Entrepreneur Experience: Nathan Breckord, Bootstrapping to Investors

(00:04):
Straight to you from Denver, Colorado, this is Precursa: The Startup Journey. We share the ins and outs of building a tech startup from inception, to launch, to revenue and beyond. If you’ve ever wondered what building a startup from scratch really looks like, you’re in the right place. With full transparency and honesty, we reveal it all about Precursa on our ride from idea to exit: the wins, the lessons learned, and the unexpected twists and turns.

(00:37):
Hello everybody. And welcome back. This is Precursa the startup journey. I’m so excited about my guest today. Nathan Beck Ord and Nathan is the CEO of foundersuite.com, which I know we’ve talked about before, but I’m really excited cuz he’s gonna talk about it more. His company is a venture backed company that makes the leading funding stack for startups. Raising capital since launching in 2016, users have raised over 3 billion in seed and venture capital on the platform prior to starting founder suite, Nathan spent 10 years working with over 150 startups as interim CFO, business developer and advisor. Nathan has a ton of fancy degrees and probably some letters behind his name, but more importantly, he’s climbed the mountain that so many of us entrepreneurs are attempting and he’s built excellent products to help other entrepreneurs do it as well. So without further ado, welcome to the show, Nathan,

(01:32):
Thank you very much. That might be the best intro I think I’ve ever received. So <laugh>, that was great.

(01:39):
Awesome. I love that. I love that intros are my favorite part because you and I get to know each other, but you also get to see like how excited I am for my, my audience to get to hear from you. <laugh> <laugh> so why don’t you just start by telling us a little bit about yourself, how you became an entrepreneur and sort of what that journey looked like.

(01:58):
I grew up where you are in Colorado and I was always kind of a little hustler as a kid. Like I, I think I’m sure we did the lemonade stand, but I always had some little side hustles going, selling like martial arts stuff out of catalogs to other kids whose parents wouldn’t let them have, you know, Chinese throwing stars and stuff like that. <laugh>

(02:17):
Borderline legal, you know, business when you’re 14 or 10 or whatever. It’s always had a little bit of an entrepreneurial bug. My parents, my dad was a doctor, so I really didn’t have entrepreneur parents like a lot of founders do, but you know, really just love this idea of making money and creating businesses, but then went away to college and went down a, a path into investment banking, which I, I thought I wanted to be. It’s, you know, it appears very glamorous from the outside and it is actually a pretty glamorous career, but like I liked investment banking, but I never loved it. And so I wanted to get back to kind of the entrepreneurial path and it took me a while. It took me over a decade, but then finally had this idea. So let me back up while doing investment banking, I was helping companies raise capital.

(03:02):
That’s what investment bankers do and working with later stage companies taking some public, some of them raising, you know, later stage like C round D round mezzanine round, then went off from investment banking and actually started doing that for earlier stage companies for, for about a decade through a consulting business. And that was called venture archetypes. And then kind of had this idea on the side, like, why don’t we build some products for this, right? We’re helping those companies raise capital. You’re a customer you’re coming in the door, we’re building a pitch deck for you. We’re building a financial model. I’m creating a list of investors, putting it all in a fancy spreadsheet to help you track all your conversations. Why is this in a spreadsheet? Why don’t we build some tools for this? So that’s kind of where we started to launch founder suite, really eating our own dog food <laugh> and it, you know, it was like a side hustle for two years or so, and then spun it out into its own company and, and the rest is sort of history. So that’s

(03:57):
Awesome. What’s the journey. So tell my audience a little bit more about what founder suite does. We’ve talked about it before, because when Precursa was considering doing some fundraising, we actually went on to founder suite and kind of poked around a little bit. And we were like, okay, this could be an option. And my background just to, you know, Nathan is I, I have historically bootstrapped every one of my companies. And so waiting into the investment waters is like a little bit overwhelming to me at times. And so, you know, like three different times we had a lead investor on the hook and then they sort of ghosted us three different times. And I finally was like, you know what? We’ve got cash flow for my other businesses. Let’s just keep doing this in the bootstrapped way. So this is new for me. I know it’s new for, you know, you even talk about yourself that is it, 98% of founders are raising for the first time, which is why we’re all so bad at it. <laugh>

(04:45):
Yeah.

(04:46):
So talk about what founder suite is and, and how do entrepreneurs know when they’re ready?

