AMA with Founder Institute Silicon Valley HQ Team - 30 July 2020

Hey everybody, welcome to this Founder Institute webinar. My name is Jonathan Gritchen. I am a co-founder of the Founder Institute. Thank you all for joining, whether it's the evening or morning there as well. I know we probably have some people joining from across Asia, Australia, etc. So let us know where you're from in the chat. This is a 100% live event. All right, this is not pre-recorded. We're really here right now and we're here to answer your questions. Alright, so please, so already Christian Yepes, hopefully I'm pronouncing that correctly, Christian from Mexico, San Francisco, California. Let us know where you're from. Please don't be shy, alright? The whole value of doing these live webinars is so that we can interact with you and answer your questions, right? Otherwise you could just go to YouTube and watch a video or something. So we really do want to make this as interactive as possible. And this is great, Brownsville, Texas, Singapore, Chicago, Campbell, California, not too far away, Sydney, a little bit further, Washington, D.C. All right, so thanks everyone for joining. So here, here's how this is going to work, okay? I'm going to go through a quick presentation about the Founder Institute, try to keep it to about 10-15 minutes, and then after that, it's just an ask me anything session with myself and some other members of the Founder Institute headquarters team here who I'll introduce in a second. So whether you want to ask questions about the Founder Institute program itself, about entrepreneurship, venture capital, whatever, all right? That's hence the AMA, ask me anything, format. So please don't be shy. Whatever you want to ask, we're here. And you can ask them when I'm doing the presentation as well. We have a member of our team is in the chat and they'll be feeding the questions to us. Okay, so with that being said, why don't I introduce some of the other members of the team that are here? So hey, Mike, you want to go first?

Hi everyone, my name is Mike Superbici. I lead the Alumni Success Group at the Founder Institute, and our role is to help the Founder Institute alumni scale. So we basically help roughly over 4,500 companies, you know, and so there's a lot of things I've seen that work, a lot of things that I've seen that don't work. So that's, that's definitely some advice that I can provide you with. In a previous life, I was also a founder, raised money, went through the entire process that you're probably going through right now from zero to one.

So an FI grad.

And an FI grad. So I can share all of my experience across, you know, across the whole stack. So hopefully I can help in any way that I can.

Yeah.

All right. And then we also have Rachel Shepherd here. Hey, Rachel.

Hi, John. Hi, Mike. Hi, everyone. My name is Rachel Shepherd. I'm the Director of Global Marketing at Founder Institute. I'm calling in from the Bay Area today. I'm also the co-creator of the Female Founder Initiative, an opportunity for Founder Institute to help more women start companies around the world. And I'm excited to be here today to answer your questions. So thanks for joining us.

