How To Get Funding | Tommaso Di Bartolo

So innovation is focus on the secret sauce what you have, right? So what is it that makes you unique? Once you are unique— lately I had a conversation, a speech also about exit. It's key. It's key also for your exit because the one who acquires you wants something that they want to defend, right? So innovation is a great differentiator and it's key also for the acquisition and the acquirer, right? And look at this. This is what we are waiting. We are waiting that our product fits everybody's fits, right? This is the so-called product-market fit, right? So you build a product, you are innovative, you bring something on the market, you build a team, you have the right mindset, and then you keep on hustling and rehearsing and pivoting and adjusting and bringing it always back to the market. And this is like the most important moment. That is not just one moment, but at least it's a moment where you see it in your KPIs, in your numbers, that the product is being accepted on the market. You know what I mean? Does it make sense what I'm saying? Yeah. Yes? Okay. So again, What is it that we are aiming once we bring an MVP on the market? Long-term product-market fit. Yeah, exactly. Long-term product-market fit, right? And that's exactly when it fits. So many times people ask me, do I have achieved my product-market fit? Well, just the question alone doesn't make any sense, right? Because you see when your product-market fit— and where do you see it? Where do you see it? Metrics. Metrics, exactly. So you see when your product works in your metrics, right? Just alone the fact you're asking if you have a product-market fit, It doesn't— just reveals that you don't have the product-market fit, okay? That's what we are aiming next. Wow. Kamikaze strategy, go-to-market. Now imagine the following situation. We have hacked a cool product, Tom. We hacked a cool product, Einstein. Okay, we hacked a cool product, okay? We put this thing together and we are excited. We defined a value proposition. We start now coming to the release date, okay, who's going to the customer now? How to go to the customer? So challenge number 1 is go-to-market strategy, or being bold enough in facing customers, or being strong enough, being pushy enough in bringing your product to the market, right? So main reason why products fail is not because of bringing a team together or hacking an MVP, it's because of go-to-market strategy. And I want to tell you, a story of my first company because I figured that you are in a first stage, first company, right? So that you have a connection to what I was doing. Who is an enterprise business? Who is an enterprise business? Enterprise? Enterprise? Rest is consumer? Yeah. Awesome. Yeah, I switched to the consumer side after a couple of years, but let me tell you my first company was an enterprise business. The beginning of 2011, we had hacked for 3, 4 months an MVP, email and web security MVP in the cloud. Back then it was not even cloud, it was called application service provider. And the virus, you remember those times, right? The wave of viruses and spam was huge. So I came up with a very simple thought and say, hey, what if I take these existing softwares and I bring them in a data center and I today would say SaaSify or cloudify, right, and I basically make them available in the cloud. So, and this is what we did. It was a very simple MVP and then on February 2011, you know, the engineers called me and said, hey Tommaso, we are live. And I was in a room in front of the phone, phone looking at me, The guy just hung up and said, "We are live," and I said, "Shit! Where do you start out?" Right? Think of that. It was you know in 2002, 2001, right? And well, what I did is I took the Yellow Pages. Was in Europe, and I picked up the phone and I started you know calling the market. I focused on the small medium business businesses, and I contacted 100 customers a day. I spoke with roughly 15 customers a day. I had 7 qualified conversations and between 3 and 5 webinars a day. And these are real metrics, by the way. Still today in software as a service business are steering metrics. And that's where I basically started scaling from 0 to 350,000 seats under management within 48 months. We had 31 months average contract length terms. And no funding, no investment, completely grown out of revenues, right, and profits, right? And that's when we started really hitting the market. So key advice here again and key takeaway, you cannot start early enough and a vision without execution is an illusion. Now let's repeat it all together and read it all together, okay? A vision without execution is an illusion. Okay, with motivation. A vision without execution is an illusion. Exactly. A vision without execution is an illusion, okay? So this is really key for you to execute on. The second last step is the topic of fundraising. Fundraising here, the market in Silicon Valley, I mean, you're here at Draper University with Drim Draper, you have huge insights in terms of fundraising. Let me give you my insight and my experiences, what I did at Swag. Because what I want to share with you in fundraising is not the fact you have to fundraise. Even though when I pitch to some non-Silicon Valley companies, there comes the question always, yeah, what if I don't want to raise funds? Well, if you don't want to raise funds, my question is always, what do you do here in Silicon Valley, right? Why didn't you grow an organic business somewhere else, right? So it's part of the ecosystem fundraising. You remember the slide that I had with the ecosystem, right? So if you are here, you have to leverage and use the ecosystem. Fundraising is one part of it. But what I want to encourage you is you have to be creative also the way you fundraise, okay? And I wrote a blog on my— a blog post on my blog that I will share later on with you guys that is saying how do you raise money before even having a product, okay? And these are my experiences. Again, the same scenario, you know, we build a product, and then we go with an MVP on the market, right? An MVP is a first— is a version number 1 of a product. Now, the probability of a version number 1 being a great product is very low. It actually sucks, a first product, right? Now, if you go with a first product— now, if you go— before you raise the funds and you go to investors, the investors say to you, hey, great idea, come back when you have your first number. Does it sound familiar to you? Who has already first investor meetings and conversations? Raise your hands. Here. So what is it that they say? They have to show traction at the very least. Yeah. Traction of some sort. Yeah, traction of some— Ideally you have to show some sort of revenue that's generated. Exactly. So you have to show some sort of traction. Now we are, you know, we go there with a product and say, you know, we released the product and for us we are totally happy. And it's a form of traction because we have hustled and hacked away and we have crunched away. But then what they say is, come back when you have real traction, right? So there is always a challenge on when you actually— what's the right time to raise funds? And what I advise is to focus on a very sexy pre-release strategy. And the reason why is the following. On a pre-release, I mean, they always ask for traction. But once you have the first product, then they say, come when you have the second version. Because they're not going to give you money for you to do the second version. Because this is what an entrepreneur thinks. Oh, I have the first product, so I can show I did my technology, so they mitigate the risk about the technology risk and the team risk, right? And then they give me money. But that's not the case, right? That's not the case. They expect you actually to have traction. And they don't care if it's the first version, the second version. As long as it's not working on the market, they don't jump in. Does that make sense what I'm saying? Yes. Okay, so what you do is you call the team in, you prepare before you release and you build the hype around the release.