Funding Your Startup: Christian Karrer Shares Tips on Sourcing Investment

In your experience, what's the most common mistake you've seen first-time founders make?

That's a good question.

They're killing it. Common.

Yeah, I, I could, I could at least, uh, there's one that immediately comes to mind. Whether that's the most common or not, um, tough to say. I, I think one— and we made this mistake ourselves when I was at at the startup Plantiga I referenced is hiring a salesperson too early, or, you know, and this kind of goes hand in hand, like the founding team trying to offload sales in particular before they've found product market fit.

Hey everybody, what is happening? My name is Martín, Martín Martínez. If you've been to one of these events before, you've seen my face. It's good to see all of you here in FI land. Welcome to AIR-MEET, and I'm just going to kind of wait a little bit while we get a lot of y'all filtering in. We already have a ton of folks. I can't see the full number, but our backstage manager will update me here in a few minutes as to how many folks. I'm coming to you live from Austin, Texas. We just hosted Founder X, here in the Lone Star State, Austin being the host city, heading into South by Southwest, which was just a couple weeks ago. So we had a chance to really bring together the global community, many folks, you know, like yourself from all over the world. And I'm already starting to see some really awesome countries. So do me a favor, it's gonna be a very interactive event, y'all. Let's light up that chat for me. Tell me where you're coming from. Tell me where you all are coming from. I already see you, J.D., tell me where you at. We got people out of Florida, Wisconsin. All right, we got some US-based people, but I definitely saw some people— oh, and yeah, right there out of Texas, right on. What part? L.A., Taiwan, Australia. Good morning, I guess. I don't know what time it is over there. You let me know. Colorado, Sacramento, New Zealand. All right, we got people from all around the world. Keep that coming too. I love seeing that. We pretty much get representation at every one of these online events from every continent minus Antarctica. But I know there's folks in Antarctica, so y'all need to get on it. Anyway, I've been, um, I've been with Founder Institute 8 years now. I was privileged to help bring the organization to Texas, you know, back in 2017. Nobody had heard about Founder Institute. To date now, we've been around 16 years now, um, we're in 200 cities, 100 countries around the world. It's been a joy to watch this organization grow and feel like we've been able to contribute a little bit here. In the Lone Star State. So this event, you know, on Airmeet, if you've done this before, you know, what's going on, our friends in Egypt, Pakistan, Nigeria, Chicago, you know, Airmeet is one of the last really effective online networking tools that I've seen since the pandemic. We had a ton of those that showed up, not a lot survived. Airmeet has certainly done a good job to maintain a strong product. So we've been using it pretty well. Over the years. It's got a lot of different functions. Obviously you see this chat. We're going to be using the QA tool, you know. Again, uh, I don't know how many people we got in the room right now, but if you give me 3— right now we had about over 300 people RSVP. We normally get, you know, well over 100 for this one. I think it's going to be no different. Um, but yeah, uh, so as you can imagine, this many folks, um, the chat tends to get a little busy. Right? So use the QA tool. This is an AMA format. So when we bring our guest CJ up, you know, we're gonna— we're gonna— him and I are gonna chat for a little bit, but then I was going to kick it to you all. So please come with questions. Use that QA function. Should be that third— where is that third little icon? Little two bubbles, those conversation bubbles. Use that. That's what I'm gonna be looking at, okay? You know, with the— with all the activity we get in the chat, um, your question, if you ask it there might get lost, and I don't want to miss it. Okay, so do me that favor. And it's going to make our lives and yours a lot easier in terms of getting those questions answered. We're going to have for the full hour. I'm bringing CJ up here in a second, we're gonna get to know him. And then right after that, we're going to dive in and listen to all the questions you have, and hopefully we can answer them for you. So thank you all again, keep using that chat, connect with each other, drop those LinkedIn's, tell us how the weather's like. I want to know. You're up, Muhammad, you're up at 2 AM in Cairo. I like the dedication, okay? I like the dedication, man. Uh, give us some questions, make that time up overnight worth it. Um, so let's bring up CJ with, uh, with our friends 43 North. Let's, let's ask, let's bring him up. How you doing, man?

I'm good, Martin. How about yourself? Oh, I'm living, dude. Happy to be here.

Yeah, and I, I got a lot of sleep last week. South by Southwest kind of beats you up, but we had Founder X the week before, that just floored me. So I am upright, gained some weight back, and I had to found a journey, man. Putting on a conference very much is like that. But yeah, definitely for our audience, I know this is your first time using Airmeet, our first time really getting to chat, so I'm looking forward to this. I'm glad you're with us. Tell the audience a little bit about yourself right now.

Yeah, sounds good. So I'm CJ Carr. I currently lead the selection process for a pre-seed and seed stage accelerator called 43North. We are based in Buffalo, New York. We were founded in partnership with New York State with the mission of economic development for Buffalo, and we execute on that mission by investing in early-stage, primarily tech companies, and then running a year-long in-person program out of our offices in Buffalo. And, you know, we found that if we If we do a good job recruiting and supporting through the year, then the economic development takes care of itself organically. And we've been lucky enough at this point to have 60% of our active investments maintain a presence in Western New York post-program. And I grew up in this area. I grew up in Buffalo, so it was a mission close to my heart. Just prior to this, I spent about 5 years as an operator for a pre-seed and seed-stage wearable tech company called Plantiga. Which makes sensor insoles that measure gait and biomechanics from the shoe. And that was its own unique experience. So happy to chat about that. We almost died several times when I was there. Made it through the pandemic, got to work with a bunch of professional teams and amazing athletes. So, and I should say I'm non-technical, but that experience allowed me to see almost anything you could imagine on the business side. Of a startup from sales, customer support, strategy, finance and accounting, which is a little bit more of my background. But yeah, like having that experience and now being on the other side of the table, so to speak, has, you know, has been fun and, you know, looking forward to the questions and hopefully sharing a few valuable nuggets here.

Right on. Again, thanks, CJ.

Thank you.