Awesome. All right. Well, thank you, Rachel and Mike, for joining. And please, as I said, throw any of the questions that you have into the chat, and we look forward to getting to them as soon as I'm done with this presentation. All right. So for the time being, I am going to share my screen here, and then we'll get started on the presentation. All right. Share screen. There we go. I'm sure it's really helpful that I'm narrating this to you guys, but okay. Cool. Alright, so again, welcome everybody. Talking about the Founder Institute today, and we're the world's largest pre-seed startup accelerator. We've been doing this since 2009. We're in a lot of cities. We've helped build a lot of very valuable companies, which really is kind of the thing that helps us, you know, get out of bed in the morning. It's the thing that we're most proud of, and we've done that over a lot of different cities and a lot of different countries. And this was started in 2009, so now over 11 years ago, because we— and it was started in Palo Alto, aka Silicon Valley. And we started it because we believe that entrepreneurs can make a real impact on society. We actually believe leveraging the market and using entrepreneurship to create change is one of the biggest catalysts for change in the world, especially with the way that global politics is right now and how things can be really, really slow to happen. So We started that in 2009 and it was mostly, we focused on this pre-seed stage, okay? We believe that most companies fail right out of the gate because they lack the expert feedback and they lack the focus that they need to get going. So we started this program to help these pre-seed founders and teams get to traction and funding, which we have found to sort of be those two first milestones that are hardest to get to for new companies. And we help, Companies do that in two main ways: through a devoted support network and through a structured growth process. So I've used the term pre-seed here a couple times, and it's a little bit of an industry term. So let me dive into a little bit of what that means. You could see here on this chart, and this is a common question that we get, people will say, you know, why should I do Founder Institute over Techstars or Y Combinator or 500 Startups? You know, there's a lot of these pre-seed accelerators no matter where you're joining in the world. And the quick answer to that is that you shouldn't. If you're able to get into a program like that, you're too far along for FI. Those are seed accelerators that work with companies that are a little bit further along than us. We are a pre-seed startup accelerator, so we work with founders, solo founders, some part-time founders, and teams that are too early for some of those programs, that are still kind of at this pre-traction and pre-professional funding, or at least a lot of professional funding. Stage. And in this pre-seed stage, you typically have 3 different types of applicants. On the earliest end of the spectrum, you're gonna have people in this really what you would call the idea stage, right? They may even still have a full-time job and probably even pre-incorporation. And then in the middle of the spectrum, you'll have people that are full-time on the business and they have a small team, but they're sort of at this prototype MVP, you know, really validation kind of stage. And then finally, at the latest end of the spectrum, you'll have a a full-time team that has a live product and maybe even has a little bit of growth revenue, et cetera, but still that they're, you know, they haven't gotten to that traction and funding step to really push the business forward. And obviously these are three pretty different groups of people or companies, right? And they all need different things. And as a result, it's not just like a one-size-fits-all thing at FI. The program actually bifurcates into two different tracks. So the Launch Track is for people at the earliest age, end of the spectrum, and that's going to focus you more on validating the business, you know, in some cases even figuring out if it's, if it's worth even building at all, right? Um, building out your team and actually figuring out the go-to-market. And then for the later stage people, they'll go into something that's known as the growth track, which is really going to hyperfocus them on getting to traction and funding. And, uh, this is the, uh, the Core FI program, which lasts 4 months, which is what most people, you know, identify as, you know, Founder Institute, uh, is really just the beginning of this Founder Institute lifecycle. After this core program, we built a number of structured post-programs totally free for FI alumni, um, to help you reach the next steps in, uh, in your business long after the 4-month core program ends. And also, uh, all alumni get access to the world's largest network of mentors, founders, um, and advisors around the world to help you keep growing again, long after that 4-month core program period. So we've been doing this since 2009, and we've helped a lot of awesome companies. You can learn more about them at fi.co/companies. The thing, at least for me, that I'm most proud of here is that it's not like we just have awesome companies that we've helped build in New York and Silicon Valley and London and Singapore and, you know, places like that. We have awesome companies on every single corner of the globe. If you want to learn more about some of them, check out fi.co/companies. All right, so I've talked a little bit here about, you know, what we are, and now let me talk about like how we do it, right? And it's pretty simple, and this has been our philosophy since, since day one at FI. We find great people, we give them a devoted support network, we put them through a very structured growth process, and then we give them a lifetime of support. So let me dig briefly into, into each of these so you have an idea of how FI actually works and our methodology. So first, we find great people. And if you think about it, you know, at the stage that we're working with companies at this pre-seed stage, if we're going to sit here and try to evaluate your idea in the application process or your business at such an early stage, it's sort of a fool's errand, okay? Even the most successful VCs in the world are wrong 90% of the time. Like, that's just the name of the game. So for us, we're less interested. We don't even require you to tell us what you're doing in the beginning of FI. We're more interested in learning more about you as the founder, because we know that the greatest variable in the success or failure of any early-stage startup is going to be the founder, okay? It's not going to be the idea, the market, or any of that kind of stuff, because ideas will always change. It's a journey, and those ideas will adjust over time in, you know, in response to whether it's the market feedback or expert feedback or whatever. So we're trying to find the right founders that we think can kind of see that journey through. And we've taken a very social science and data-heavy approach to this. We've been working with social scientists for— this actually predates the Founder Institute, before 2009— to build out this test, and it's known as our predictive admissions test, to find and then correlate the traits that make kind of these successful early-stage entrepreneurs. So I could talk about this for hours, and obviously this is something that a lot of people find pretty interesting. That's my co-founder, Adair Essie, there on the COVID of Entrepreneur Magazine. Our, our research has been published in a lot of different places, but you can learn more about the test at fi.co/dna. If you go to fi.co/admissions, there's actually some sample questions and things like that. But the whole point of this test is that we're really trying to remove a lot of bias and trying to find the best founders, uh, to go through our program. Okay, so after we find the best founders through social science testing, then we give them a really strong and devoted support network. So FI is going to give you in any cohort somewhere around 25 to 50 local CEO and founder mentors, and that's a very good, you know, ratio. And these mentors are there to share some best practices. You know, one of the prompts that we give them is like, what did you have to learn the hard way, right? How— what, what are the— some of those lessons that you can share with some of the founders? But more importantly, they're there to make sure that every single step of the process you sort of have the sounding board to get feedback, right, to help you interpret the data that you're collecting and all that kind of stuff. And a lot of programs have mentors. Obviously, this is not something that's new, but what is new with FI is that these mentors are invested in your success through something that we call the Equity Collective. So this is sort of the secret sauce, and I think kind of the, the thing that really pushes FI to the next level, in my opinion. Here's how it works. All right. So about halfway through the FI program, this is not something that you join right when you get into the core FI program. About halfway through the program, you will contribute 4% in warrants into an equity collective that FI manages for 15 years. So any financial returns to that collective, and just to be clear, this is not profit sharing, You know, you don't owe us any money or anything like that as part of this equity collective. Okay, this just means that in that 15-year period, if we receive money as a result of this equity, and that could be through an acquisition, an IPO, some kind of, you know, secondary stock offering or something like that, we then take that money and immediately distribute it evenly across your cohort. One quarter of it, or 1% of the, of the 4%, goes right back to the alumni of that cohort. So let's say that you graduate graduate the program with 10 companies total, right? That means that each— or 10 founders— that means each of the founders are gonna get 1/10 of the value of that. We actually cut you a check and it gives you financial upside in the other companies that you're going through the program with. The second 1% goes to the mentors. Now, with this, obviously, it incentivizes the mentors to work with you and all that kind of stuff, but it's not split evenly. So if you have 40 mentors, they don't get 1/40th of a percent. It actually is based off the anonymous ratings that they receive from you, the founders. So the more mentors help you, the more they go out of the way, the more they, you know, do office hours, the more they make introductions or any of that kind of stuff, the higher the ratings they get, the higher of that 1% allocation they'll get. The third 1% will go to your local leaders. These are the people that are running your local programs, essentially acting as advisors in your business. And finally, the last 1% comes to us here at Founder Institute headquarters. And that really is our business model. It's our main model for growth. And to be And honestly, it kind of keeps us in check for the long term because we need you to be successful for the biz, for our business to work, right? Us having that 1% is sort of what we, why we have all these post-programs and why we've built all these support networks