customers. That's fine, right? That's a great way to practice pitch because you might actually get some customers and some sales. But either way, you should be practicing that pitch all the time. Nonstop in making sure that story is on point and you can change it up depending on your audience, right? Once again, VCs, customers, and potential employees.

Yeah, I've seen it where the advice from the investor was great pitch, just do it 1,000 more times.

Yeah, I mean, you might have the right elements, but if you can't tell it convincingly, like the ability, that's a red flag. You might be brilliant, but if you can't recruit anybody and can't sell, who cares? No one. It's sort of like the story of if a tree falls in the forest, does it actually make a noise? Well, it's sort of the same thing here. If no one understands your story, I don't care how badass your product is, no one's ever going to buy it.

No, we definitely see things get over-engineered sometimes, and it's a lot safer to sit in engineer things than it is to go out and sell it.

Way safer and harder too. I mean, actually not true. Selling is incredibly difficult too, but you need to have the fortitude to go do it because once again, the best product in the world, if it doesn't have a way to sell itself or you sell it for the product, it just doesn't matter.

Totally. Okay.

Yeah.

We'll queue up another one just on that. It's kind of like, um, Coming from the agency world, it's always like, uh, perfect is better than now, but really in startups, now is better than perfect. Okay, so this is from, uh, Tara. Uh, what inspires you to invest in the company? And obviously, let's maybe assume this is early stage.

Yeah, totally. Tara, great question. Uh, so, so what inspires me to invest are once again a few different things. I mean, like, one is the founder. I think two is the sort of market and the excitement that I have around the market. I don't really care. Everyone's going to say their TAM is massive, all that other stuff. It's more like, what is the really big opportunity in front of you and why does it catch my interest? And that kind of sucks because my interest could be all over the place and you don't really know. And same thing with every investor. But if it catches my interest, I'm like, oh, that is different. And that is something that hasn't been done before. That gets really exciting to me. And I'll give an example of that too. But then the third is the connection to or recommendation of that founder. So there are so many founders out there that I get hit up with. People send me messages on LinkedIn and email, you name it. It's almost impossible for me to wade through those. Professional full-time investors who are doing it nonstop every day, and I do have a fairly high investing rate, but it's not my full-time job. I mean, they're just weeding out people all the time. So you kind of need to find a way to get a warm intro into that investor to have them even look at what you're saying and talking about. So it's sort of those things. Do I know someone? Is that like a warm recommendation? Is the founder story incredibly compelling? And then is the market something that excites me? So once again, going back to human interest, to me, I was like, oh, that's a no-brainer. 401(k) should be for everybody, not just for big companies that can afford a massive back office team to manage it. Or another example, invested in a company called Diamond Foundry. They manufacture— they're the first company that really made at scale diamonds. And why did they do that? There were a ton of reasons. I was like, oh, this is amazing. If it can be done, it's difficult. How does it— will it change the world? It can. There's some really big reasons for it. Or another one, company called BetterUp. Knew the founder— actually, all these cases knew the founder through other things. But then BetterUp, they were like, we're building executive coaching for everyone, which just to me made on the surface so much sense. Like, why, why should coaching be reserved for executives? That seems insane. If it's valuable for executives, it's valuable for everyone. The question is, can you scale it up and bring down the price cost to make it viable for everyone? And that was what they were going to do. And I was like, oh, this is a no-brainer. Makes sense. The market has to be huge for that. If you can do it. And then it's just a bet if you think the founder can execute.

And these were lab-grown?

Yeah, lab-grown diamonds. Yep. So Diamond Foundry was the first one. They— Royston G King is their sort of consumer brand.

I've always wondered how big can you grow one? You know what I mean?

I think pretty big. I think— I don't know what their current ones are, but like it's probably in the— I bet 4 or 5, 6 carat and they can do different colors, which some of the colors are super rare in nature. My wife's engagement ring actually was the first ring ever that had these stones on it, which is great. So that's kind of fun. But yeah, but they're doing a ton of other really— there's a ton of different applications for diamonds that are well beyond jewelry that they're like, if we can do it, this opens up a wide world for so much other stuff. And they've done great.

Plated teeth.