And now it looks like we're already starting to get some in, but, you know, People have a tendency to kind of pop on a little late, so I wanna make sure that everybody is aware. Again, use that QA function, y'all. Again, that chat's already very wild, and I wanna make sure that we're getting your questions seen and answered up here. So use that QA tool. There's also some upvoting. Upvoting will surface some of the most popular. Many of you probably have the same question. So avoid, if you take a look at that QA tool, you might see somebody already asking a question similar to what you have. Vote it up, and then everybody gets that benefit of the answer. Um, now, so it helps avoid you being skipped over for redundancy. So we want to avoid all that, y'all. Um, but I don't think y'all— y'all are some good educated folks from all around the world, so I think y'all are gonna be fine. But before I do that, I think you might be able to answer some questions based on what you just told me. Um, sure, tell us about that journey, man. Said you made it through the pandemic, uh, so you— there's a lot of learnings on the first-time founder, really, when you think about it from the first time, first-time fundraising. That already I'm seeing from the questions. So let's dive in there because personal experience can go a long way.

Yeah, so I guess where to start. So I joined the company in January of 2018, right after they had raised about a $2 million pre-seed round. And I guess, you know, one thing that I was able to learn for folks who are in the audience and maybe considering the operator route or just being an early-stage employee. I was able to leverage a bit of my background in finance accounting to get my foot in the door. So I, you know, offered to build the financial model for investors, clean up our board deck. I ended up doing our books and our monthly and annual accounting. And, you know, from there was able to build trust with the founder and and was able to be given more responsibility and to explore a little bit. But I guess, you know, in terms of the pandemic, so we maybe a week before everything really shut down, a round that we had fell apart. So a lot of, a handful of the investors that were considering coming in, you know, were pulled back, you know, rightfully so, because nobody knew how the world was gonna look, you know, the next week, let alone the next several months or a year. And so what we ended up having to do is, you know, the entire team took a meaningful pay cut. So I think one lesson there is while it was painful, we all did it together. So we all were kind of in the same boat there, all 10 or so employees that were at the company at that time. And we did it quickly. This was, you know, right after we kind of, we knew that some of these investors were pulling out. We had a very frank discussion with the team, and we all agreed that we wanted to keep this moving forward, and we all agreed to, you know, a substantial cut so that we could keep, you know, keep pushing towards the mission. And then, you know, we were able to move quickly to get some government support. So this company was based in Canada, and there were a handful of loans and other programs that the government quickly spooled up that were not typically offered to startups, but they granted some flexibility to companies like ours to help us survive. So I think it was just, you know, making that deep cut first and not doing a bunch of subsequent little cuts to salary and expenses was one thing that I think we did right. And then just moving quickly, like it was a crazy time, but But we took advantage of every single program we possibly could. And that was kind of my role as, you know, VP of Finance at the time to just make sure I was, you know, I was making sure that the company was funded. But we did survive. And I think maybe 7 or 8 months later, we were all back to full salary. And we were lucky enough to have a meaningful defense contract through the Canadian DND that kept us afloat until, were able to raise that round about a year and a half later.

Well, right on, man. Again, I'm glad to see that y'all persevered. Not a lot of folks did. It was wild times. Already half a decade ago. Try not to think about it. Most don't. Yeah.

For us, we thought we were— typically when you're selling to sport or we were doing a little bit of medical and physical therapy, You know, those are, those are a little bit more recession-proof than, than other industries, but with no fans in the seats and, and no clinics, physical therapy clinics or other open for business during the pandemic, or at least the first several months, we, we, we had that, we had to, you know, switch things up pretty quickly.

Nice, awesome. Well, let's dive into these questions then because I think that's a good, good segue into our audience. And now Good job, ladies and gentlemen in the audience, because y'all just filled up a ton of questions for me. So let's try and knock these out as fast as we can. 45 minutes in, or 45 minutes to go. So I promise we'll get as many as we can. Y'all try not to double up on questions and make sure you're using the QA function and upvoting because I won't be able to see them in the chat. I'm already seeing a few y'all break that rule. Let's start with right at the top, Carly Wainwright. Where you coming from? You're out of Wisconsin. Yeah, for pre-seed and seed levels, is accelerator the easiest way to get traction, or is there other ways with angels and other pre-seed investors? In your experience, what have you seen?

Um, you know, it's, it's a tough question to answer broadly. Um, I think it really depends on the individual founding team and, and the company. So if you're If you're second or third time founders and you have a network and you have a track record and maybe you even have some of your own capital to invest from a previous exit or a previous career, then you may not need an accelerator to get traction. You very likely wouldn't, and it'll be, it'll be easier or in theory, it'll be easier for you to raise, you know, proper venture or from friends and family. But if this is your first time and you don't have capital to bootstrap, or maybe you just have a little bit of capital to kind of get things off the ground, you don't have an investor network or a founder network to lean on to raise from institutional investors, then I think accelerators are really, really good options to explore. Accelerators, I would say, like, you can get creative, like pitch competitions. Like, we are also a pitch competition at the very end of our process. We still have maintained that from our earliest days, um, and more— I see more and more, like, high-quality pitch competitions popping up. Um, they're, you know, they're often very targeted on sector or vertical, and so those are great opportunities to, you know, get $25,000, $10,000, $15,000, $50,000 to, you know, to maybe hit that next milestone or get your first handful of customers.

Yeah, yeah. And I'll add one more thing, Carlos. Good question, good way to kick things off. Seems like it's a popular one too, Carlos. Um, but yeah, for when I get that question as well, um, you know, it's really— you gotta ask yourself, you know, where, where are you coming from as you're starting a company? If you already have a track record and, you know, you've been in there and you already have a network and a community of folks, then you may not need an accelerator. And I'll say that too, somebody who runs one like yourself. Um, but if you are looking for community, you're trying to figure it out and you don't know where to begin, you know, accelerators, especially at this level, at the start of that journey, can be one of the best ways to do it because it's going to give you grounding, assurance, confidence, but mostly people have been there too that aren't going to call you crazy. You know, you know, that's why you're getting it, man. And, um, and that's just not the encouragement you, you need or deserve as a founder embarking on the journey at the very beginning. So again, we're very bullish and proponents of accelerators here for the obvious reasons. But good, good way to start things off, Kylie. Thank you. Um, let's go down to the next one. Arnaldo, I think he's out of Chicago. Um, yeah, what are the biggest mistakes you see founders make when they pitch investors? Good one, this is a good one.