for our alumni after the core FI program. So the whole point of this Equity Collective is for you to form a devoted support network to help you build out your business, not just for the 4-month period, but for the entire lifecycle the business. And at least in our opinion, it was like, okay, well, how do we do that? What's the most obvious way? And we've done this clearly through financial incentives, right? You are financially incentivized to work with the other founders in your cohort to help them be successful, for them to help you be successful. Uh, the mentors are financially incentivized to, to help you, and the same goes with your local leaders and with FI. So we're really trying to give you a strong support network for the life cycle of your company. You can learn more about the Equity Collective at fi.co/liquidity and obviously happy to answer any questions after this presentation. All right. So just as a summary, now we found really good people through social science testing. We've given them a really strong support network through the Equity Collective. Now finally, we're going to give you a really structured process. At least for me, something— I think a lack of focus is what kills a lot of companies, okay? In the beginning of a company, it's like a blank canvas. You can be working at 100 different things or on 100 different things at any given time. All the while, every minute that you're working on the wrong thing, you're one minute closer to death, right? You're one minute closer to running out of money. So we try to, with FI, take all of the, you know, uncertainty out of that and give you a very structured process. To build your business. It's, it's super structured, super sequential. Every single week we're going to be giving you very structured growth sprints to build out your business. Um, and not only are we going to make sure that you're focused and making progress through these very structured sprints, we're making sure that, uh, you have a sounding board of mentors every single step of the way to kind of be a check on, okay, am I doing this the right way? Am I making the right decisions, etc. And let me show you here, this is the latest version of our methodology. And as I mentioned before, just as a reminder, this is the Launch Track. So this is for people that are a little bit earlier stage, idea stage, MVP, that kind of thing. And this really is the track that focuses you on validation, team, go-to-market, right? So as you can see here in the top row, those are the 14 weekly feedback sessions that you're going to be taking part in. Each of those is focused on a specific topic where the mentors will be looking at your business and giving you ratings, etc. And then on the bottom, you can see the various growth sprints that we're going to be putting you through. Something I should mention, this is not homework, okay? This is things like going out there, gathering emails, testing features, closing sales, building your customer list, etc. And as you can see here, they're very structured and sequential. Like, the whole point is for us to stack your progress, right? So to make sure that you're not focusing on things that you should only focus on a month or two from now, you're stacking your progress to build out the business. And here's a look at the later stage track, which is the growth track, and obviously pretty similar. But if you start to look at a lot of the sprints here, it's focusing you on a lot more later stage stuff such as building out an advisory board, getting ready for your investor diligence and things like that. So obviously the world's changed just a tad. I think that's saying it lightly, but as a result of COVID obviously we've made some changes at FI. Every program in 2020 now, or starting in 2020, is 100% virtual around the world. And we're running more programs than we ever have in the history, the 11-year history of FI. Founder Institute. As a result of a lot of the financial hardships that we're seeing a lot of people have, we have reduced the course fees to every single program around the world. To increase the amount of interaction that you're having with mentors, your local leaders, and Founder Institute headquarters, you know, with, with this remote nature of the program, we've been adding a ton of tools like new office hours scheduling tools so that founders can connect with mentors on office hours. We're also doing a lot of AMAs with the Founders Institute headquarters. And, uh, and finally, just as a note, and this has been the case before COVID too, any FI grad can attend any session they want around the world in the future at any time. Okay, so for example, if you're in a city and you're like, hey, you know, maybe I should wait for the program to be in person, right? And to be honest, that's fine, but none of us really know when that's going to be, you could do the virtual program and you can still do— attend the in-person programs in the future as well. So you can learn more about how our virtual programs work at fi.co/virtual. And finally, we give you a lifetime of support. So as soon as you graduate FI, you get access to a ton of partner discounts, alumni groups, groups, the, the general support network. We have a grad support team at FI, and Mike is on the line, is the leader of that. And we basically got a graduate of FI to, to build out our grad support services, because who better to understand what they need, right? And, uh, finally, we have these Founder Lab programs. So very similar to the FI Core Program, the methodology is to give you a structured process and consistent feedback to reach some of the later stage milestones that you may have you have in your business. These are 100% free programs for FI alumni. Again, this is sort of where FI earns that 1%, so to speak, and, and that keeps us in check to make sure that we're helping you for the long haul. Um, and, uh, they've always been 100% virtual, so we've had experience running virtual programs for, for many years now, even, even before COVID And these are the 3 different Founder Lab programs that we have at the moment. So for people that are a little bit earlier, we have a Product Market Fit Lab that helps helps you get to product-market fit. Funding Lab is the program that we definitely get the most enrollment on and it's sort of our model program in this respect, and that helps you close your lead investor for your seed round. And then finally, we have something called Venture Lab, which is for later-stage companies, and that's helping them get to their Series A. All right, so before I finish here, this is always a caveat that I love to put in here, and I always love to quote here from Jason Calacanis, a fellow New York native like myself. The Founder Institute is really hard, okay? Like, we are not a founder fantasy camp, is sort of a term that we like to use. Like, we are here to help people that are ready, committed to put in the work that it takes to build a great business, okay? And if you're not ready to do that right now, then FI might not be for you. And the way that we like to put it is that FI is really hard because building a great business is much, much harder. So less than 40% of the people that start the FI program actually make it through, and this is by design. The program is a filter itself. Okay, the first filter is the admissions process. The second program is the program itself— or sorry, the second filter is the program itself. And to remain in the program, to make it through, it's It's pretty simple, right? Number 1, you have to keep up with all the growth sprints, which makes— which means that you have to keep up with the pace of the program. And number 2, you have to maintain good ratings from the mentors. So every single week, the mentors are going to be rating and reviewing what you're doing, the progress that you're making, decisions that you're making. And if the panel of mentors don't think that you're building something that's sustainable or that makes sense strategically, they're going to rate you low. The Founder Institute headquarters tracks all of our global programs on a global, basically, learning management system, and we see that, and then we essentially will give you what are known as these EPIC sprints, or we formerly used to call them special assignments, where, uh, so that you can fix some of the problems that the mentors are finding. And if you're able to fix those problems, then you stay in the program, and if you're not, you're asked to leave. Now, the good news is, is that honestly, if dropping out of the program, not making it through, is not the end of the world. Number one, you can enroll the next program, uh, you can roll over basically your course fee into the next program, and a lot of people do that. The program forces them to to really think critically, and they'll go back to the drawing board a little bit and come back next time even stronger. But also, if we can help you figure out that the business that you're trying to build, uh, doesn't make sense and it's not going to work, if we can help you do that with just a little bit of money and just a little bit of time versus a lot of money and years of time, then I see that as a success. And, um, you know, that, that's a large part of what FI does for a lot of idea stage founders. All right, so we do keep costs low at Founder Institute. There is a $25 application fee for the social science test, and that's because we incur a hard cost, but to be honest with you, it's very easy to avoid this fee. You can— it's free for any event attendee, and you'll receive an email after this event with the free link, and also it's free before the early admissions deadline in any city as well. And then there is a course fee to the program. I don't have the— oops, sorry— I don't have the exact course fee listed here because the course fee varies by city. The course fee essentially covers the hard cost that FI incurs, the break-even cost of running a program in your city. That course fee is 100% refundable, no questions asked, if you drop out before the third session of the program. Okay, so as soon as you enroll, immediately you get access to all of the growth sprints. You can get into the system, start working with it, and then we allow you to to take part in 2 sessions so that you meet the other people in your cohort, you meet a lot of the mentors, you meet the local leaders, et cetera. You see if FI is right for you. If it's not, drop out, no problem. If it is, stay in. And, uh, and as I mentioned before, it's— we've also reduced all of these course fees as a result of COVID All right, so that's it. Uh, just to recap, FI provides you with a devoted support network and a structured growth process to help you get to traction and funding. All right, so you all may be a little sick of hearing my voice now, so let me bring on some other voices and, uh, and we can get going. All right, so I am going to bring up the stuff. I see some questions in the chat, which is awesome. Keep them coming. We're, we're going to go through all of them. And let me just— sorry, I have way too many Way too many Chrome tabs open here. Where is the Chrome tab with the questions? All right. Anyway, does any— do any of you, Rachel or Mike, have anything to add on that while I'm sorting through my horribly organized desktop?