I— we probably will have diamond-plated teeth. We will probably have diamond everything everywhere at some point on our phones. Like, why wouldn't— why not have a diamond-plated phone instead of glass? Um, who knows? I don't— I have no idea if they're doing that. I don't think they can build them that big yet, but, um, there's probably more valuable, uh, places to go. But, um, yeah, diamonds everywhere. Why not?

Okay, uh, actually, let's get into another one here. So for a tech AI startup, how ready should we be to get an investor interested? What if we just have a good idea but have not built anything? So this is like the chicken or egg.

Smruti, it depends on how badass of a background you have. So if your background is amazing and you are just top-notch AI person, just it looks like you're at Microsoft and you're just like, hmm, like thinking like, hey, maybe like I want to go out there. If you're really good, you'll still get investment. I mean, the AI hype has cooled down a little bit, but you'll still get investors just based on your background. It's just being one of the top people because they figure like the worst down case scenario is you get scooped up by one of the big players for a small enough amount. But it gives the founder— founders get an exit, investors make it a little bit back. So it's sort of downside protected. So I don't think you need to have that much as an AI company. But if your background isn't as sexy, to be clear, I'm not saying not as good. I think the sexy background sometimes can be worse. But for fundraising, if your background isn't as sexy, then you need to have not necessarily a lot. You still just need to tell a really good story that's compelling that says like, this market is untouched. Here's why I'm the best to go attack this market. Here's my background. Here's why I'm passionate and obsessed with this.

Yeah, I mean, I've seen— just FYI, the Y Combinator application for the fall is tomorrow. So there's— you could hustle tonight over 24 hours and get it in. But I've seen people get in with like basically a business card because they were like, yeah, here, our last— we were the CTO, the company was a unicorn. No, like, well, Decacorn really. And they're like, okay, just do whatever you want.

Yeah. That's, that's, that's, and the same thing applies to lots of people, especially in the AI space right now.

Yeah, totally. Okay. Uh, actually let's roll in with another question here.

Yeah.

Uh, so this is from Charles. Can you help me understand how evaluation for pre-seed startup with only estimated revenue is arrived at?

Charles, great question. Uh, it's basically sticking your finger up in the air, see which way the wind is blowing. To some extent, there isn't a great answer to that. Generally speaking, though, it's a function of, once again, the team, the market size, and your ability to tell a good story. It's essentially a function of those things. So if your team is badass and you're targeting a big market and you can get in front of the right investors, your valuation will be higher. If it's not, your valuation should be lower. So that's one part of it. I noticed you're, I think you maybe said Lancaster, I don't know, Pennsylvania, or I think Michigan, there's Lancaster as well. But being outside of the Bay Area usually entails a lower valuation for a variety of reasons. Happy to talk through that, but it usually entails a lower valuation, but it also means you probably can hire lower cost people. So it's an okay trade-off, but So those are the key functions that go into valuations. And truthfully, part of it is just say what you think. Like, we're raising at a $10 million cap, pre-money or post-money, whatever you want. See if people bite. If people are excited by you, they'll bite. And if you have a lot of excitement, be like, okay, first people in $10, second round $14. You were too slow to close. You better run a little process too. I'd kind of just make up a number that you think is viable.

Maybe just while we're on this, because this is like one of the most common questions that we get, you know, when you're raising, what's the importance of putting a deadline on a round?