Yeah, I guess, well, maybe I'll sort of narrow it to like an intro meeting or say a live pitch and not a cold email or something like that. But maybe I'll highlight two that sort of immediately come to mind. I think one is not trying to build some rapport early in the conversation. So And hopefully the investor is doing this a little bit as well and reciprocating. But I think, you know, not just jumping right into the pitch or the deck, you know, asking, you know, asking a personal question or hopefully you've done a little bit of research about the person you're talking to and just kind of like, you know, making sure that you're getting to know each other a little bit as well as learning about the business and that it doesn't seem so transactional. And then number 2 is, you know, I don't know how to even, how to say this better, but like, you know, I think it's always a red flag or it can be like concerning if the investor feels like you're putting on like a hard sell or the pitch seems like very salesy. I think the best pitches are often very matter of fact. And it's, you know, there is narrative and story, but oftentimes it's just a clear communication of what you've done and where you're going. So you don't need to oversell your traction. Just say you've grown 2x, you know, over the past 2 years or stuff like that. So just being very clear and straightforward with what you've done as opposed to trying to make it, you know, too much of a like a proper sales pitch, or like what people I think view as like what a sales pitch is.

Yeah, good point, good point, CJ, because yeah, there's two different pitches, y'all. There's two different— there's a sales pitch that's going to be for the customer, right? Those are the people that you're— that's who you're solving the problem for, whatever it is you're building. Um, that's not an investor pitch. It's not, you know, they're not necessarily going to buy it. Um, they want to invest in the future of the problem they're trying to solve, but Till it— totally different pitch. Another thing I would add too is, um, to your point, you know, you're going right into the deck, you're just gonna try to take up as much time as possible. In many cases you're networking, you're at events, you know, you might be here in this room, you know, doing the networking after the fact. Might be an investor in here that you're gonna— the last thing you want to do is immediately start pulling out the deck. Again, there's a hint of desperation that comes out of it. You touched on it. It's overly pushy, it's salesy. You want to build rapport. These are still, at the end of the day, people. And a lot of first-time entrepreneurs, founders, make that mistake and just think they're an ATM, you know, just, just that, just here to dispense money. And that's their job, sure, but at the end of the day, they're still people, and you need to respect that. You have to understand that. Um, so there's one thing you have to just kind of get your mindset in, take your head out of it for a second and really think about it from the lens of them, right? So yeah, yeah.

And then the founder, I mean They have to, or the investor, like, they have to like you as a founder to invest. Like, it's, it's pretty rare for, I think, an investor to write it, like, you know, maybe in exceptional circumstances. Um, but I think, I think it's rare for an investor, regardless of the business opportunity, to write a check to a founder that they don't like or they don't trust.

Yep. Yep, exactly. And that actually goes into a couple of these other questions. I'm going to combine them a little bit. And then we'll just kind of necessarily bring them up. But, you know, people are looking like, oh, you know, if you're running into, you know, there's— Jaden, you have a question about which are important subjects that investors look for. I'm thinking, interpreting that as industries across the board. You know, you have to really go and ask, you know, investors what is their thesis, right? What are they actually writing checks for? You know, a health tech investor isn't going to invest in your crypto thing.

Right?

You know, crypto investor ain't going to do your hardware startup, right? So you have to ask these questions to make sure that you're not wasting too much time of your own talking to folks that just aren't going to work with you and invest in you. Certainly don't want to waste their time either, right? So, you know, that's— it's going to be across the board. I wish there was a most, you know, superlative to do this, but, you know, there's an investor for every kind of thing, right? Which also goes into the next question that Brian has. You know, you're hearing a pitch outside of your specialty You know, uh, and, you know, is it going to hook their interest, right? You know, the answer is probably going to be no there, man. Um, you know, they might do a side deal if they really like it, but, you know, if they're an investor at a traditional fund, you know, they're gonna only invest in what that thesis is describing, you know. So again, don't waste your time on it. You have it— you have any thoughts to that?

Yeah, um, I, I would say maybe, maybe this is a This is a variation of that question, but like for us, we're generalists and so we can't be experts in every area, sector, vertical. And so when it's something in a space that I know a little bit less about, that's where I think communicating with plain, straightforward language is super, super important. And, you know, there are like— there you can't completely avoid jargon, especially if it's a technical business. But as much as you can, you know, try to avoid jargon and, and try to just, you know, explain what you do. Like, you don't really have to do more than that. You don't have to be, you know, make, make it like some, some tagline or anything. Just, just tell investors what you do. Um, and then the other thing I'm going to be keying in on is traction. And so, yeah, even if I don't, I maybe can't ask like the smartest question about some of like, you know, the challenges of a particular industry, you know, I can at least understand if this company has good traction or not. And that's a signal that you're at least onto something and a signal that I'll want to study up and learn more about the space you're in.

Absolutely. Let's actually get into that. You said traction. That's one of the magic words. And I know there's somebody that asked a question. Um, traction varies, you know. How would you define traction? How should a founder, especially when that's still a very hard nebulous term to wrap their heads around, how would you describe it?

Um, I mean, I think it's like, it could be any— it's really like the broad— in the broadest definition, it's any indication that the problem that you're solving is real and that it's truly painful for the audience that you're going after. And so that could be usage. It doesn't have to be revenue. That could be, you know, you have 3 or 4 amazing design partners who are like top 5 firms in the industry. And then of course that could be revenue. I think any of those can be compelling. Um, but it, you know, it sort of depends on the space you're in and, and what you're trying to do.

Yeah. And again, yeah, revenue, obviously money in the bank, that's the fastest way. It shows that people want this. I think I froze, maybe. That's weird. Um, you can hear me?

All right, I'm back.

I can't hear you. You can hear me?

Okay.

I was like, um, but revenue obviously is going to be the leader. You know, you have money in the bank, people are giving you money, you're you're doing something right. But that's not going to be for everybody, right? So to your point, you said, you said you were doing, I guess, was it not dual use? You're what, you had government contracts? But like, how do you get those? Like LOIs, you have to start somewhere, you know, they're not going to give you money, but they're giving you letters of intent. That can be traction, right? It's just going to depend, depends on your industry, who exactly your customer is, how long those sales cycles are from first engagement to close. So yeah, you know, for many of you, you're looking for a magic bullet. There isn't, you know, it's gonna be really focused on who you are as a founder, what you're building for who exactly, and how you're actually gonna transact for that revenue that's in the bank. For sure.