Nope. I think you covered everything we have to talk about. I would just say the one thing that I get asked a lot is, is, you know, what are the ways in which founders— what are some of the common reasons, I guess, founders drop out of the program was a question I get a lot from founders. So I can talk a little bit about that. Sometimes it's because, as John said, the program is really hard, and that's on purpose because running a company is really hard. And so that sometimes has something to do with it. But usually it breaks down into 3 categories, I would say, the first of which is Founders find out the idea is not valid, and so that the idea that they were working on or coming in on is not necessarily something they— that people are willing to pay for. Maybe the problem exists, but maybe they haven't quite found the solution for people to pay for just yet. The second is sometimes people find out that entrepreneurship is not for them, and that may be due to the pace of the program, but that may also be that just that's something they discover. And it's worth doing that before you put a lot of money and time and effort into building a company, which is, I think, a good reason why Founder Institute exists. And then the third is because life happens. As we all know, we're all experiencing a global pandemic, and there's things that are wildly outside of our control. So sometimes we see founders leave the program for that reason as well. So that's just a common question I get when I talk to founders. Hopefully that helps someone on the call today.

Yeah.

And, and also, as you, as you all could imagine, that we have a couple founders that will drop out right before that third session, right? Right before what we call the refund deadline, and that's fine, right? Like, that's, that's part of it. We want people to come in and see if it's right for them. So, all right, we got a ton of questions, so thank you everyone, keep them coming. I'm gonna start. So here's the first question. I'm gonna, I'm gonna try to divvy them out a little bit because I don't want us to all answer each question 3 different ways, right? Because that'll just take forever. So I'll give you some of these out. So, Mike, Anonymous is asking, for founders with a live product in the pre-seed stage, what's the difference between FI and YC?

Yeah, I mean, just it's traction, right? Right now, the average company that's getting into a Techstars/YC on average has raised, you know, somewhere between $500,000 to $750,000, sometimes even more, and they're using that as just extra validation, right? And again, the seed stage traction is pretty high. Like it's not uncommon for companies to have $20,000, $30,000, $40,000 a month recurring revenue growing at like 20% month over month. And you know, that doesn't mean that all of them are like that, right? There's, there's some on the lower end as well, and that's, that's fine. But you know, that's the main difference, right? At the pre-seed stage, it's largely, you know, founders working on an idea, pre-product market fit, trying to get customers and adoption and try to do that quickly, right? So at that point, it's a little bit different and that's a much wider range as John mentioned with that slide because you've got folks that are in the ideation phase, then you've got like folks that have a team and a product but they don't have any traction, right? And so that covers that entire pre-seed stage.

Cool. I'm gonna answer a question really quick. So Jack was asking, how do I find out the course fees for my location? So Jack, it's all over the website, fi.co/oc. Overview. It should be in a lot of the emails you've been receiving from us as well. And just to give everybody an idea of it, right now with COVID I believe the highest course fee we have worldwide now is $999 US, if I'm not mistaken. It used to be— well, we used to have, yeah, somewhere around $2,499 or $1,999 US, but we have cut those. Okay, so Rachel Sharayana is asking, if I have specific questions about my product or get stuck in a particular issue with my startup, will I get help from mentors on that?

Yes. And then, hi Sharanya, you and I just spoke on one of the founder calls earlier today.

So that's funny.

Yeah, yeah, great to be speaking with you again and thanks for joining us. But I can speak to this a bit. So if you have specific questions about your product or your company, you're absolutely getting feedback from mentors on that and also the local leaders. So you'll have an opportunity to to the local leaders, your group, so other founders as well, and mentors. I will say that a caveat I'll say with that is you have to be proactive about it. I don't think that you'll, you know, mentors aren't going in and sort of advising you without you coming to them and saying, hey, this is a problem I'm having. Same is true with the leaders. This is a problem I'm having. This is something I'm really stuck on. And our local leaders and our mentors have a ton of experience with product product development. And so if you need someone specific to talk to, there's, there's always somebody in that category that can help you and advise you on your next step and help you with your biggest challenge.

Yeah, another thing to talk about that as well is we have basically a tool into the— that's built into the entire curriculum for office hours and setting up office hours, right? And basically what mentors do is that they open up office hours and then you really easily go in and figure out a good time that works for you, and you basically get get a phone call, right? It's pretty cool. Like, you just hit a button, boom, and then we— you can kind of set it up. So it's all built into the entire system.

Yeah. And something just to piggyback off that, um, our mentors, a lot of them are busy people, all right? So, um, and Rachel was sort of alluding to this, it's not, um, we have— there's no like buddy system. This is a common question I get, right? We don't say like, okay, this person, here's your mentor, right? The mentors are— you have to be proactive. Right? The mentors are going to resonate more and be attracted more to certain types of businesses, certain founders, etc. So that is something, you know, we give you that opportunity, we open the door, but the founders definitely need to walk through it. And that's just the nature of the mentors that we try to get, right? They're not like university professors or something, like they're there to do interesting things and they're going to be attracted to different types of business ideas. So Really quick, I just saw Ali saying, "You don't have a program in Vancouver, Canada." We do have a program in Vancouver, Canada, Ali. You can see that. If you want to see all of our programs, go to fi.co/global. You'll get a nice little map box there where you can click on anything. Okay, so let's see.

The Vancouver program is actually called Western Canada at the moment, which may seem a little confusing, just in case that helps.

Yes, that's, that's a good point. We are calling it Western Canada. Some of the programs, now that we're virtual, you know, obviously we're trying to cast a little bit of a wider net to help more people. So another thing on the mentors, and I'll answer this one really quick too. Priyash was asking, is it possible to learn more about them that we'll be working with? Go to fi.co/mentors, Priyash. You can, you can see all the mentors for, for your local program. Okay, so costs, and maybe I'll throw this one to you, Mike. Mike does— Mike runs our local, or local, our global Silicon Valley chapter. You know, local, global, all those definitions have been muddied in the time of COVID But Mike, Jean is asking, should I set a budget for research assignments, etc., that I'll be doing during during the program?