I like putting a deadline on the round because it gives people— VCs like information. That's kind of, I would argue, like what they are. Their job is like information peddlers to some extent. They love to just sit and wait and get more. Also, your IRR is a function of, by literally IRR calculations, it's a function of when you invested. So if I can invest today at a $10 million cap, or I can wait 6 months and invest $10 million still for the same company that's 6 months further down the road, further progressed, closer to the next round. Why not wait? That my IRR is better because I waited 6 months. So investors rarely have a reason to move quickly unless it's a hot deal. They feel some pressure because someone else is going to get the deal from them. So long way of saying I would put a target around it, be like, I'm setting up— I recommend everybody set up a really clear process for your fundraise. Essentially try to make it 3 to 4 weeks at most. Do make a list of 50 to 100 VCs. Specific, not just firms, specific partners that you wanna target. Start with like your level C firms, like they, you'll, you'll take money from them of course, but like they're not your top ones. Then sort of B ones and then A ones. You're like, ah, my dream firm, these ones. Go reach out to your C ones first. Hopefully then very within the first next 2 or 3 weeks you set up meetings with all the C firms. Then after that's done, you start, not after that's done, but sort of you then start contacting your B group. And then your A group. So then the goal is basically between week 1 through week 4, you're meeting with basically going from group C to B to A. And in that process, by the time you get to A, you're coming into the meeting and be like, thank you so much for taking the meeting. I'm really glad to chat. By the way, I have a term sheet already. I don't have a lot of time to mess around. I have a term sheet. And now your A firm's like, oh shit. We need to close and move fast. This is a hot company. So I would try to make it fairly tight timeframe. Also, it just saved you mentally. Mental load of always raising is so draining. You need to focus.

Oh, and I'd love to get your opinion on one thing. Just go around the topic too. So, um, unicorn founder, uh, like almost a decade unicorn and like they— is things with 3 things when you're raising number 1, he said always the CEO and only the CEO, because anytime you introduce additional variables into the pitch, things can potentially go wrong. So that was interesting. But then another one was never leaving the deck, like the pitch deck as like a PDF with them. And the, and the final one was like, if you don't hear back in 24 hours, it's a no, basically. But in, in specifically in terms of the deck, because his point was like, if you put the deck out there, potentially it can get into the wrong hands, uh, and like immediately it's outdated, right? So like, is that even possible to not leave the deck with investor?

Yes, you should. I think sending a docsend is a great way to go. One, it puts it a little bit— I mean, you know, people can still use whatever email they want. And so within reason, I think you actually maybe can, can restrict it to certain domains, but like send a DocSend, you at least get people's emails, you get a little bit of data and analytics, and you can keep updating the deck. So like, that's really valuable. You have to leave them something. I just wouldn't leave— I agree, I wouldn't leave the PDF because that does get sent around, it gets shared, it gets saved. You never know. So I would just give them a doc send on that front.

Yeah. Next thing you know, they're ripping it apart on LinkedIn as like bad decks or hopefully it's success story.

Hopefully. You never know though. And then going to your point, by the way, about only the CEO, I only partially agree there. I totally agree with what this person's saying and why they're saying it. I don't completely agree with the— a lot of people have co-founders and if you're really early, you're The investment is because of your team and probably you and your co-founder more than anyone else. So you do need to show up with the core, core people that the VCs or investors are putting money into because that's the bet is on you as a team early on. However, you should make sure you have your pitch down perfectly and everyone knows exactly the role they're playing. I don't care if One co-founder is this. I'll use an example. Let's say one co-founder is the CEO, and that's also the CEO, but he or she is also really technical. One co-founder is more of the sales type of person, business person. Either let the CEO do the whole thing and do the pitch themselves the whole way through, or make sure you know what roles you're playing because your role is to sell VCs on it. So the role arguably should be let the sales and your salesy co-founder, business co-founder, lead the pitch, tell the story, get out there, get excited, get energized, do all that stuff. And then let the technical co-founder who is CEO jump in and be crazy technical, go deep, start writing algorithms on the wall, make VCs be like, I don't even know what they're talking about, but this person seems like they are so on point, but don't overlap each other. Make sure you stay in your lane because if you start bickering about who's saying what or repeating what the other person says, it muddles the message and it makes you two look uncoordinated and not working as a team, which founder breakups and split is a huge risk factor to startups. So don't give VCs a reason to worry about that.

Yeah, no, that's great advice. I think know your role. Where I've seen a breakdown was, for example, like a CTO that just started rambling about like honestly nonsense. And then, or like I've seen it where like board members feel like they need to come in, but then like sometimes the board members, like they were just there for the money and like they're almost out of touch with like the reality of things anymore. And then they just ramble forever and just ruin it.

Give me one second. Your pitch, if you're gonna get in front of a VC 'cause you're there to get money, What's good? Same goes for a customer, but like, you should know exactly what you're going in for, exactly who's saying what, what your script is. Just be on point. Remember, this is your one opportunity to make an impression. So make sure you are on point and ready to go.