(04:52):
Yeah, those are, these are all great questions. So what is it? I’ll start with that. We started with basically replacing the spreadsheet, right? That was our first product. We came out and launched an investor CRM, which is really like a tool to manage a pipeline of investors, all the discussions, actions around that. And we’ve since, and that was six years ago. We’re kind of old in startup time <laugh> but that was six years ago and we’ve been launching other products ever since then we launched a database of investors about 200,000 investors in our database. Now we launched a pitch deck hosting tool. So you can put up your PowerPoint or PDF and send out your pitch to investors, which is awesome. We launched an investor update tool for doing like follow up stuff with investors, especially after you raise money, you gotta start kind of keeping them in the loop, email tools, a virtual data room. When you get into due diligence, you really wanna be sharing like the confidential information in a really secure way. So we gotta pro so to back up a bit, what we’ve basically done is like taken each step of the fundraising process from a to Z and built products around that. And so, and, and trying to help folks like yourself, like, like we just talked about most founders, you know, fundraising is not rocket science, but it is hard. It is actually much harder than people think it will be. <laugh>

(06:07):
A lot of pain involved Uhhuh <affirmative> and we can go off on a tangent on that. But if you think about it, you know, what do you do first? You build a target list of investors. So that’s what the database is for. Then you’ve gotta have a me way of managing them. You’re gonna be talking to 200, 300 investors. So that’s the CRM. And then the communications are the email tools. The PitchTech hosting the investor updates. That’s sort of your marketing tools. And then the, the data room is for the due diligence. So it’s kind of mapping that. And then we also have a collection of like downloadable term sheets, cap tables, things like that for really finishing touch on it. What was the other part of that question? I forget already.

(06:43):
<laugh> how does an entrepreneur know when they’re ready? Right? Or like, yes. You know, because it, so I work with really early stage founders, right? Like these are people who are like, I have this idea and I’m like, great, let me help you figure out if you have some indicators of early product market fit. And let me figure out if there is an ROI here and I get them to the point where they have a launch plan, they have a performer, they know where they’re going for. Not every entrepreneur is ready at that point to raise money, but some of them are right. And so how does, how does an entrepreneur know when they’re ready to raise money and win just to pitch founder suite? Like when they’re ready for founder, suite.

(07:21):
Yeah. No, it’s a good question. It’s there’s not a precise, concrete answer to that. Like <laugh>, I think you have to, and this is hard to do when it’s your own start. You have to sort of take an objective step back and look at, if you put yourself in the shoes of an investor, what is of value here? What is of interest to this? For some people I just had a, a guess on our show yesterday, he’s a third time founder and he’s had success. So don’t for him. It almost doesn’t matter what the company is. He’s had success. So it’s purely him as the team for a lot of first time founders, they don’t have that. Right. So take care, objective, step back. Like, what have you got here? If you put all the little pieces on the table, is it a, a big market? That’s always good. Is it a working prototype? Have you built something that ideally you’ve built something and you’ve got some customer validation on that, even if you might not have revenue yet, but you’ve got people using it, coming back and using it more and more. That’s always a good sign. And, and then, you know, around that, what’s the market look like, right? So if you’ve got something just because you have something that is working and people are using it, but if your market’s really niche, that might not be a good fundable business. So

(08:33):
Yeah, because it’s hard to make money doing that. Right. It’s hard to, it’s hard for an investor to come in and say, yeah, I’m gonna put 2 million in when your market cap is 10 million, because it’s very hard to ever see a return on that money.

(08:43):
So there’s no hard and fast answer to that. There’s also kind of the function of like, when do you need the money? Mm-hmm <affirmative> can you like, you’ve done bootstrap it as far as you can, the farther you can bootstrap it, the more control ownership you’re gonna have, the more leverage, the more power, right? I mean, that’s good to bootstrap it further. The worst type of raising money is when you’re like desperately needing money and you have no leverage. Right. Cause it’s kind of like a bank, right? Yeah. If you don’t need the money, that’s when they wanna lend to you. Right. That’s right. A little bit like that with venture firms too. So it’s hard. I mean, you can raise money on kind of something very early and maybe just beyond the idea stage, but you better have other factors that are really gonna investors excited. Like your team, like your background, if you don’t have that, I really do recommend getting customer validation. The more you can put up a slide. Yeah. That shows, Hey, we launched in October. Yep. By December we had 10,000 users on this and they were coming back. Our churn was almost nothing. It was actually like negative churn cuz they’re telling their friends. And then by April we had, you know, 50,000, like that’s exciting. That’s gonna get someone’s interest at least. So

(09:56):
That totally makes sense. And so founder, suite is a software company. It’s a, it’s a SAS company. Talk a little bit about how can you get to that point? Like what do you have recommendations for entrepreneurs who are maybe, maybe they’re like, I don’t have $200,000 to build, you know, an initial software product. Like how can they get to that point without having a lot of money in the beginning? Cuz that always feels like the chicken and the egg thing. Right. Which is like, you need to have some kind of proof, but if you don’t have 200 grand to put into software or 50 grand put into an app, or it’s sort of like, where is that line? Where proof is enough that people could legitimately like get creative and get scrappy and bootstrap,

(10:35):
It’s tough. There’s no easy answers to this. You have to, I’ll give you, I’ll give just our story. Like when I was starting this and this lasted probably close to two years where I had the consulting business and literally I’d go work 60 hours a week doing the consulting. I would save up a little kitty of cash. And then I would wire that cash to some developers in Poland in chunks of like 30 K and they would build some stuff for me and then I would be out of money. And so I’d have to kind of go back and consult. And we did that for a whole long time to get something off the ground. Yeah. And you know, I don’t always tell this story, but like I actually tried to raise money two times based on what I had. I thought I had enough and both times failed.

