This content was created by Tim Draper. This content was uploaded by Tim Draper. This is a YouTube video titled "Establishing Personal Credibility | Andy Tang" (posted 2017-11-16) containing an English excerpt of a talk/workshop Q&A in which Andy Tang speaks with audience members (labeled here as SPEAKER B). Tang advises newcomers and entrepreneurs on establishing personal credit and investor credibility—covering practical fundraising tactics, hitting milestones, asking for advice vs. money, and how immigrant founders' hustle factors into investor decisions.
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Anyone here who is new to the United States here?
To the what?
New to the United States. There's something called a credit system, right? So for you guys, it's probably very hard to get a credit card. Have you tried to get a credit card?
No, here no.
Yeah, you need a credit history, right?
They just give you debit.
They just give you debit. Basically what it means is that you can spend your own money, okay? Thank you very much. So with investors the same way, right? You need to figure out how to establish a credit history in the shortest amount of time. So I'll give you a tip for applying for credit card. You go borrow money from the bank and you return it, borrow again, you return it, borrow again, you return it, and then they'll say, all right, you seem to be someone who knows how to use credit. We'll give you a credit card. I don't agree with that system, I think it's pretty dumb. It's too primitive, very primitive, but it works, right? Or it seems to be working, right? With early-stage investment fundraising, it's the same way, okay? Except getting that first money is very difficult, right? So what you want to do is you want to be mindful of people's time. Right? You tell them, hey, I'm going to finish my business plan and I'll show it to you. And you really do that. I'm going to bring on a technical co-founder to do this. You really do that. Right? So I'm not talking about some crazy goal, I'm talking about things you could do. I'm going to sign a letter of intent with a customer. And you do that. Okay? Then what's going to happen if you're an investor, if you are the investor, this person holding this share certificate suddenly sounds pretty credible, doesn't he or she? Right?
Yeah.
If you hit 3 things out of 4 times or the last— you hit 3 milestones in a row, then the next time you come and say, hey, we're raising a seed round, $100,000, what is the person going to think?
Yeah.
This person is going to do it, right? And then you tell them, hey, we are filled, $90,000, we just need $10,000 more, you want in? My reaction at that point is going to be, well, if I don't put in the $10,000, this person is going to do it, I'm going to miss my opportunity, and the next round is going to be more expensive. So that's how you get people to think, right? Ask for— Money from people, you get advice. Ask for advice, you get money.
Can you say it again?
Ask for advice— so ask for money, you get advice. Ask for advice, you get money, right? So the first 3 times is not to ask money. It's to ask for advice and show your credibility. personal credibility. And then you ask for money, because if they don't know you, why would they— you could tell them you're raising in 3 months, but it's a theoretically possible but statistically challenging value proposition. Does that make sense?
Yes.
Okay, good. Let's see what else we have on the chart.
Andy.
Yeah.
I have a question. When you You tell the example of the bank, like for example when you come from outside and you want to get credit, they will not trust in you. But I think with investors it's completely different because when you come from another country and you come to the US when there are a lot of opportunities and in your country there are not, you have that burning desire to make your idea possible. Like you are— you want to work more because you came from a place that you don't have the You think about that too?
So say that again so I can understand better. Say that again.
You told that, for example, with investors, like for example, if I am from another country, let's say Africa, and I go to a bank and they will not give me a credit card, no? Because I'm from another country and all that. But if I will get a job in the United States, pitch my idea to investors, you don't think that investors will invest in me because I come from another country? And when you come to a new country, you have that burning desire to make your idea possible. They say, well, that guy came from Africa. He has nothing to lose. Yeah, yeah.
So are you asking me, do foreigners have a better chance because investors think you hustle?
Yeah.
When it comes to investments, it's a crapshoot, it's also competitive, so you could— I could list 100 necessary but not sufficient conditions for success. Just because I went to a good school and I worked at Facebook doesn't mean I'm going to have an easy time fundraising. Is it easier than the person who went to a good school but didn't work at Facebook? If I'm a first-generation immigrant, just because I'm a first-generation immigrant doesn't make it easy for me to do billing because there are many other first-generation immigrants who hustle, who work hard, who are probably smarter than me. So there are probably 100 necessary but not sufficient conditions for fundraising. It's pretty competitive. But if you— I will say this though, at the end of the day capital is a commodity, right? Truly good entrepreneurs and good business plans will get funded. It's a very fair marketplace, I think, because money is everywhere, right? It's only a matter of time before the good ideas, become obvious. Early stages, it's just lots of money and lots of ideas and there's some strange matching going on, right? As the business matures, it becomes more and more obvious. And in the economic theory, I think market is pretty efficient. Yeah?