Yeah, totally. Okay. Uh, actually let's pull up another question here. Those are great. Uh, so when getting pitched, how much weight does previous or field expertise carry in regards to the business proposal? Product. So if the person is pitching, if the person pitching has a great product idea, but not the relevant background, I think maybe it got cut off, but—

I say not the relevant background, is that a deal breaker? So Jace, short answer, not a deal breaker. However, you need to then, it's a little bit harder to make that compelling story for why you should be that person to solve that problem, right? I mean, the, the, Thing that I hear, the most common thing I hear for what makes entrepreneurial entrepreneurs excellent, which is what's gonna be the name of my podcast, everyone go follow, but entrepreneurial excellence, probably the number one thing is what I call obsession. People say it with different words, but like, are you obsessed with this problem? If you are obsessed with it, then you need to be able to explain why, even if you haven't, okay, fine, let's pretend you went to accounting school, in your accountant full-time day-to-day, that's your job, but you are really into longevity because that's like you love health, like that's what you do in all of your free time, and you've read every book, every podcast, you name it about the topic.

Cool.

Make sure it's really clear why you are so obsessed with that topic and why you're going to go build something that does not exist in that space. Um, that's, that's fine. People have lots of life, life reasons for why they aren't doing what they are obsessed with just yet but want to.

Awesome. And so just as a reset, anyone that's just joining, there's a Q&A box so you can put your questions in and then we'll, we'll pick them up. So we're going to do probably another like 15 minutes of questions and then we'll get into the networking in the main room again, in the breakout rooms. But actually, if you want to bring another question up here. This is from Joel. What should your primary focus be year 1 to 2, revenue or user growth that you can monetize later?

Joel, this is a little bit of a tough one to answer. I generally say that the right thing to focus on is growth overall. Like growth is generally solves all problems. Even if you are If you're not making revenue but you're growing massively, you'll get more funding. You just will. Revenue doesn't really matter. However, if you're getting a lot of growth and there's no path to revenue that you can explain, then you have to have a good story for why, right? You can be a social media company and not looking to get any, you're just looking for growth, right? I mean, TikTok, who knows if they're profitable today, but I think everyone would agree there, the amount of money they spent on Facebook ads to grow their business was well worth all the money in the world. They basically stole Facebook's market users. So yeah, I mean, growth solves our problems. So I'd focus more on that, but make sure you actually have that growth, because if you don't, then you need to have a revenue story and revenue then keeps you alive till you can get back to figuring out growth.

Yeah. Like velocity almost. It's like maybe you're not picking up customers, but like you're filing a lot of patents and like And the velocity of that is booming, and maybe it's a deep tech play. So the— but whatever it is, yeah, it's got to be making progress and traction. Okay, let's jump into another one, actually. Adam, all this talk of change and innovation in the future. What are some aspects in startup features process landscape you see staying the same? And what is your most memorable exit? And how? So there's kind of two questions, but yeah, totally.

I think the part that's staying the same is everyone likes to talk about AI, how it's changing everything. I don't think, maybe it's just a hot take, I don't think AI is changing things nearly as much as people imagine. It's still going to be the big change in our, the next 10 years there. I don't disagree with any of that. I just think it's not happening as fast at like the fundamental level. As people imagine. It's happening on the edges, but it's not like, oh man, I'm going to build a new CRM with AI and it's going to dethrone Salesforce tomorrow. I'm like, that's just not happening. Kind of the same thing that happened in crypto. People are like, oh, crypto is going to change the world. And I don't know, let me know when you found a crypto use case that is really differentiated in building something that couldn't be built with standard databases. So I don't think that's changing a ton. I do think what's starting to change, or maybe say the same, is you still need to run. I mean, this is my own bias. You still need to run your company. You just need to figure out how to hire great people, build a great team, recruit people, figure out how to use the, yes, sometimes new tools, but how to build go-to-market that changes frequently. It's certainly, you can't do the same go-to-market motion that you did 10 years ago, but it's also not changing dramatically. You just need to be constantly innovating. Most memorable exit. That's a good one. How do I celebrate? Probably the most memorable actually was speaking of the Diamond Foundry as an example. We sold, we had an opportunity to do an insider sale. We sold a third of our stake in it, and that paid back and a little bit extra the entire amount invested in my first fund. So we have two-thirds of that still riding, but it paid back. The fund is fully now in the money, which is great. So that was probably the most fun one. And how do we celebrate? I don't know. I didn't do anything special. I don't know, that might sound weird, but I don't do investing, nor do I even run my startup for the money part, or like, and that's the win, or the company's exiting. I do it because I want to help the startup founders be successful. I do it because I think I'm building something great with what I'm doing at Levy, and that brings me joy on a daily basis, and I can otherwise fund my day-to-day life. That's, that's arguably why anyone should do anything in life, but certainly in the startup game, because it is tough.