(11:22):
So it wasn’t until the third time that I was actually successful in getting a VC to commit and some angels commit. So there’s my journey. Right? Then that’s that’s one scenario. You bootstrap, you consult, you keep your day job, keeping the, the rock moving rolling forward a little bit until it starts to kind of roll on its own, then go start to talk to investors. I mean, there’s other ways to do it. There’s some businesses like, especially like SAS businesses, if you’re able to develop it yourself, right. You can get this going and start to set up a, a landing page and a Stripe integration and you can start to charge basically from day one. So some businesses basically you can bootstrap from, from nothing. That’s obviously harder. If it’s like products or, or hardware, you know, you kind of need to raise money for that.

(12:09):
And then of course there’s a friends and family, right? So you just, this is a very, very common thing. Not everyone is comfortable with it, but if you have 10 people in your life that can write you $20,000 check, my dad full disclosure did write a $30,000 check. I think like he did invest <laugh> and no one, no other family member, but you know, if you’ve got 10 people that can write $20,000 check, there’s your $200,000. Yeah. Um, to get going and, and yeah, you better make them proud cuz those Thanksgiving dinners are gonna be awkward if you lose their money. But

(12:43):
Yeah. It’s so it’s interesting because you said you, you did that sort of cycle of like build up capital, do some building build up capital for almost two years. If I heard you correct. Was that, did I get that right?

(12:53):
I’d have to, yeah. It’s something like that. We started and it took a while until we I’d have to like go back and look at my calendars, but, but something like that, it took a a while. Yeah. Really until we were able to get off the ground. Yeah.

(13:06):
Yeah. And, and, and I love that you called out consulting. Right. Because, because the thing that I’m always trying to get entrepreneurs to understand is if you really have something that you think you can productize, you should be able to go do that in exchange for, for money as a consultant or in some kind of consulting capacity almost as like another proof point. Right? I mean, that’s what we do at Precursa. Like our, our whole business is based on fractional work with founders, coaching and advising startup founders at early stages, helping them build their ideas. Right. And we’re about a year and a few months into our build and experiencing the same thing. So we, we we’re just like cash flowing, everything we can. Right. And building as much as we can along the way. And we’re probably about six months out from actually having the platform done and ready to launch so that then we can start getting early users into the platform and start showing that traction.

(13:59):
Right. So talk for a minute about the overnight success myth. I hear this all the time and the most recent one that sounds the most ridiculous to me is when Sarah Blakely sold the majority stake in her company to Blackstone back in November, December of last year, all these stories started to come out about Sarah Blakely as this overnight success. And I was like, yeah, 21 years later. Yeah. <laugh> so talk about that a little bit because entrepreneurs, we get caught up in that, like I’m gonna build this thing and in a year I’m gonna sell it for a billion dollars and I’m gonna be Elon Musk or, or, you know, I’m gonna be PayPal. Right. That really is extraordinary. What is a more typical founder journey looking like? I mean, you’ve worked with a lot of founders. You build tools for founders, you have a ton of data on this. What does this really look like?

(14:44):
Yeah. It’s a lot, <laugh>,

(14:47):
It’s a lot messier, a lot less linear. If you will, you know, then, then it always looks when you’re reading tech crunch. I think I said this, I think I was talking to one of our customers the other day. And I said something to the effect of if entrepreneurs really knew what it was going to be. Like, they wouldn’t even start down that path. They would keep their day job, cuz it is so much harder, more stressful, more pressure, more roadblocks, more just setbacks rejection than you can possibly imagine. And it is like that for, usually from my experience for the first call it two, two to three years of the journey. And then, and again, I’m using founder street example this first two or three years. We’re so hard. We kind of ran outta money a few times. And then finally, but you’re just keep that cycle is continuing.

(15:36):
We’re generating some money. We’re putting that right back into the product. We’re talking to customers, we’re getting what their pain points are. We’re improving it. And this is great for SAS. This is why I love software as a service so much cuz like the product can kind of cumulatively get better. Yes. And, and, but I think most products are like that too. And eventually it gets good enough. There were a few multiple times where I’m like, I think we’re good enough now. Like I think we actually have some, then, then of course it wouldn’t be quite good enough then a few, you know, six months later, like I think we’re maybe good enough now. Yeah. Yeah. But eventually that just compounds and you keep repeating that cycle day in, day out, 52 weeks a year. And eventually it does kind of get good enough and the things source to start to lift on its own. But those first call two or three years are going to be brutal. People rejecting you PE you know, people getting angry at you, customers getting angry, cuz it, the app quit in the middle and you lost all their data or whatever it is. Right. <laugh>