Yeah. And maybe one other way to think about it, especially if you're really early or maybe you have a hardware component to your solution, is it's just sort of like speed of development. If there are clear ways you can demonstrate that and communicate that, like for example, we, 2 years ago, we invested in a pre-revenue hardware or like, you know, software-enabled hardware company that was in the clean tech space. And that was a little bit unusual for us to go that early, but the team was exceptional and they had built the first version with very little capital in a very short amount of time for you know, what they were trying to do. And so that was, that was a great signal for us. And, you know, we were able to ultimately say yes because of that.

No, that's awesome. That's awesome. And again, that's, it's a big assurance, right? You know, at the end of the day, you know, especially at the stage y'all are at, they're looking at the trust that you have in you as a founder and your founding team to actually get the job done. Putting a lot more faith because you're not going to have a lot of these numbers yet. You know, you're still proving that this is something worth pursuing and worth building, something big, right? So some of y'all have to really understand and kind of ask more introspectively as to what that means and what that means for the company. So let's see. Okay, we got some great questions. Remember, use that QA tool, use that QA tool, and upvote what you see, what's good. Let's actually get into more of the relationship. We talked about your investors are people. So let's see, James out of, uh, you know, from the US. James, he's like, I'm told we should start warming relationships with investors before funding, but also investors are flooded with pitches and have prioritized traction. So we're on traction. Is there anything in terms of like monthly recurring revenue that you should be looking at? You know, again, you, you know numbers, you've seen it, you know. Are there some standard metrics? And this is a, this is a good question, you know, in terms of that. Some investors are looking for certain kind of stable, scalable growth?

Yeah, for sure. So I guess it depends on how much you're looking to raise and kind of what— everyone has like different definitions of pre-seed and seed and Series A, but sort of where you, you know, you might fall within those buckets. So if you're pre-seed and you're targeting pre-seed investors, and fortunately there are many proper institutional investors that focus on pre-seed now. I don't think revenue or MRR is going to be— they're not going to— I don't think many of them are going to tell you that we have this specific target because often they'll invest pre-revenue. And so they're going to be looking at other stuff like the team and the market opportunity and any sort of technical differentiation and things like that. If you start to get to seed and like, say you mentioned MRR, so I'm assuming what you're building is SaaS or a SaaS business model is something you're contemplating, then it's gonna be a little bit more metric driven. I think you're like a good seed round today, I think is probably in the range of like $800K to maybe a million. ARR, so, you know, wherever that comes out to in MRR, um, you know, maybe, you know, $20,000, $30,000, $40,000 per month. But I think like most sophisticated investors will be flexible on that if there's something else that, if there's something else the company spikes on, if there's something else that's exceptional about the company, or if your growth rate is incredible, because I think that's, that's probably the most important thing. Is not the absolute recurring revenue, but how quickly it's compounding. Yeah. So yeah, I wouldn't, I don't know, I wouldn't get too caught up in metrics. Like I will say if you're pre-revenue and you're a software company and you're trying to raise like a $5 million seed, that's probably going to be challenging for you. But if you're a few hundred K in ARR and you're like, you know, $10K+ in MRR and you're growing quickly, I think you can, you know, you can get an audience there.

Love it. Yeah, I'm getting good points on it. Um, all right, let's keep going. We're halfway through. We've been knocking out some questions, as I was hoping. Um, so yeah, let's get to this next one right at the top. Todd, oh, you're out of San Diego. I'm actually going to be there on Wednesday, heading out to work on a music festival. I'm an event producer by trade, so I love events. Yeah, super easy. Um, but either way, uh, Todd— yeah, I'm gonna answer— I'm gonna say this question out loud. CJ, I want you to take it first, but I'm feeling around. We might beat you up a little bit on it, respectfully.

We're here to help. Sure, sure.

So Todd out of San Diego is asking, as a pre-MVP startup, we're looking for pre-seed investment to build our MVP and go to market. Given that we're pre-product, what are some effective ways to show traction to build confidence enough to attract the level of money that they need? So I'm gonna let you take that first, CJ.

Yeah, that's a, that's a great question. Um, you know, I think you might, you might have to be a little bit creative, but there, there are ways to do that. Um, I, I think the two, the two possibilities that immediately come to mind are— there, one is like you can build a website and you can kind of show people what the product might be, and you can start to build a waitlist before you have a product. And if you get enough interest, then that's a good signal that you should actually build the product. So like, you know, I can't think of a specific example, but I know there are multiple companies that have probably built 1,000, 10,000 person waitlists before they even had, you know, a Figma design. And then the other way to do it is to have your customers pay you for it. And so if it's a real problem that you're solving, there's a decent chance that you can go to a customer and pitch them essentially what you will build and have them fund it for you with an initial contract and having some piece of that be an upfront payment. So I've seen both work. There's probably other things that you can do, but those are the two that immediately come to mind.