Yeah, maybe just on AI, like I would add, I was talking to a CTO of like a unicorn and they were talking about how like from their perspective, because they asked like, is AI disrupting everything? And they said, hey, we used to look at AI as just a feature. And that feature is really popular right now, and everyone wants to add that feature. But fundamentally, in the entire tech stack, it's really just a feature. And then another thing, like, if you're interested, OpenAI has kind of talked about their roadmap for achieving AI, and it's like level 1 to 5. And so, like, I definitely recommend reading up on it because it's like, like, as an example, level 1, AI can interact in conversational language with people. That's kind of where we're at. Near future would be level 2, reasoner. So AI systems can perform basic problem-solving tasks comparable to like a doctorate-level human. And then like level 3, agents. AI systems can operate autonomously on the user's behalf for several days, which like, that would be the best, especially if it was like a robot that could help you out, do the dishes. Then level 4, innovator. So AI systems that can develop innovations independently. So that's like writing their own apps, writing their own scripts. And this is where quantum is actually heading right now. And then like level 5 organization. So like AI capable performing the work of literally an entire organization. And if you really want to get scared, like if you research into quantum and where that's basically going with AI, just as like a quick snapshot, it's like AI will not only start to write the apps, but it'll start to write the operating software. But like on your phone, your operating software continually gets slower and slower, it gets filled up with memory, whereas with quantum, it'll just get faster and faster and smarter and smarter. And then to the point that it hypothetically can solve any problem that you throw at it, which is almost impossible to fathom sometimes. Okay, actually, let's get into another question before we start getting into, uh, too much theory. Okay, Adam, I received the positive feedback from investors early on, but it wasn't fundable yet. With my MVP launching in 2 months, how can I keep these investors engaged and maintain momentum? This is a great question.

Yeah, Johan, great question. Uh, agreed on the question part, Jordan. Um, uh, yeah, I mean, I would be sending monthly updates I mean, when I've gone and judged at different events, the founders there ask me, hey, can I put you on our newsletter update list, keep you updated where we are in our progress, things like that. I would put all the investors that I have on a newsletter update and say, hey, here's our status, here's our progress, here's what we're doing. And truthfully treat it like they are actually investors, like send pros, cons, outlines, status, all that stuff, at least whatever you're comfortable with. I would share with them and make sure they know what's happening when. So yeah, just don't be scared of keeping them updated on a really regular basis.

And just doubling down on that, like the structure of an update, like what's some of the best updates that you've seen and kind of that structure and how it breaks down, like everything from like the subject line to like the very beginning. Like, and I'll just give you an example, like A lot of investors apparently so busy that like they literally want a summary of what your business does, like at the very, very top, because they don't know it. But are there things that you see that like have just— you remember them, you actually go out of your way to read them?

Uh, sometimes if obviously the company's been memorable, I, I try to do that for sure. Um, and try to read it just because I find it more interesting. Um, otherwise the big one I focus on is just like, what is the key executive update, right? Remember People are either busy or lazy or both. So keep your summary. What do you want to read? Right? I mean, how much time do all of us right now have time to focus on anything? We all are multitasking probably right now. And how do you multitask? How do you keep things really focused and short to the point? Like, big update, got this done. Big update, launched this blog post about what we're doing. New change, this. Hired a great new person. You name it, put it in one sentence or less, keep it super, super, super short. And then the rest is in the details.