(16:33):
Um, I think we all live in fear or at least I will, that someone’s going to publicly post on Twitter, you know, some horrible story and we’re, we’re dead. Yeah. Um, so, so that’s, that’s one thing. I mean, I, I think if I could also graph the hours I’ve worked, especially in those first few years it was 80 hours a week, then it’s 60 and then it’s 50 and now it’s more like 35 or something like that. Right. It just gets easier. But that’s six years for us until it’s sort of easy. So I think that’s pretty common and not to spend too much time on this, but if you hear the origin stories, go back and look up the origin stories about even Airbnb yep. And Twitter and some other ones, you know, Airbnb was like sleeping on friends’ couches, printing up cereal boxes to try and like generate some revenue, doing all kinds of crazy stuff cuz they didn’t really have a functioning business yet, but they just kept hustling and sleeping on couches and saving money. And until it got good enough and obviously the rest becomes history. So history.

(17:34):
Yeah. That’s awesome. So you mentioned something a minute ago and I kind of wanna come back around to it, which is, you said, you know, you have 200, 300 investor contacts conversations you’re having, does it really take a hundred or more conversations in order to raise money or are there some secrets you’ve learned doing what you do? <laugh>

(17:55):
Yes and no. I mean the more you spend upfront doing the research, really doing the research, digging in, going through investors, webpages, bios, everything, and really identifying the short list of people who exactly do your industry, your stage of business, your geographical location. Sometimes that matters. Sometimes it doesn’t really identifying the perfect fit investors, the fewer number of investors. You need to go talk to

(18:27):
It all starts with your idea, scratch that your great idea. So you do your homework in because you’re a doer. You make a plan, you raise the capital, you find a good developer and boom, your app is born. But even the best plans for these great ideas are rarely turn out. So linear testing, bugs, user feedback and unforeseen setbacks can make an expensive mess of things. Did you know that on average you’ll spend more than $600,000 over 36 months to realize zero revenue. In fact, in 20 18, 40 6% of startups failed because they lacked the experience and skillset to successfully navigate this challenging entrepreneurial journey, even worse, 42% of these great ideas failed simply because there was no market for the product in the first place. The good news, there’s a better way. Precursa provides qualified, specific, experienced feedback from those who have taken this journey before. That’s the kind of informed research Google can’t provide. Preor provides a time tested sequential roadmap, meaning you’ll always know the answer to the ever present question. Now what Anne Precursa has successfully navigated the stressful turbulent, but necessary steps to start up success. So when you’re ready to take the leap, your roadmap to successful launch is more direct with far fewer pitfalls. We believe entrepreneurs like you change the world and we provide you with the best tools to get there.

(20:00):
So having said that most startup still need to talk to at least a hundred often more than that. Um, and one of the metrics I throw around a lot is, and this is true for us. I pitched about 200 investors and ended up with one seed fund and 10 angels coming in on the round. So okay. If you do that math, that’s about 5% of the people I pitched, came and write a check. And so that means I got rejected 95% of the time. And that’s actually pretty typical. I’ve seen that five to 6% conversion rate kind of the funnel. If we think of it like a funnel five to 6% conversion rate between who you pitch and who writes a check is actually pretty typical. So that okay, if you back into it, if you need a certain amount of money and you need a certain number of investors, you can kind of figure out how many you need to talk to to get to that, that amount. So yeah.

(20:48):
So what you’re telling me is there’s no shortcuts and anything worth having takes work.

(20:55):
Yes. And, and people do take shortcuts all the time. People say, okay, well you just told me I need to talk to lots of investors. So why don’t I just send out an email blast to, you know, cold email to 5,000 investors. That’s not gonna work. That’s actually not gonna work. Yes. You need to talk to lots of people, but not that way. And that’s why I always feel like I’m contradicting myself cuz you need to talk to a lot of people, but they need to be highly researched, highly focused. And then you should start to have success, but not, not any variations from that. <laugh>

(21:23):
Yeah, because, because investors are about relationships. This is not, Hey, I meet you. You’re gonna gimme $5,000 or $10,000 or 20,000 or a hundred thousand or whatever. And then we’re never gonna talk again. This is now becoming your boss as the founder of your company in a lot of ways where they are now expecting you to deliver on the thing that you said. So it’s a relationship that you, you want to take the time to build that, to understand who’s the person on the other side of the table. Do I trust them? Do I think they really understand the vision and that’s what they’re buying into or do they have some other motive? And this is why I always feel like I’m trying to explain to people, you, aren’t going to investors begging for money. You’re going to investors because there’s a, there’s a trade that’s going to happen. You have something of value. They have something of value. And we want to create a relationship that pro that forwards everything we’re both up to for the future, right?