Yeah, I actually give a talk on this, our very first session for our Texas Founders across. They were in 4 cities now, um, but I always like to try to do the first one across the state. And, um, there's a variety of ways you can actually build an MVP and not need any technical skills. Like, face value, uh, when I see that, like, oh, give me money and then I'll build it, uh, you know, it'll turn an investor off because it's like, oh, I'm not going to do any work until you pay me. But a founder, a founding team does the work knowing it matters first. So that's a signal for me. Is this something you actually care about? You just want to get paid to go do something that's fun. That's great, don't we all? Um, but you got to show some effort. You got to show some effort in that this is something that you're willing to learn about building versus, oh, if we get money, then I'll hire a dev team, then I'll hire a CMO. I hear that a lot. Every time I've heard that, that person fails. They quit the program or I kick them out, um, because that's not how you need to approach it. And to CJ's point, there's plenty of things right now. We use a couple tools right now like Ripplet, Lovable. These are no-code tools that you can build an app easy. You don't have to do any kind of design work. You just start typing it in, boom, you're starting to get something magical to play with. So that shouldn't stop you right now. You can— that— so that's a really fun no-code solution. That's a really hot way to build your MVPs now. Traditional ways are the concierge MVP. This is the traditional one, as I call yours, the hamster wheel. Again, you're taking— you do that, you're building your email list, you're putting in a spreadsheet, you're making phone calls. Hand delivering it or whatever. A lot of great founders started that way, very successful ones. Piecemeal MVP is another one, and I think you alluded to again, CJ, just taking things off the shelf, you know, like, um, I've seen folks leverage, you know, meetup groups and Facebook groups when those were working, and, uh, and like taking them to like Eventbrite pages, selling tickets. Again, just showing that there's revenue coming in, proving the concept, but not using anything that they've had to build themselves, and then they go raise money because they're— to TJ's point— they're proving that there's demand here, there's a market here, and people are willing to pay money for it. That— those all count as MVPs, man. Um, so don't let that discourage you, like, oh, I gotta get the money first, then I'll hire the dev team. That's usually a terrible way to set fire to tens of thousands of dollars.

Yeah, yeah. And to your point, there's, um, There are very few excuses now to not build a software MVP given the tools that are out there. I haven't used Lovable, but I was playing around with Bolt.new over the weekend. It's a comparable sort of prompt-based coding platform. I was blown away by what I could build in a weekend. Fascinating. I was able to build 80% of our application just through that. And, you know, we're using a different provider, a different web form, but I'm not even sure we'll be continuing with them after that experience.

Yeah, yeah, I hear you, man. Hey, and then now there's just like this overload of tools. And like, you know, just like, just like what we're using right now, Airmeet, you know, there was a proliferation of event networking tools because we couldn't do events like we could, you know, the first couple years of the pandemic. We all try to forget. Um, but then there'll be a contraction, you know. A lot of them just went the wayside. They raised a ton of money, crazy evaluations, and just kind of set that money on fire. Focus is important, you know. Platform like this is focused. A lot of these tools will probably do the same, go the same way, but it's important that you try them all out and see what's working. So don't let that discourage y'all, right? Again, just because you don't have technical skills does not mean you can't build a product. Right now it's easier than ever. Entrepreneurship— I, again, I've been in it for a decade just supporting others, but been an entrepreneur my whole dang life, you know. This is not one of the best times to do it. So good question, Todd. Good question.

Yeah. If I could just touch on that quickly. Yeah. Another thought that comes to mind related to the democratization or however you want to frame it of software and app building is software and like your technical abilities are probably less of a moat now than they, than they once were. And so there are going to be other things that you're going to need to do to stand out. And, you know, like execution is going to be, is going to be paramount. Or we'll see. I mean, that's, that's, I think, like, you know, logically where you would go. But, um, yeah, I think just, just your software is, is not going to be, not going to be the moat anymore in many cases.

Yep. No, yeah, it's, it's even, yeah, I just saw a friend of mine, um, he's done a couple startups, he's well known in the Austin area, he just launched actually like an investment AI platform too. So he's like automating even the angel investment situation, which is interesting. Like even what, the guy at Andreessen Horowitz retweeted it like, oh, I'm terrified. Like, so software, AI, AI is eating investment now too and all that stuff. Like he said software's either But yeah, I'm digressing. Again, y'all are giving some great questions, y'all. You know, we got about 22 minutes left for the top of the hour. So we're making some good time. We're answering as many questions as possible. Just please, please, please use the QA tool. I'm seeing a lot of y'all not listen to me and break the rules. And I'm seeing people put questions in the chat. And I can't get to them. And we can't surface them, we can't upvote them. So do me a favor. And there's a few of you See a couple of you out of, uh, out of the US and a couple out of Colombia that are breaking this rule. Use the QA function. It's right beneath the chat that you're using. Use those little bubbles and upvote them. Okay, I want to make sure we can get to all your questions, but if they get buried in the chat, I can't help you. Um, so definitely do me that solid and I'll try to get your questions answered. Um, so let's look at this. Oh, good one, Luis! First one at the top right now, the new batch. In your experience, what's the most common mistake you've seen first-time founders make?

That's a good question.

They're killing it.

Common. Yeah, I could, I could at least, uh, there's one that immediately comes to mind. Whether that's the most common or not, um, tough to say. I think one, and we made this mistake ourselves when I was at, um, at the startup Plantiga I referenced, is, is hiring a salesperson too early. Or, or, you know, this kind of goes hand in hand, like the founding team trying to offload sales in particular before they found product market fit. And so that's a problem for two reasons. One, if you don't have product market fit, that salesperson is not going to know who to sell to or what, how to even pitch what you're building, or they'll struggle with that. Especially if their background is purely sales and not like, you know, market development.

Yeah.

So it's a very unique type of salesperson as well who can thrive in a startup environment. But two, what that does is it separates the founding team from the feedback loop. And so you end up getting secondhand feedback instead of firsthand feedback from your customers. And that's dangerous. And, you know, things get lost in translation. Or tend to when that happens. So that's one I see all the time and one we've made personally.

Yeah, yeah, dude, I've been there. Mine has been, in my experience, you know, I raised money for my first tech startup and we might as well— quarter mil, might as well set it on fire, you know. And the big thing that we did was that we— wasn't that we weren't validating, is that we maybe like overvalidated, which leads to what is a common term, is called feature creep. So, so we weren't verifying and really taking into account, you know, all the feedback we were getting. What we were doing is we're just taking it all for face value and then building exactly what the next person told us to build. So by the end of it, we had this big bloated product that didn't do anything well for anybody, but it did everything because we thought, oh, everything for everybody, everyone's gonna be happy. But You can't, you can't. So we, we made that mistake and, uh, we ended up having to rebuild the product multiple times. So we just dumped it, like dumped all that money just into just technical debt and making and digging ourselves out of that technical debt hole until inevitably it turned into a product that we weren't even intending to build. We ended up, you know, selling the tech off. But, you know, a lot of lessons that— this was before I discovered Founder Institute, you know. A bunch of hindsight 20/20, you know. And a lot of the frameworks that, you know, that CJ instills, what we do at FI, helps you avoid a lot of those things. So again, big, big mistake that I see again is that lack of focus. You know, being, being unfocused is even worse than being wrong in some cases, right?