And then maybe just to follow up too, because this is really important, have you seen them? Because you see a lot of investor updates. Have you seen the rise of different apps and tools to kind of automatically do the investor update?

I've seen the rise of it also the fall, maybe. I don't think any of them have taken off. And I think the main reason is the end is like, it's not that big of a problem. The default is email. It's still email. I don't think email will ever be dethroned. So it's just make it simple, straight, easy to the point. I sometimes like to do, I mean, I think probably the best one would sort of be have a really short summary email with some links to a Notion page where you can get in far more depth. Like here are the key 4 bullet points of what's going on. If you wanna read the details of what's happening, click here. And it goes to a better formatted Notion page.

Yeah. Very cool.

Okay.

Actually maybe another question here if we still have, so what do you think are the most essential processes or needs when it comes to operations for startups? So this could be tools, this could be just like Scrum styles, all sorts of different things.

Yeah. Gabrielle, thank you for asking a question that's close to my heart. So yeah, I mean, look, so, so once again, it depends a lot on what you mean by operations for sure. I'm biased towards back office ones. So you need to get a payroll system in place. So I do something like Agusto or Rippling. You need to have basic bookkeeping and accounting. So get a bookkeeper accountant and they will run everything on QuickBooks. I'd get my equity set up and running on something like a Poly or Carta or AngelList. Those are kind of the main back office ones that are important. There's a bunch of other sort of secondary ones that can be relevant. Other tools, those are like the key tools. You need someone to manage it. It's what we do. So if you're ready, hire us. But otherwise, the founder can do the very basics certainly, but I wouldn't spend a lot of my time on it and managing it. And then other tools, right? Like, you know, like Linear is great if you want to track the work your engineering team's doing. I'd outsource as much as possible. The fewer hires you have, the better. Fractionalize everything. That is the future of startups. So be really good at figuring out what talent looks like and hiring that and managing that talent without them being full-time.

I just put a link in. Hold on. I think I put it in the Q&A here. A link there where you can work with Levy for those.

Thank you.

Um, okay, let's pull up another question here. We have time for a couple more here. So as an angel investor, would you invest in an Algerian, so North African startup, um, if you find their growth rate worth it?

Short answer is yeah, for sure. I certainly, like, I'm sure there are some people who have weird biases. Um, one of the mantras that we have at Levy is meritocracy. I couldn't care less where someone is in the world. We hire a global team, global remote. We hire the best we can hire anywhere in the world because I think talent is everywhere. Um, that's me. With that said, there are a lot of functional reasons to make it more difficult to invest outside of the United States for me. Uh, one is it's just way harder to do diligence on it. Number two, it's way harder to get further funding rounds. So money unfortunately gets money. If you raise money, it helps you get to your next step, which will help you get to your next fundraise. And those things just build on each other. So there is a real upside in being able to be in a place you can get more money. Finally, talent. Like, yes, there's a global talent pool, but there's also a lot of value in getting great people in the US. So I'm with my biases sort of known. I would say find a way to keep maybe your headquarters team, everything else in Algeria, but then move yourself to the Bay Area. Yes, it's way more expensive. That is a real cost of doing business, but you're going to be here. I'd make the company itself a Delaware C-Corp. It's going to make it way easier for investors to invest. Great, Delaware C-Corp. Oh, amazing. You have an amazing team in Algeria. They're 70% lower cost probably than people in the US, and they're amazing. And you have that, you know where to hire and how to get that talent. That's an edge that you have over all the other American companies. That's a huge, that's a really big win. So you can play that game a little bit more, but if you're not based in the US, um, in a Delaware C-Corp, it does make it a bit harder irrespective of your growth rate. Your growth rate just has to be like that much better to overcome those hurdles.

Yeah, I would agree. I mean, a lot of the, some of the fastest African-based startups that we've seen have followed that model. You see that their, their team's still in Africa. The founders or the executives, uh, come to North America to kind of set up to get close to investors. And then, um, yeah, either do a Delaware C-Corp or somewhere else, and then just try and scale as quickly as possible and really use the connections that they're building in North America to assist the startup that they're building. Um, okay, we'll do a couple more here. So maybe, actually, if you have any What is the best way to reach investors through email if you do not know the investors? So this is kind of cold email. What's your thoughts on it?