(22:20):
Yes. I like that. And let’s touch on that cuz I think if you do go begging for money and this is another mistake I see folks make is they go say, if I had some money, then I could do X, Y, Z. And that’s, that’s not exactly begging, but it’s kind of in the category of begging and investors get turned off on that. Really what you wanna do is like, Hey, I’ve got this awesome thing that’s already in motion. Yep. And I’m looking for partners to kind of help me take it to the next level. Yep. And I’m interviewing folks basically. And you know, I’m gonna let in some of the, the best people, right? Yeah. Like in other words, you, as the investor, I’d be, you’d be lucky to get in on this deal. That’s cause I’m coming from a position of strength. I’ve got something going versus, Hey, I really need your money. If you gave me money, I could build something. You know, could you gimme some money? Could it’s a terrible position. Yeah, please. You

(23:09):
Could be. So may I have some more

(23:11):
<laugh> but, but you also touched on something. I mean you’re absolutely right. This is a five to 10 year relationship you’re gonna have, they can be friendly, but they can also not be your friends. Yeah. You know, I’ve seen kind depends on the, the structure. If they have a board seat and stuff like that, but they have influence over your business. They can potentially fire you if obviously if they control enough of the board and stuff, like it’s not always a friendly situation. So you need to be choosing partners wisely. <laugh>

(23:40):
Yeah. That’s good advice. So what would you say that is the most important lesson that you’ve learned as an entrepreneur throughout your journey?

(23:49):
I think something that has worked pretty well and it wasn’t obvious to me at first took me a while to kind of discovered, I guess, is like when in doubt, just spend more time. If you’re confused about what you should be doing, when in doubt, spend more time talking to your customers, really just sitting down with them. I still people get surprised all the time. Cuz we use Intercom for our customer support on our app and I’ll be responding to people like, wait, are you the CEO of this? And you’re responding to my question about importing my CSV. And I’m like, yeah, yeah, yeah. I’m here all the time. <laugh> like in other words, I’m still doing a lot of customer support and I love it because I’m really understanding where people are getting stuck, what people are doing, what people are trying to do, going off a little tangent, we’re redesigning this metrics, dashboard page, all the deal metrics you wanna see about your fundraise.

(24:44):
And I’m talking very closely to like three or four customers who have had requests for things in the past and getting great ideas from them directly from their brains. That’s gonna feed into our product. Right. And if I was like four steps removed from that process with a bunch of layers in between me and the customer, I wouldn’t be able to do that. That’s been really critical to me is like just keeping a close pulse on the needs and wants your customers and talking directly to them meeting ’em for coffee. If you’re, if you’re in Denver and you know, some great customer power customers there take ’em out for lunch and just pick their brain at what they’re doing and where they’re stuck and stuff like that. So that’s always a good default. Yep.

(25:23):
I love that. And I just wanted, so we talk a ton about talking to customers. Like it’s like the number one thing. And what’s funny is, you know, you said earlier, if you’re a technical person, you can kind of bootstrap by building something yourself. Those are the people who tend to talk to customers, the least, but who would have the most to gain from talking to a customer because the problem, when you’re, when you’re a founder sort of in your own silo, you think, you know, what’s most important and you have this vision, but it’s actually the customer who has to pay for it and use it. And if they aren’t represented in that vision, in fact, the bulk of that vision, then you’re gonna miss the mark and you’re never gonna hit that traction point. Right.

(26:01):
That’s so true. I’m glad you brought that up because I feel like that’s a mistake we made in the early days is like, oh, I know fundraising. I know how to raise capital. I have all these ideas for what this product should be. And I kind of just wanted to build these ideas almost in a vacuum. And we, we did build some stuff that was irrelevant and wasted a lot of time on it, especially in the early days when resources are so precious, you know, you can’t waste engineering or money that’s cuz I thought I knew what, what the market should want instead of like talking to customers. So yeah. Reason number 3000, why <laugh> talking to customers is good.

(26:34):
I love that. So in your opinion, what do you think is the most important personality trait or characteristic that someone needs to have to be a successful founder? You know, to play this game?

(26:47):
It’s a hard question cuz you’ve seen different personality types work in different businesses, right? You’ve got like, yes, Travis ick, who was probably the only personality who could get something like Uber off the ground, dealing with all the taxis unions and stuff like that. He’s hardcore ruthless, but his personality probably wouldn’t work in some other sectors. Right. So <laugh>

(27:09):
Yep.

(27:10):
You know, I think to answer your question, probably the one thing you’ve gotta have is that ability to kind of hustle and sell that means selling to customers. That means selling to people. You’re trying to recruit. In other words, selling them on your vision, obviously selling to investors, your vision. It’s just that ability to get people selling to journalists, to get them interested and ready about you. That ability to kind of pitch present, create a emotional connection to what you’re doing and, and to spread that message out there, cuz that works across all those layers, investors, customers, team recruiting, press everything. So that’s pretty important again that some industries that doesn’t matter as much, like we have seen some of those technical founders that are really deep in the engineering. You know, they build products that are kind of, I guess, sort of sell themselves, right?