Yeah, I mean, definitely. I can't speak specifically to your particular business, but look, you're gonna be testing a lot of different things. So let's say you're like a consumer-facing company, you're gonna be running ads to test in various different landing pages to figure out where you're gonna get traction with what type of customer archetype and things like that. Everything that you do is all practical, right? There's no theory here, there's no school, there's— you're like basically building your business, right? And so with that, you're gonna have to probably spend some money at some point to get some kind of customer acquisition. And especially right now when everything is virtual, you do have to do that, right? You can't just like go around knocking on doors in most places. Not, you know, there's definitely some places that have done a lot better job with this than others, but it's just harder to kind of just go in and meet people, right? And so there's definitely that, you know, you're gonna incorporate a company if you haven't done so already. And so there's gonna be costs associated with that as well because, you know, you're not a founder if you don't have a company, so you're definitely gonna do that too. And so, yeah, those are probably like the main costs at this point.

Yeah, starting and building a company costs money, right? And it's, again, it's not money you're paying to FI, right? It's just like we're trying to help you do it faster and more efficiently, and we have service provider partners. Most chapters will have a legal partner as well that either will do discounted or deferred costs and that kind of stuff to help. But, um, but yes, building a company that does will cost some money, right? Whether, and again, it could depend on the type of company, your skill set, whether it's marketing, hosting, design, you know, whatever, right? Uh, all right. So let me go through some of these other ones. So Rachel, uh, Martin and Hannah are asking, is it possible to network with other founders and mentors? From other cities and also from past cohorts?

Yeah, so regarding the mentors, as Mike said, we have the office hours tool built into the program, so that can really help you network with mentors outside of your specific program. And regarding mentor— or networking with other people, you know, across markets, if you will, with grads and alumni, I would highly recommend it. Again, something you need to be proactive about, but There are a lot of people on LinkedIn who write about their experience. A lot of grads write about their experience on LinkedIn and share, you know, everything from exactly how hard it is to exactly how much work they had to do and how far along their company came. So a lot of people are really proactive about that. And then you do have an opportunity to do a lot of networking within your program specifically, but I would say that after the program, you'll have a lot of opportunity to network with people on a global scale as well. Mentors, alumni. We have big alumni groups that we help manage, and you have access to lots of people. There is no lack of networking nor feedback in the Founder Institute program, I can promise you that. I don't know if you guys have anything to add.

I think a lot of people don't— they devalue, so to speak, the value of networking with other founders. Obviously the mentors, some of them are big names, that kind of stuff. People are like, oh, I wanna meet this person, I wanna meet this person, right? But having the ability to work with other founders that are at a similar stage is pretty damn important because they are really, you know, they're going through a lot of the same issues that you're going through and you can grow along with them and learn with them. And I think a lot of people really devalue that. Would you agree with that, Mike?

Yeah, I mean, some of the best people, the most helpful people, are people that are not famous, actually. And not super famous, right? Because just their effect on their time, the ability to get their time, right, it's just harder, right? And so they're gonna be harder to get things done with. But a lot of folks that are not as famous but equally as helpful and as important and like to stay under the radar can be very, very helpful. And, you know, quite a few of them are our founders' student mentors.

Yeah, and I would, even outside of FI Everyone, I would recommend that, like, if you want to try to find advisors or personal mentors, that kind of stuff, don't always go to, like, you know, the name-brand people. As Mike said, they're not going to have as much time and they're probably just not going to be able to be as helpful in a lot of cases, right? Like, I would— yeah, you can find a lot of useful people to help your business and they don't have to be famous and on CNN and all that kind of stuff, right?

I would add too that it depends on where you're located, Martin and Hannah. I know you guys both asked this question, but some of our programs have been around for 10 years and very close to the amount of time we've been around, right? And, and so they have very large networks, and the local leaders who run some of these programs are very passionate about helping startups, and they're networkers. That's what they do. They know a lot of people in the startup ecosystem. And so if there's more established— the program's a little bit older— there may be groups on LinkedIn and Facebook, for example, and more opportunities to continue to network prior to even your program starting.

Okay, so we have— we got a lot of questions. Keep them coming. I think let's all speed it up a little bit, all right? And I'm not pointing fingers, I'm just saying let's speed it up because we got a ton, a ton of questions. So, all right, let's see here. So Rachel, this one, as kind of the champion of the Female Founder Initiative, Marley's asking asking through Female Founder Initiative and also the Black American Founder Fellowship, something that we just released yesterday, so I'm happy that that's being mentioned. Does the program differ at all, or is it exactly the same?

The program itself through Founder Institute is exactly the same. What's important is that we're trying to build support structures around the initiatives and try to diversify the technology as a whole on a global scale. That's our, that's our goal. And so we're here to support as we can and help make introductions to mentors and do whatever we can to help you be successful. But the program itself will be exactly the same.

On the fundraising front, so Mike, I'll throw this one to you. Is, does not having an impressive background, you know, in parentheses here, being an alumni from a top school, etc., impact your pitch when pitching to seed investors?

Not really. It doesn't— that doesn't matter. So first of all, as a general rule, traction solves everything.

Yeah.

Okay, so if you have traction, it doesn't matter. Nothing matters, right?

Yeah, if you could be a Harvard, you know, summa cum laude, if you don't have traction—

But then there's this other concept of founder-market fit, Okay, so if you are attacking a market that you're uniquely qualified to operate well in, then that actually really helps with your pitch, right? And part of the process of going through FI is that level of alignment. Is this something that you want to do for like the next 10, 15 years of your life? Is this a market that you want to— are uniquely qualified to solve this problem, or should you be working on a different idea, right? But generally not really. What matters more again is your execution.

Yeah, entrepreneurship is definitely a meritocracy when it comes to, you know, it's more of a meritocracy when it comes to like looking at where you went to school and that kind of stuff. If you can show traction, doesn't matter if you even have a high school degree, right? Like you got traction. So let's see here. Alfonso is asking, can FI guide me on how to pivot or determine the best route to gain traction? I don't know, Rachel or Mike.