For sure. And it's understandable. I mean, I think it's, it's scary to focus because you feel like you're, you're sort of like putting all your eggs in one basket, or like it's not a big enough opportunity. But It will kill your company if you don't. And we ran into the same issues. Part of the reason we almost died several times, you know, we were selling to like physical therapy clinics, we were selling to pro teams, we were selling to individual trainers, we were selling to the government. And like when you asked what do you want to see on the platform, everyone had a different answer. So exactly what you said, Martina, we struggle with that ourselves.

Yeah, and it's there. It's there. It's something that, again, it's an avoidable thing. But yeah, again, it's a discipline, right? And community. Community in the beginning, that first question we had from, I believe her name's Carly, was just that. That's where these communities at the very beginning can help you, at least remind you of that focus that you need. Because when you're doing it by yourself, or even just a core team, you have the blinders on. And it gets lonely and isolated. And then the echo chamber starts to come in and you just don't know. You know, mentorship, advisor, that's all important. And that's why we do what we do, right? You know, it's not for the immediate money because I ain't coming for a long time. I ain't coming for a long time.

Yeah. Yeah. And I think just, you know, one other thing to say on that is, you know, sort of focus aside, I think there is sort of like a like an intuition from founders that more features are better. And I feel like that's just rarely, rarely the case. Even if you are only serving like a very specific customer base, doesn't mean that more features are going to make that a better product or a better experience. And so often it's like fixing the boring stuff, like the infrastructure, making sure things are working properly, that the app loads quickly, like that kind of stuff that gets sort of set to the side in terms of trying to build some sexy new feature. And, you know, I see why it happens, but, you know, I think that's something to keep an eye out for as a founder as well.

No, absolutely. Good, good stuff. Yeah, we are got about 15 minutes left for the top of the hour. We're making great time. How you feeling, CJ?

Great.

Yeah, we're jamming, man.

I love it.

All right, now again, I'm just going through our questions right now. Some of them are getting a little too specific. So I'm trying to just make sure that, you know, we're getting as much coverage on these questions as possible. And I appreciate y'all giving them, but I want to make sure that the whole room is going to be able to benefit from these answers. So let's talk about All right, we got somebody that's a little more tactical. JD, JD Bertrand coming out of Denver. Um, so speaking with potential investors, we've had difficulty getting them understand our product or read the white paper. They hear things about the idea and immediately conclude we're just like other, you know, his words, crap products in the space. How would you break through that? JD Bertrand out of Denver.

Yeah, good. That's a, that, that's a really interesting question. Um, you know, without, I guess, without knowing more about what it is you do, there's two things that come to mind. One is it's possible you're just not talking to the right investors. Um, and you know, that it's just, it like finding, finding the right investors takes a lot of time and, and it's a lot of outreach, and you could re— you could reach out to 200 investors and to get to the 5 that really get what you're doing. So I'd say don't be discouraged, just make sure that the volume of folks that you're trying to connect with is meaningful enough to get a real signal. But the other thing is, if you're getting caught lumped, being lumped with competition, then, and it sounds like it may be a crowded space that you're in, One way to cut through that a bit is to just address it very clearly and directly and to do it sort of upfront. So there's, I read this great tweet thread from Elizabeth Yin at Hostel Fund, it was probably a year and a half ago that she sort of addressed this and I think referenced founders, like say they're building in like the mental health space or the climate space where There are these massive problems that everyone just knows are big issues. And so if you come in talking to an investor, trying to like, oh, climate's a $3 trillion problem, whatever, people are going to like, okay, they're going to roll their eyes. I can get it. So if you're kind of in that spot where there's a bunch of other people trying to do what you're doing, but you're different, address that and say, like, here's what everyone else is doing and here's why they're wrong and here's how we're doing it differently. So just be very upfront about that. I think that can be really effective. If you don't address it, I think you're just gonna get lumped in and you're gonna struggle.

Yeah, yeah, good way to approach that for sure. So here's how I interpreted this question. For me, one thing I do a lot, JD, you know, to address the question is like, wait, I like to work. I do a lot of public speaking, as you probably tell, um, on stage. Otherwise, we've had a lot of founders that I put on a stage at the end for our demo days. You know, you all have those too, right? Pitch competition. So one, one of those values that I personally like to provide to my founders is I try to teach you how to be the best dang communicator you can be. And for a lot of folks, especially when they have highly technical kind of things, it's very difficult. Because again, CJ mentioned it earlier, jargon can really clutter your language and that just goes right over a lot of folks. To your point, JD, got all the acronyms here today. He's having frustration getting people to just get it. Some simple exercises, it can be challenging in the beginning, but the simpler you can get to how to explain both the problem, who deals with the problem and how the solution solves the problem makes your life a lot easier. And it's totally possible to do that in a sentence. So what I would, just without just knowing anything else about you, JD, is, you know, I would ask you, can you do that, right? Do you not need the white paper? The white paper too, you know, unless you have a highly technical person who's very academic focused, it's going to be hard to get them to read a white paper, you know. I mean, right now I just want to hear white paper, I kind of just think crypto. Stuff. It could be crypto, could not be, could be something highly technical, academic even, that you're taking IP and trying to commercialize. Could be that too, I don't know. But irrespective of both of those angles that I'm just hearing this question from, um, I know that there's a struggle with you having to communicate it. So think about it like you're explaining it to maybe your 85-year-old grandma or your 5-year-old niece, right? And if both of them can understand it you can communicate it to anybody. Right? 100%.

Right? 100%.

Yeah.

And I think there's, like, I don't know how to describe this. I feel like there's a better way to sort of communicate this. But it's like if it's a super technical problem or, like, solution, like, just try to— try as best you can to just explain what it does and not how it does it. If that makes sense. Just kind of walk through how somebody interacts with it as opposed to what's actually happening maybe on the backend or underneath the hood. And I think that's a way to maybe cut through any misunderstanding as well.