(28:05):
They kind of have a baked in viral model. We had a guest on our podcast, a guy named Richard White. Who’s a pretty technical guy. And I think he’s actually become more of a pitcher, um, than he used to be. But you know, he is pretty technical and like he actually did something. I found interesting where he’s giving a little bit of equity to compensate for maybe not being a natural salesperson. He’s giving a little bit of equity to, and I don’t know what the number is called the top hundred top thousand power users of his product who are then kind of gonna be his advocates and sales people kind of talking about it, word of mouth. So I thought that was an interesting way to kind of possibly compensate for maybe not a natural salesperson. Like how can you turn other people into salespeople for you?

(28:50):
Yeah, exactly. Yeah. Because that’s, that’s really, when you start to hit that viral, like you said, right. Which is not typically something that if you sat down with a marketing company, be like, okay, we’re gonna make this video and it’s gonna go viral. Like you can’t really plan that kind of thing. Yeah. Right. But what you can figure out to your point is can I take the users I do get and turn them into sales people or advocates or, or ambassadors or however you wanna say that so that they then tell people and that creates more and then that’s how you can create some of that, like building virally. Right. So sales skills are important if you don’t have them, you gotta get creative.

(29:30):
Exactly. Perfect summary.

(29:32):
<laugh> do you think, do you think there is such a thing as products that sell themselves? Is that a thing?

(29:38):
I mean, I’m trying, I’m trying to think of it, right? Like,

(29:41):
Because we hear that all the time, right? Like people say, oh, this thing is so awesome. It’s gonna sell itself. And I, and in the back of my mind, as you know, I’m, this is my sixth startup for, because I know we don’t know each other, all that well yet, but I’m like, I’ve never worked with a company I’ve never built anything that actually sold itself. Like there was always something that had to be done, but that doesn’t mean it isn’t possible. That doesn’t mean that someone isn’t like, oh my gosh, I created this thing and it just like blew up. It was like so great. And I don’t know how, how I didn’t do anything. You know? I mean like, is that a thing?

(30:13):
So I think founders do underestimate, especially technical founders. They sort of think if I build it, they will come. Right. And that often leads to this product, standing out there in the universe with crickets chirping around it, people underestimate how much a product will sell itself. However, I think there are, you know, products that have some built in virality. Right? Think about like zoom or something. I invite you to a zoom. Oh, you just use zoom, you see zoom branding there, maybe get a follow up email that kind of sells itself. It has that natural virality built into it. So I guess that’s the closest I can think of. You know, things like

(30:48):
That. Yeah. That’s a, that’s a really good one. All right. I like that. So if you could give other entrepreneurs one piece of advice, what would that be?

(30:56):
Yeah. It’s well, talk to customers. We’ve talked about that already. That won’t go back to that one, but I’d say just the pick something you’re truly passionate about and hang in there. And those two things are kind of interrelated because you know, like I said, at the beginning of this, it’s so much harder. The start of journey is so much harder than you think it’s gonna be than any TV show or blog post can indicate to you. It’s just gonna be exponentially harder. So you have to be doing something that you really are passionate about. Whether or not you get funded, you wanna see this thing happen, whether or not anything happens. You want you’re, you’re just committed to this cuz that will sustain you through those really tough times. And then the corollary to that is just keep plugging away. I mean, I use, I’m really passionate about what we’re building and like I, I told you, we ran outta money a few times had to like scale down to basically zero engineers for a while in the early days. Like, but just keep it alive, keep it going and pushing forward. And you know, sometimes you just have to push through those really hard times and you’ll find something on the other side that gets you going. So that’s it pick the right thing basically that you’re really passionate about. Yeah.

(32:08):
I love that. You are, you’re more mature in your journey now, you know, you guys are six years in you’ve you’ve, you’ve got revenue for sure. What are your concerns and that other people and how are you handling them might be facing, you know, coming up in this inflationary period. And there’s, you know, Sequoia put out this 52 slide deck basically saying don’t try and raise, cuz it’s not gonna work. You gotta make your funds last for the next two years. Like what is going through your thoughts as a more mature founder? And what advice would you have for other founders about how to sort of negotiate what’s happening right now? Cause it is kind of unique, especially if you’re a first time founder and you weren’t building a company in 2000 or you weren’t building a company in 2008 when everything kind of all went, went to hell on a hand basket.