Yeah, I'll take that one. So what you're going to be doing is you're going to be pitching your business in front of a panel of mentors on a regular basis several times during the cohort, and you're going to be getting feedback again from a panel of mentors, and you're going to be, you know, be able to dissect that and figure out kind of where to go as a next step. So that's number one. Number two, There's office hours there that are available where, you know, people like myself and things like that can help you kind of guide you with the what you want to do next.

Brian, I think it says Brain, maybe, maybe your name is Brain, but I'm assuming it's Brian. Either way, Brian's asking what makes the program really hard. Rachel, what do you think about that?

I think what makes the program really hard is the I think the speed, at least that's what we hear a lot from founders, the speed is really quick. You're meeting weekly, but that really only gives you 6 days in between each meeting to make a lot of progress on your company. And as Mike mentioned earlier, like we're not giving you busywork, we're giving you work to do on your company. And you have to make a lot of progress really quickly. And sometimes people are also managing full-time jobs and other things like that in addition to the program. So I think that's what makes it hard the most is speed. And I would say second is that it's because it really does reflect what it's like to run and operate a company, which is just plain hard. But as somebody said in the chat earlier, I think you guys can handle it if you're determined to start and launch a really good company and a company that matters and you're dedicated to the solution.

Yeah, and speed is one of the few advantages you have as a startup. And then that's why we really, really focus on that because you have to move fast. Otherwise, you know, you're sort of trying to compete on a level playing field with big bureaucratic companies. So let's see here. Brian was asking, what's the average age of people who go through the program? What would you think of older individuals with over 30 years experience in various industries? I'll take that one really quick. So Brian, and to be honest with you, this data point's fairly outdated. The last time that we did look at it, the average age of an FI founder was 34 years old. That's— and again, that probably was, I don't know, maybe 4 or 5 years ago. So, but generally speaking, I think it still holds a little bit true. Now, when I say average, we operate in a lot of different markets, right? So certain markets Markets, it's like very young, other markets it's older. So, but for sure, I guess the point I would have here is that we're definitely, we definitely differ from a lot of other accelerator programs whose strategy is sort of like pluck people right out, right out of college or something like that. That's definitely not a strategy of ours, like the social science admissions that we use tries to remove a lot of bias, whether it's age bias, location bias, idea bias, you know, or whatever. So, uh, Hi is asking, if I, if I want to found a new business but I don't want to seek funding, uh, is FI right? Is FI right for me?

Yeah, totally. Uh, we have a lot of— there's a lot of companies that have gone down this route, and that's perfectly okay. FI accommodates that just great. And And if you think about it, we operate in areas where there's just not that much funding available, and like new ecosystems where there's just very limited amount of capital. And in those cases, the entrepreneurs basically bootstrap their business. So we're set up to handle that. And most companies do take this route anyway. They bootstrap for a little while or for a long time, get to product-market fit, and then they end up raising more money. And taking their business to a whole nother level. So yeah, F5 can support that.

And that, that's the right way to do it too. Bootstrap as long as you can, um, because you may not need to raise funding, or at the very least you'll, you'll create metrics that will help you raise funding. Um, so let's see here. Um, Will is asking, does F5 provide training for founders on, on actually the building aspect, web mobile applications, uh, development, uh, and all that kind of stuff. Yeah.

So we have a product, we have a product session, but we basically, uh, enable you to meet with various mentors that can help you with various different aspects of that. In addition to that, we have another post-program called Product Fit Lab that's like kind of designed to get your product, uh, several iterations done of your product. And many of the people that finished the program, actually majority of the people that finish the Product Fit Lab have basically are generating revenue from their, you know, from their product. So this is if you have no product, right? That's essentially what that's for. But then you have a resource, a bunch of resources of mentors that can help guide you through that process, and generally your local leader teams are very experienced in this front as well.

Okay, people are asking here about doing it with a full-time job. I have thoughts on that, but I don't know, Rachel, maybe do you want to jump in on that one?

Sure, it's, uh, it's possible. Um, although as we mentioned, Founder Institute is hard and it moves fast. You still have to do probably a minimum of 20 hours of work a week, and that may go up from there depending on how much work you have to do to keep up with the pace of the program and to continue to grow your business and and move quickly as a founder. So I would say it's possible, and we're definitely designed as such. So the sessions will happen in the evenings so that you can accommodate your full-time job. But it is tough. I wouldn't— I want to make that clear, and we usually do.

So yeah, and it's a lot of long nights and weekends. But what I always tell people is like, look, you'll show up to the sessions and your eyes may be a little bit more bloodshot that, but you can also like show the other people the paycheck that you have, right? Like, so it's, it's a trade-off, right? Like, um, some of the other people will be full-time, uh, but, but you have the comfort of a consistent paycheck. And again, you know, this is, you're going to build some sort of a side hustle in this project. It's going to be long nights and weekends with or without FI. We just try to help do it a little bit more efficiently and faster. Um, So let's see here. And thank you, everybody. Keep the questions coming. This is great. Honestly, the worst things with these webinars is when it's a quiet room and there's no questions, and then I have to like try to sit here and entertain people. And that's not my forte. So thank you for the questions.

Keep them coming.

So let's see here. How does the group engagement work? Ibphissim, and I probably butchered that, and I'm sorry. How does the group engagement work? And just to provide a little context for everybody, we put people into what are known as working groups in the FI program, which are groups of other founders in your cohort, you know, typically either in a similar stage or similar type of business sector, etc., so that you can sort of share some resources as you're building out out the business.

Yes, you meet with your working group twice a week, and this is a really great opportunity not only to meet new people and network, and there's several questions in here about like building co-founders, founding teams, things like that. This is also another good opportunity for you to meet a lot of really interesting people, and you know, you do that twice a week, and you're gonna be practicing your pitch, you're gonna be going over whatever challenges you have. Think of it kind of like your mini board meeting that you have twice a week essentially, with some pretty high, pretty smart individuals because they're in the program and they can help you quite a bit with various different forms of experience.