Yeah. And Jeffrey, I hope CooperSoft is named after yourself. That's dope. Anyways, the best way to reach investors, kind of a few things. I mean, one, you can set up a full cold drip email campaign. You'll get some, but it's tough, just like it is tough to get a drip. I mean, how many emails do you open from random people trying to sell you random products right now? Or how many ads do you click on when you're on social media or something? So it's tough. I think the better way to do it is to try to find connections that you share. That's number one. Number two, if it's still— you don't have a lot of connections, like, hey, like, I don't have those connections. You said you're in the DMV, so DC, Maryland, Virginia area, I assume. Start going to the events that are out there. Start going to the founder events. There's going to be VCs there. Start to meet them, sit down and chat with them. Come out to San Francisco on a regular basis. There's literally multiple events here every single night. I used to go when I was younger. I used to go to events every single night, and I built a huge network. I mean, like, I'm not like— hopefully it's not like bragging— like, I'm friends with a lot of people that are like pretty famous now. But I've been here 14 years and I went to all those events when none of us were anything. That lead, that network effect is really powerful, but you need to be out here to be a part of it. Or once in DC has some of that, New York has more. I would just start going to events and building those networks. It can be really powerful, not just from investing purposes, but also just generally to build a company and find co-founders, you name it.

No, and that's really important advice because I think, I mean, like, We've seen founders get like super creative on email where it's like, you know, they're using tools so that they can do like video, customized videos and like put it in the email. And then what you realize is that like the investors actually don't want to even open those because they don't know if it's going to give a virus or something like that. So they're almost afraid of it. Whereas, you know, the, the sometimes the best luck that we've seen is like by going out, getting out of the building, meeting other people, finding like these super connectors. Who can set up at least a couple meetings. And then once you get a couple meetings, like a lot of times if the follow-through at the end of the meeting is like a domino where it's like, hey, do you know anyone else you could introduce us to? Then it kind of starts to open a lot of doors and the momentum just keeps on picking up.

Yeah. I mean, I'll give you another example there actually on like literally exactly that, even for myself, um, a company that, so I was, my, my fund was an investor in this company. We got to know them, their founding team, really well. One of their founders left. He then went to a different company, worked with him more there. Then he went to a different company, and now he's crushing it with his new company that he is the sole founder of. And we were chatting, and I'm like, hey, can you help me with your network? Because he happens to actually be a super connector. And because we've spent 3 different companies getting to know each other, he made 15 different intros for me. To people who I definitely didn't know who are great for me to know for my company. Like literally just, I got 15 text messages making intros for me to people which have all led to 15 different calls. And you know, you just build relationships with people. I've never, by the way, met him in person once. I think he's coming to San Francisco in a month, so I will finally meet him, but never met.

That's incredible. Okay. Maybe we'll just end it there. Cause it's so good. So before you go though, I think Well, it's obviously Levy, the Entrepreneurial Excellence podcast. Definitely people check those out. But is there any like parting advice or anything that you want to plug? This camera, this camera, this camera. Tell us what you want.

Yeah, no worries. Look, it's really hard being a founder. Work hard, decide you want to be obsessed with what you're doing. Do it for that reason. There are going to be so many different hard days that will occur. Your chances of success are pretty small, right? Like 90% of startups fail. So you have to be open to that, ready for that, and almost excited for that. Like, obviously you don't want to fail, but if you do fail, you're hopefully going to learn a ton and jump back up and get back up again and go do it again and again and again. I mean, the guy I was talking to today and interviewing for my podcast, he's done 5 different startups. I think he raised $50 million in 1998 or something, which was a long time ago for pretty much everyone on this call probably. But he was on the COVID of some major magazines. Guess what? Company sold for pennies because the whole world fell apart. He picked himself back up. He started a bunch of other companies since then and been very successful. But it was hard. He was like, literally, I was— he didn't quite say it this way, but basically depressed. And it took him his wife and a bunch of time to get out of that funk. It's really tough. So be prepared for that journey, but be obsessed and be like, I know the world needs to— what I'm building, the world needs, and therefore I'm willing to give it my all to make it happen. So those are my words of advice. Also try to have a little bit of work-life balance to some extent. I guess one other piece I will add on that front, I tend to believe you can only do two things really well in life. So if one of them is your startup, presumably it is for all of you on this call. That's one. Choose the other that you can do well, be it your friends, be it your family, be it a hobby, you name it. But you probably can't do all three. So for me personally, I have good friends, I get to see them somewhat, but my life is basically work and my family, and that's the large majority. I mean, like, I'm gonna go do family stuff pretty soon, 6 o'clock here, uh, and then I'm gonna get back on my computer and do emails until I get too tired and need to go to sleep.