(32:54):
I love it. There was, I, I saw this threat on Twitter or on LinkedIn, I’ll try and summarize it. But there was a founder that said we’re never going to do layoffs even in a downturn or something. And someone else wrote back, I checked out your bio, you graduated in whatever, 2014 or something. You’ve never seen anything other than a boom market. Like you’re giving advice to other founders, but you’ve never seen a down market and kind of called him out on that. I thought it was interesting. <laugh> so <laugh> I dunno where I’d go with that. But I thought it was kinda funny. I mean, I think so

(33:26):
Funny,

(33:27):
You know, we’ve gone through a few cycles. I think it’s always exciting actually I’m in some ways kind of sounds perverse, but I get excited a little bit about a downturn, like, okay, cool. Wow. I might be able to get some better talent now. You know, I might be able to, I’ve had a couple competitors reach out and like, Hey, are you interested in acquiring us? Like, you know, there’s opportunity to sort of take some market share from competitors now cuz we’re strong and maybe they’re weak. Like I see a lot of opportunity in these sort of downturns, which I, I get a little bit excited about. My advice though is also like, you know, Sequoia puts out these doom and gloom winters coming kind of things <laugh> and like I would say don’t be super reactionary. Look at your cost structure. Don’t just need your react and slash half your staff because you panic don’t panic, right?

(34:19):
Like take a measured approach and, and keep an eye on it. Like we haven’t cut anything yet. I’m watching this watching very carefully. Like I think June, we actually had sort of a flat month, which is like the first month in a long time. We’ve had a flat month. So I’m watching, okay. What’s the trend here? Let me see. A couple months is July is August also gonna be flat to down September is a fundraising season. So if my revenue isn’t going in September then yeah, maybe, okay. Then I need to start really trimming. So, you know, don’t panic, don’t need jerk react, keep an eye on, on the macro environment. And the other reason for not panicking is like we’ve seen, you know, obviously when COVID hit and the markets crashed in March, April, may of 2020. Yep. You know, that was another doom and GLM, right?

(35:06):
Investors said the same exact thing. You need cash to sustain you for the next 24 months. And six months later, the start of market was boom booming again. Yep. Even smart people like Sequoia, can’t always predict the future with, with total accuracy. So again, don’t panic, like keep an eye on the stuff. Kind of adjust those levers a little more gradually than, than now having said all that I’m talking about like our business, if your burn rate is really high, you’ve been like going super hard spending way more than revenue, you know, that’s a different scenario. Right. You might have to make more severe cuts if you’re gonna be out of cash in six months. So that’s.

(35:44):
Yeah. And, and I like that you pointed out that the, the, the fundraising process, it is cyclical. Right. And like I’m seeing this in a couple of my startups that are raising right now where investors are, they check out in the summer, just as much as the rest of us do. Right. Like we’ve got one he’s like more <laugh> Hey. Yeah. Even more like we’ve got one, we’ve got one for one company that I’m working with. They’re a reg tech company. And, and he’s like, Hey, can we hurry up and get like the first conversation in before I leave next week on vacation. So that when I come back in September, I have notes to remind me why I wanted to talk to you. And we’re like, this is such a weird conversation we’re having right now. Right. But, but that’s how it is. Like they, they check out in the summer too. And so I’m sure you know that in your business. And so you sort of, I guess what I’m saying is you have to know your market and you have to know the landscape that you work in and live in and play in so that, you know, what’s a trend versus what’s actually expected in your business. And, and because that’s gonna direct you a lot to when you need to panic or not, right. I mean, we’re saying don’t panic, but when you need to start getting more aggressive about action actions you’re taking

(36:51):
Exactly is the lack of response you’re getting from investors because they’re all in France on vacation <laugh> or is it because, you know, the economy is tanking and going into a recession or combination of both. I think frankly, I’m hearing that investors are a little watch and wait right now, slowing down in their active, but they still have record. I’m talking about venture firms have record amounts of cash that they’ve raised in recent years that they have to put to work. Yes, they do. Like they don’t get to keep it. They don’t get a, they don’t give it back. They have to invest that money. So it’s a little bit of a timing thing, whether that happens immediately in the fall or, you know, more gradually over the next year or so. But if you picture a dam with a lot of water behind it, that water’s gotta come out.

(37:38):
And so it’s just a function of timing. Um, what can, so just to riff on that one more, what can you do now? So start to build that target list. We talked about like really put in, I used to say to founders, it takes 50 to a hundred hours of research to really build a really good target investor list. So start that process now, really putting in the time, searching databases like founder, suite, like AngelList crunch, base, whatever resources you have to, to identify that going through your network, you know, searching on LinkedIn to see who you’re connected to investors. Like there’s a lot you can do now to really prepare for either this coming fall or whenever the timing might be right for you.

(38:18):
Yeah. That’s awesome. I love that. Okay. I wanna give you a statistic and then I want you to tell me what you think about it. Okay. Okay. And, and the disclaimer is there’s no right or wrong answer. It’s literally, I want you to just what comes to mind and what do you think about this statistic? Okay. 42% of startups ultimately fail because no one wants what they’re building.

(38:40):
That almost sounds low <laugh>

(38:43):
<laugh> about half of people. I tell that too. That’s what they say. They’re like only 42. <laugh>

(38:49):
Yeah.