Yep, I'm gonna go through here and pick off a couple really quick ones that I can, that I can tackle here. Just, I have a lot of questions and I'm just going to try to bust through them. Okay, so really quick, Ashok, or Ashok, is asking pros and cons of an LLC versus a C-Corp when forming a company. So Ashok, and for everybody, this is very US-centric company, but nobody's going to invest in an LLC. It's very hard to issue new shares in an LLC. This is the cheapest, I think it's the cheapest form of corporation you can create in the United States. It's something you can go online and get it done in like a week for a couple hundred dollars, right? So Delaware C-Corp really is the goal. Standard. And, you know, with any investor, for example, they're looking to de-risk their investment, and kind of a quick way for them to see that is your corporate structure. C-corp is the standard there. So some of this other stuff— would a real estate startup work in this program? Yes, Scott. So I guess that kind of gets to the types of businesses. We have dog food companies that have come through FII. FI, right? I wouldn't necessarily call a dog food company a tech company. Like most venture and startup organizations, we look for companies that can scale through technology. So a dog food company could scale through technology through e-commerce and different, you know, supply chains and things like that, right? Even though it's not necessarily a tech company. So if you're a real estate company, I mean, if you're out there trying to sell houses like a real estate agent, not going to be a fit for FI or most or any investment, venture investment, or anything like that. But if it's something that can scale through technology, even real estate or virtually any different type of business is a fit. And honestly, if you're not a fit for FI and you apply, it's something that maybe you won't know it in the admissions process, because we don't necessarily dive too deep into what you're doing, but you'll certainly learn it within the first 2 sessions of the program. It'll become very clear to you. Okay, so can I— so the co-founder front, and Mike, you dove into this a little bit, um, a bunch of questions on co-founders. So can I find a co-founder through the FI Network? Raju asked, Sharian is asking, are we— we're two co-founders, can we join together? Um, Michael's asking, how do you help? Uh, you know, so just let's, let's both— let's all collectively try to attack this co-founder thing. As a whole.

Yeah, so, so look, um, as John mentioned, um, only about 40% of the people that joined the program end up finishing, right? So a lot of the 60% that drop out, that doesn't mean that they're like not good. It's just that means that they probably realize that this is not a business that they want to run for the next 15 to 20 years of their life, right? And this is not what they want to dedicate their life to, and that's okay. But they still want to be part of a startup, and so that's a really, really good opportunity for you to basically try to engage them, try to get them to work with you on your project and things like that. And that happens all the time, literally all the time, where we see founding teams being created as a result of this process, right? On the other foot, on the flip side of that, teams join in as well, and Founder Institute handles that as well. And it's actually pretty cool if you have a team because basically what we do is we put each team member in a different working group, This is why they— and they get maximum amount of feedback, right, from two different things. So you're able to do a lot. So there's a lot of benefits as a result of that as well.

I would add too that we don't match co-founders. So as Mike said, a lot of it happens kind of organically. And we're not going to— we may make a suggestion if we see a good fit, but we're certainly not going to match people in a very structured way because Because frankly, being a co-founder is a very, you know, that's a very strategic relationship. You should have some real say and take the time to find the right person who complements your skill set. Otherwise, if you're building this company with somebody for 10 to 15 years, it's a big chunk of your life you're spending with a person who you should have a say over who that person is, not us. So some of it happens organically, but we are not doing formal matching.

Yeah, it's not— you never want to force the co-founder relationships. Now, a lot of them will happen naturally. We're putting a lot of smart, motivated people that want to build businesses together. Um, our most valuable company that's come through FI, Udemy, those two founders actually met in the program. They didn't come together, they just naturally met. And, you know, it happens fairly often. But again, it's not the design of the program because, again, it's not like, okay, it's week 2, team up, right? Like, that would be a terrible, terrible idea. But it happens naturally, whether it's founders in the program, mentors, even some local leaders have joined some of the founder teams. So some of the other stuff here too, just really quick. Angela's asking, can I join F5 without a team? So yes, Angela, we take solo founders, we take teams alike. If you do join as a team, there is bulk pricing essentially, right? So if you join as 4 people, like the per-person cost goes down, right? Just kind of common sense. But it also— and this is a common question I get— they're like, if you join with 4 people, does that mean that it's 16% into the Equity Collective? No, the Equity Collective is by company, and you're not required to join with every member of your team. You know, we sort of leave that up to you. What we always tell people is like, just have everybody apply and see what your options are, then we can go from there. If one person gets accepted, that doesn't mean the whole team's accepted. If one person's rejected, that doesn't mean the whole team's rejected. Okay, so we're— let's, let me try to group some of these other ones in here too. Privacy. Are privacy protections in place to protect the company data? As Arjun, Jack, you know, confidentiality, NDAs, right? So what is your opinion on that? I think those kind of dovetail nicely. I have a very strong opinion on this, but do one of you guys want to jump in? No?

Yes, I mean, every mentor signs an NDA, every founder signs an NDA. I mean, it's all part of the process, okay? And we try to take that very serious. That being said, you know, people are not gonna steal your idea, right? Because is if you think about it, it doesn't take that much work to come up with an idea. You know, you're just like, I got an idea. All the work, like 99.99999% of the work is in the execution of it, right? And that's where the rubber meets the road, right? Because a person might be like, oh, this is a great idea, let me go ahead and try to do it. And then they're like, I don't want to spend the next 20 years of my life doing this, right? And they're not going to execute on it, right? This is how you want it So, but if you are the person that is gonna put the effort into doing it, then you deserve to win. And if the other person is the person that wants to put the 20 years in instead of you, or 15 or 10, whatever it is, then they deserve to win, right? So that's more or less how this goes.

Yeah, there's very few quote unquote unique ideas. All the value is created by the founder and the execution. And yes, as Mike said, we have NDAs and all that kind of stuff, but to be totally honest with you, just like real talk here, an NDA is is only as valuable as the legal team that's behind it. So, you know, it's something that's there. To be honest, it's not worth that much. But again, it's like, the risk of you having your idea stolen pales in comparison to the risk of you not getting as much feedback as you can and building something, spending a lot of time to build something that nobody wants, right? So you should be out there sharing that within or with— out of FI. Share it with everybody as possible. Not only will you get feedback, that's where the relationships will come into place where you'll serendipitously find an investor or a co-founder or a partner or distributor, whatever. Okay, so, um, let's see, uh, is there such thing as an idea that's too small for FI, asks Marley.