So you're still doing it yourself?

Still doing it a lot of myself.

Shortcuts?

There's no shortcuts. I'm trying to continue to grow my team so I can get out of some of it, but I don't think you ever fully do. You know, there's the founders of the biggest companies in the world work nonstop, probably harder than most people on their teams. That's just what it takes in many cases, not always, but in many cases what it takes in that willingness and drive to jump into the hardest problems that exist. And figure it out.

No, that's great advice. Okay, everyone on the bottom right, there's like the little reaction button. So huge round of applause for Adam. Thank you. However you guys want to— yeah, there we go. Nice. Some hearts. Love it. Amazing.

And by the way, get in touch. I like— I can't always promise to respond to people, but if you put me a note on LinkedIn or something and say like you heard me speak at this event, that will help it maybe route to the right place and if I can be helpful, happy to do sort of like quick 15-minute calls and stuff with folks if I can be helpful.

Yeah, amazing. Okay, so 2-minute housekeeping before everyone goes into the other room. So this is the conclusion of the formal presentation portion, but then we're going to move into the open networking. So Adam, feel free to drop off or stick around, whatever you want to do. But the So we'll all go back. So you'll see tables, you can pick a table and then you can join that table. I'll stick around for a little bit. Um, you'll also receive an email with a replay link so you can watch this webinar. Give us maybe kind of 48 hours. Uh, it is the last week of basically summer, um, it feels like. So it may take, um, maybe 3 days. And then to learn more about our programs, we put a link in the chat. You can see right there, there's a Linktree for Founder Institute. So if you want to take the Entrepreneur DNA test, if you want to apply and you can just learn more about our services. And then, yeah, that's it. So thank you for, for coming. I mean, we can't— the world needs more entrepreneurs, and it's a very difficult job, as I mentioned. So you just showing up, I think, helps the entrepreneurial ecosystem and the tech ecosystem. So big round of applause for you guys. I'm Jordan Jokis. Thanks again. And yeah, we'll go back and mentor into the networking room and then go from there. Adam, you're the best. Thank you. Thank you. What's your favorite restaurant in the Bay Area?

Oh man, that's like such a hard question. Foreign Cinema is delicious. I'm actually more partial to a lot of bakeries. Tartine's fantastic. I could go on and on and bias the Bay Area, but it's expensive, but for a good reason. Weather's great. People are really interesting and fascinating. Food's delicious.

So, and then when you're, when you're going to the coast, where are you going?

I mean, yesterday I was literally at Ocean Beach. Just, just literally, you can drive or bike there to the beach, which also makes San Francisco pretty amazing. So you're basically here all the time or drive up the coast, Marin, go down south, Santa Cruz, Santa Barbara, you name it. There's, California is a pretty special place. It has, has a lot of issues too, but it's a pretty special place.

Yeah, no, I get it. The— I like Half Moon Bay because of Mavericks. It's always so cool.

Half Moon Bay is also awesome. They're all great and all close by. I need to get out more often, frankly. I don't— as I mentioned, I work all the time. I don't really leave my home office. Mine is like biking around. I bike everywhere in San Francisco, which also is great. But yeah, so hope you all make it out here if you have a chance to. Drop me a note if I can be helpful. And yeah, as Jordan said, fight the good fight. The world runs on entrepreneurs. So I'm glad you're fighting it and make— going out there to build something amazing.

Amazing. Thank you everyone, and let's go network.