Yeah, absolutely. And again, what y'all are doing is hard. Whatever it is you're doing. I saw somebody said they have just like a cookie business, have somebody else that's looking at trying to do something dual use from just the chat, just cursory stuff. Everything y'all are doing is hard. You know, being an entrepreneur is one of the hardest things you can do. I said it earlier, everyone that loves you is going to call you crazy, you know, but you do it because it matters and it gives you joy and it feels like it's going to give you purpose too. So I applaud all of you for taking the leap. And these are just the things that, you know, people like, people like, you know, CJ and myself see all the time, but y'all don't get to. So we're grateful that we have the time to be able to at least impart some of this. You can avoid a ton of mistakes that both him and myself have made many, many times in the past. Right? We got about 10 minutes. Let's make it count. Let's make it count. We got a few still good ones here. I mean, everything's good, but I want to make sure we got some that's good for everybody. Steven's got a more existential one here. Steven Daniel. Um, it's, uh, he's out of Abuja. We had a bunch of folks from Abuja come in to Founder X just a couple weeks ago. So Steven's asking, you know, how can startups find and win investors who align with their values? Values-driven investors, I like that. Um, you know, roadmap, you know, it's one other thing, but really at the core of the question, Steven, is an understanding, I guess, probably what kind of questions you should ask an investor. To understand their values?

Yeah, that's an interesting one, I suppose. Well, there's a couple— I have a couple thoughts without, I guess, asking them directly, although I think you— I mean, I think there's— I don't think there's necessarily anything wrong with sort of asking a version of that, especially if you're getting, you know, you have a term sheet or like you're considering going into deeper diligence and things are fairly serious. But one thing you could do is just go on their LinkedIn and their Twitter and see what they post about. And hopefully they're doing a little bit of their own writing and I feel like their values will come out of that. Same with like podcasts, stuff like that, webinars. If Most investors these days, you can find them on something. So in those more conversational, lower stakes, organic settings, I think some of those things will come out, especially if they tell their story, how they got into the space and what they find compelling about being a venture capitalist. And I think the other thing you can do, especially again, especially if things are getting fairly serious in terms of an investment process is you make sure that you ask them for references to investments they've made and you're talking to the founders that they've invested in and you're getting their perspective on what it's been like working with them. And you can ask those folks, what values do you see in this fund or this firm? And In particular, ask them how did they act and operate when things weren't going well. I think that's the most interesting thing. It's when you come to them and maybe you only have a handful of months of runway and you're in trouble, how did they respond?

Yeah, good stuff. And that's kind of like an 80/20 rule right there too. Similar to what we do, we advise founders go validate, you know, just, you want to listen as much as you can, right? Ask as many good questions as you can, learn from them as much as you can, versus you just wanting to talk, talk, talk, talk, talk, because you know you want to, you know you want to. But that restraint, that focus, allows you to make better decisions versus just, you know, just waiting, just waiting to take a breath for them to actually say something, you know. Um, so again, investors are people too. Right. So again, good question, Steve. Good one. Um, everything probably can fit in like 2 more. So let's see if we can do that. Um, let's see. Uh, yeah, that one here, some more stuff.

Any—

all right, here's one. Uh, Nivi, Nivi out of Renton, and here in the US. Uh, B2B, right? How— and B2B is harder, right? Right? And these are built— these businesses, buildings, you know, like, see, consumer can be, can be easier because they're just anybody on the street sometimes, but B2B can be more difficult. And outside of cold calling and DMs, you know, how does— have you had anything or experience in, you know, getting more validation from a B2B standpoint for your idea? Because we certainly get a lot of those, certainly a lot of B2B products.

Yeah, so, um, I mean, I think those are Like, I wouldn't discount those as channels. Certainly if you can get, you know, like some sort of warm introduction, that's always helpful to a potential customer. But like, just emailing someone is generally effective. It's like, I think you'll find, especially if you know how your customer thinks and you know the language they use and you know, you're on to a real problem, like they will respond to you, will respond to a thoughtful email. Like, I feel pretty confident about that. So just to say, like, don't discount those avenues. But there are certainly other things you can do. You know, one way of going about it is, you know, to try to build like some content and like be a thought leader in your space. You know, lots of lots of your potential customers will be on LinkedIn and potentially other social media platforms depending on the industry. And so that's a way for you to highlight the problem you're solving and to highlight the way you're going about solving it. And I know while they're a consumer product, like Levels Health did an exceptional job of this. They built a whole, they really educated the kind of like the public on the importance of metabolic health and they put out like some unbelievable well-researched content in the very earliest days and that got them a lot of traction very early on without having to do a ton of outbound. And then there's also like, I would also explore, you know, channel partnerships or sort of like indirect. Ways of, of getting to your clients. Um, those, those can be effective as well.

I love that. Good stuff there. Yeah, thought leadership. Thought leadership. If you're already kind of an expert in the field and you start to put your name out there, you're building your own credibility. That's going to beget people taking you more seriously when you reach out to them about what you're doing. And you want to be Googleable, right?

Yeah.

Start to build that. Even if you feel like you don't have it, you start to build that.

You know, for sure, for sure. Yeah. And what, you know, I, I'm curious to see how this unfolds, but like there's probably an opportunity for folks to get in early on, um, sort of like the equivalent of, of SEO but for like ChatGPT and some of the other, you know, LLM search engines. Um, you know, because people will, like, I think a lot of people, myself included, are moving to those to do more traditional searches that used to happen on Google. And I already know there's a startup that's helping companies do this and optimize it. So really there's probably still a lot of time to sort of dial that in ahead of some of your competitors and that may be another way to get ahead. And then there was one other thought. Anyways, maybe it'll come. Oh, conferences. Yeah, like do the in-person stuff. What I typically caution founders against is going to too many conferences that are just like generally tech or VC, but conferences where your customers are are incredibly valuable. And those are worth the investment.