I'm not sure. Um, sorry, just to give my thoughts there, I'm not sure what you mean by small. I would say that there are definitely ideas that don't work out, but that's more because the solution is— either the problem's not big enough or the solution is not good enough for people to want to pay for it. It's more the, the data and the customer development can give you that, that feedback that the idea isn't a good fit or maybe not good timing. And that may particularly be true right now as a lot of ideas aren't in— may have to pivot in order to be good timing as we recover from the pandemic.

Yeah. Sharian is asking, the courses you teach will be more generic and not focused on my startup. Will the assignments you give allow us to apply these concepts to my product? I want to ensure that I spend time on building my startup and not just doing the coursework of FI.

Yeah, this isn't school. There's no school. There's no theory at all. You are going to be building and doing things. So all the, all the weekly sprints, what they do is that they help you focus on the things that matter and not waste time on the things that don't matter. And it's like really nicely prepackaged for you. Like every, you know, every week you wake, you wake up, you see these are my tasks for me to build my business. Boom, I go out and build my business and kind of report back on those tasks, right? And so that's the key. And these are all things that every entrepreneur essentially has to do in order to be able to build their business. And of course, there's some level of like, you know, some level of customization based on like mentor feedback and all these epic sprints that John talked about are all 100% customized to your business and things like that. But overall, like most of the curriculum is things that everybody has to essentially kind of go through. And, you know, we help you with the next steps.

So we're going a little overtime here. I'm going to do two more. I'm going to join some questions together, okay? So the first question I'm going to join together here, there's a lot of stuff coming in about the mentor gender ratio. How many female mentors do you have compared to male mentors? Rachel, as the leader of our Female Founder Initiative, do you want to, do you want to tackle that one?

Sure. So it varies significantly by program, but I would say the global average is somewhere around 20 to 25% female mentorship. We're working through the initiative to try to increase that, and we have done that successfully in a lot of our programs in a lot of locations. However, if you feel that you need female mentorship, perhaps you are a woman starting a company, for women and you need more specified mentorship, you're not getting that through your, your program for any reason, you can email me at rachel@founderinstitute.com. I will find you a mentor. I will make sure that you get the support you need.

Awesome. Yeah, and Rachel's been doing some amazing stuff there. And honestly, 20 to 25% is not enough, right? And we know that, and we're working to improve it and trying to apply a lot of those lessons that that we've used increasing female participation and female mentorship with Black Americans and other underrepresented founders. So the last kind of topic that I'll put in here is the Equity Collective, okay? So there's a couple of things here. Somebody mentioned also bonus pool, that's another word for the Equity Collective in some of our agreements. So FYI, we're talking about the same thing here. But Ava was asking, you know, what valuation is the 4% based on? Do— Arjun was asking, do only successful grads give the 4%? Javier was asking, do the 4%— does it get diluted? Does FI have any voting rights? So these are all, you know, basically it's like, all right, let's dig into it a little bit more. Let's get into— let's go through this quickly. But just as an FYI, these— all of these are explained in very finite detail on fi.co/liquidity, but But let's jump into these quick. So Mike, do you want to tackle a couple of them? Sure.

You know, I guess so, you know, if we want to talk about the warrant, right, that basically you don't have to make a decision on that until the incorporation deadline, which is usually several weeks, roughly around week 10 or so in the program. So Our philosophy at the Founder Institute is that, as you can see, we do everything bottoms up and we strive for maximum alignment, right? So we give you the opportunity to test this out with the refund and things like that. And as you continue building relationships throughout the entire program, we basically give the program and, and the local team an opportunity to basically earn the ability to be on your cap table, right, to earn an interest in your company. And if you don't feel that way or we don't feel that way about it, then that's gonna cause even more problems down the line, right? And so we want to try to strive for maximum alignment. This is why it's set up this way, right?

So yeah, you don't join it day one.

Excuse me?

You don't join at day one. Like, it's— yeah, you don't have day one, right?

So that's number one. You know, with regards to, you know, the valuation question, So basically that is set whenever you raise money, essentially. There's actually an FAQ on this on the website. You can read more about it. So basically when you raise $100,000 or more, at that point, the shares are priced, right? And that's basically what creates some value. And then it's upward from there. The final thing is, does it dilute? Yes, it dilutes. And by the way, if, If somebody wants to put any kind of stock on your company that doesn't dilute, like walk away right away because that basically makes your company unfundable, right? Unfundable, right? So we certainly don't want that. So just keep that in mind. But looks like there's a bunch of questions that have been posted in the chat where you can read more about it.

Yeah. Why is that?

Because basically other investors would never want to fund something like that. Basically, right? Because everybody, including the previous and new investors, are going to get essentially diluted, and that's the way this works.

Yeah, the whole concept is that, okay, if I put money into the business, I own a less percentage of the business because there's more shares, right? So I own a less percentage, but the business is becoming more valuable, right? And that's essentially what dilution is. It's just more money coming into the business, but with the idea that, okay, we have— we may— all the different people, whether they're investors, advisors, etc., right, they may own a smaller percentage, but, but it's a smaller part of a bigger pie, right? And that's sort of how, how it all works. Okay, so, well, thank you everybody for joining. I do see that there were some questions that we didn't get to, so I'm sorry about that. But here's a couple of ways that you can get them answered. Number one, reply to any email you've received from us, okay? As you probably noticed, some of those emails are automated, okay? But if you do reply to them, you will reach somebody on our headquarters team and they'll reply to you. And I think we just were talking about it yesterday, our response time, first response time, is something like 6 hours, or I think it was even like 4 hours. So we're very responsive, okay? It doesn't go to some other, you know, outsourced like support center or something like that. Number 2, we do have online information sessions that are running several times per week. They're pre-recorded, so you'll see my face again doing a presentation. Even though they're pre-recorded, there is live chat with people on the team, so you can get chat answered as well. Or go to any of the local events in your city, fi.co/events. We're running a ton of local events, and obviously right now they're all online, so you can participate from anywhere. All right. Thank you, Mike. Thank you, Rachel. Thank you, Virginia, who's the person who's been chatting with you all in the chat room there. And thank you, everyone, for joining. I hope I'll see you on F5 soon. And don't be a stranger. Shoot us an email if you have any questions.

Bye-bye.

Thanks, everyone. Have a great day.

Bye.