Yeah, yeah, yeah. I've also seen, I've seen that done the wrong way too, where it's like, oh, we're gonna raise a bunch of money so I can attend every conference. And it's like, what, I'm just gonna give you money so you can party in Vegas for 6 months? Like, no, no, no, no. Gonna happen. This ain't happening. Most of those happen in Vegas. You know, it's not the best time to be too productive there. Not the best place either. But yeah, another story for another day. But I'm gonna run over a little bit because there's two questions here. There's two women in this, in this Ask Question. They've asked a few, but I want to make sure they're recognized. Because I think they're great ways to close. The first one, at least I believe so. I don't want to be assuming on this, but Um, where are you at? I just saw you. Um, Mia, I saw you. Me asked a couple questions. Really, the first one, and it's a follow-up to what we were talking about earlier, it's like, again, not immediately going and pitching somebody, you know. You just asked her just a minute, just a couple minutes ago, out of— you're out of Detroit, right? Oh, um, but so what is an appropriate conversation maybe that first time you're talking to an investor? Again, you're at the networking event. You're at that happy hour, you bumped into them after a session at that conference or trade show you're at, right? What are some interesting things that would lead to them saying, all right, yeah, hit me with the pitch, or here's my card, let's do the pitch versus— again, I've had my phones right here. I've literally had people come up and they just start doing the slide deck and I'm like, I'm gonna get another drink, right? That's what you want to avoid, right?

But like, don't do that. Definitely do not do that. I think, well, so there's one I would say, and this actually is, this sort of harkens back to something we touched on earlier, which is just having, having, you know, the ability to clearly communicate what you do in just a sentence. That can be helpful because like, you know, ideally that's how you're introducing yourself. It's like, hey, You know, my name, whatever your name is, and you know, this is what we're like, this is what I'm building, or this is what I'm working on. And just being able to, to get that out in, you know, 15 seconds or less, you know, in one, ideally one sentence or less, and, and describing what you're doing in a way that an investor who has no idea, you know, who may know nothing about the business or, or the sector can, can understand. Like, that's one way, I think, to not only stand out because that's, that's fair, you know, still fairly rare, but, you know, to potentially pique their interest if it's, if it's a space that they're, they're looking at. Um, so I would nail that. Um, Michael Seibel from YC has a great chat on this. I think it's like a 7-minute clip of a talk he gave at Stanford you can find on YouTube where he talks about this specifically, and he uses the, um, the example of Airbnb. And I think he was like Airbnb could say we're a marketplace for space, but I have no idea what the hell that means. He's like, instead they should just say like, we allow people to rent out the spare room in their house. You know, it's like something like that. Like that, the latter definition is what you're shooting for. And then, you know, I think like if you're able to come with like a thoughtful question or like, you know, you know something about this person like that can be, you know, that can be a way to kick off a conversation. You know, you say you saw them on a podcast, maybe they just gave a talk and you have a follow-up question. Like, those are, those are good ways to introduce and like, kind of, kind of open up the conversation without coming across as too pushy.

Good stuff right there. Again, yeah, again, just, they're just people too, right? You know, if it's like, oh, can I follow up with you? Can we connect on LinkedIn? Would it be alright if we grab some time? I'd love to show you what we're working on, right?

Yeah, exactly.

Give me that. They give you that consent. They're like, yeah, absolutely, let's grab some time, you know, once we all get back to where we're at, where our home is. And now you have a setup, you have their intentions, you have their presence, right? And you can get that for 15, 20, 30 minutes, an hour, who knows. But yeah, you just want to avoid the hard sell right off that first one. Again, it's like, I've heard a lot, you know, um, you know, we got— looks like I'm getting told to wrap up here, but we're going to close it on this, uh, that I've I've had some fun here. We just burned through this hour.

Yeah, it's been great.

Oh no, it's been great. Thank you for being with us. Thank you all for attending as well. But, um, you know, I'll just— I'll close it on this, and then I definitely want to kick it to you for the final words and how we can follow you. But, you know, again, these are people too, um, and at the end of the day, you know, we're all just trying to solve problems that matter to us. And there are people in the investment community that want to fund people that are doing that, right? So if you come out of it again, very simply, genuinely, they're answering right now, why you? Why are you the person to solve this? Why are you the person who's going to dedicate time in their life when they could be doing something else, probably giving them a lot more money, right? Why you, right? So you answer and share that question a little more fundamentally, makes things a little bit easier. It's not going to be, it's not going to be easy. It's just going to be easier relative to the journey that you're on right now. So approach it that way. And again, communities are helpful at this point too. You don't feel like you're alone on it. And then the last thing is a lot of you are asking about pitching. So we, you know, if you've already subscribed to this, you're getting all our— you're getting updates for other emails. We have, we have specific events that are about getting your pitch feedback from mentors, from investors. We have a pitch boot camp event, you know, so come out there and actually work this pitch in front of— in those networking tables moving forward. And we have more of those. So obviously if you join this event, you're getting our updates, but definitely look at our calendar. I know we have some more coming up. But in that case, I know we ran over a little bit. I want to make sure we have time for all y'all to network with each other. DJ, it's been a pleasure, man. How can we keep following you, keep in touch? You know, what do you like to post on? What do you like to share?

Yeah, so I'm not super active, I guess. I mean, I am on LinkedIn a lot, respond. I do try to get to my DMs. So you can certainly reach out there. But email is typically best, so it's just dj@43north.org if you wanna say hello. Would love to hear from anyone who is on the call and, you know, happy to, of course, happy to share more about what we're doing, you know, if it may be of interest or if there are other ways I can be helpful, would love to connect. But I will, you will see me post every now and then, you know, a bit about us, like what we look for in companies, you know, maybe certain sectors that we're, paying a little bit closer attention to things that are maybe happening in this ecosystem, or I'll typically post when I'm on the road. So I'm in Boston, New York, SF maybe once or twice a year, but I get on the road once or twice a month to meet founders and investors. So keep an eye out for that. And yeah, of course, please feel free to shoot me an email and would love to connect. And thank you for listening. I hope this was helpful.

Well, thank you. I appreciate it, man. This was fun. I'll let you get back to it. And if you want to pop over to the networking tables, you have some time, totally cool. If not, I'm sure they'd love to meet you more. You know, so we'll get you sunsetted out in the distance. I'm going to wrap up here and send them off on their merry way. But again, I hope we connect soon, man. I'll follow up with you later. We can grab some time.

Yeah, sounds great. Well, Martín and founders, if you think Team, thank you so much for having me and for organizing this, and hopefully this will be the first of many.

I'm looking forward to it, man. Hopefully I'll be on with you. See everyone.