(38:50):
So this coat, just, just for context, this comes from crunch base and they did a study in 2018. They postmortem to thousand startups that failed that year. And of that about 200 to 300 of them were willing to like be fully transparent, open their books and all that kind of stuff. And what they found was the number one reason was this the 42%, because nobody wanted what they were building a fairly distant second was 33% who ran outta money. Mm. So I found that really interesting. More people didn’t run outta money, just they were building really cool stuff. Just nobody wanted it. You know, they had a great team, they had a great vision. They had great founders.

(39:27):
So I think that ties into so much of what we’ve already talked about. Right? Like if you, you have a thesis as a founder, you are an entrepreneur, you have an idea of how the world could be different, better some product that the market needs I’ll use. I keep going back. But like I had this vision, like we could replace a spreadsheet with a CRM for fundraising. Well, that wasn’t necessarily a true statement. That sort of seems somewhat obvious in hindsight, but like, maybe everyone’s happy with using a spreadsheet. Like that’s my thesis is this, but I may not be right with that. You’ve gotta test it out there. And so even though that seems like a high number, two things, one, obviously you talk to customers to see if they actually want what you’ve got. You can do a lot before launching landing pages, customer research, interviews, focus groups before starting the actual startup. And number two, you know, I think that’s, that’s fair because you’re putting ideas out there and the universe may embrace ’em or may not. But if you don’t try, you won’t know, you know,

(40:24):
So yeah.

(40:25):
<laugh> I wouldn’t be so like concerned like, oh my gosh, this failed I’m in that 40 to 2% category, at least you tried, like, I know tons of people who are like, have been talking about their startup ideas for years, decades, and they haven’t done anything. So like at least you tried, you got in the ring <laugh>

(40:42):
Oh, that’s awesome. I love it. Do you have any other like podcasts or books or resources? I know you have a podcast. If you wanna talk about that so that our listeners can go become listeners of yours as well. Like what other resources would you recommend for people who are interested in learning more about it, getting investors into their startup, or just learning more about building a startup? Our audience is about 40% people who are like, I have this idea. I’d really love to do this, but they haven’t pulled the trigger yet. And like 60% people who are either in their first journey or their serials. And so they’re constantly learning, like what, what would you recommend for folks?

(41:17):
Yeah. Oh, there’s so much out there these days, which is really amazing. Kind of hard to sort the and

(41:22):
Overwhelming.

(41:23):
<laugh> overwhelming. Yeah. I mean, back in the day it was much harder. Uh, anyway, I won’t talk about, I won’t talk about the old days, but

(41:29):
The

(41:30):
Old days I will. Okay. So two things I’ll plug ours just for a sec. We do have a podcast called how I raised it and it’s kind of a homage to the awesome how I built this, but it’s, it’s called how I raised it. It’s on iTunes, Spotify, SoundCloud, YouTube. You should be able to find it on YouTube or just search for founder suite. Perfect. But it’s basically 240 interviews with founders on how they raise capital for the business. It’s very, very niche, but I love it because I thought I knew everything about raising capital. And then I start to interview people and like, wow, that’s an interesting tactic. You took that worked. And just so much stuff, we really get into the nitty gritty. So look at the list of episodes, maybe find a company that’s similar to yours or same industry, listen to what they did. And you can learn a lot from that. So that’s my plug there also why common error has just a really great library of content. Some of the Paul Graham essays he wrote even the ones from 10 years ago are still just amazing. Talking to customers, finding product, market, fit, all that stuff. Got great videos too. Jason Cal canis puts out a pretty good podcast. It’s very frequent, a lot of interviews with founders, but pretty interesting topics. Yeah. Those are probably enough to get you started.

(42:44):
Okay. I love that. And I, I love that you mentioned stuff that was written 10 years ago, 15 years. So I’ve been doing this for 25 years. I started my first company at 15. And so I’ve been doing this a long time, right? I’ve I’ve been through the.com and then 2008, and then COVID like building different startups at various different stages through all that. Right. But there is a lot of wisdom that doesn’t change regardless of the circumstance and regardless of what’s happening today. Right. And, and just not to beat a dead horse, but because I care about it so much talking to customers, knowing your market really well, and building relationships with people that is 99% of building any kind of business, any kind of company. And so to your point, when you’re reading something where they’re talking about how to talk to customers, how to build relationships, how to talk to investors and build those relationships. That’s evergreen, evergreen, right?

(43:37):
Yeah. That doesn’t go away. The tools you use to may change, but like that stuff is very fundamental.

(43:45):
Nathan, thank you so, so much for taking the time with us today. Thank you for sharing your story. Thank you for building tools for people like us, because you know, a friend of mine actually used your platform when she was doing her, her seed raise of about, I think she did 900 and 150,000 of it came from investors. She found non founder suite. And so she has, yeah, just I’ve heard great things. I loved when I started digging into it, we actually looked into using it before we decided that we weren’t quite ready yet. So just thank you for building great tools. Thank you for listening to us entrepreneurs and caring about our journey. Thank you for being someone on the journey with us and thank you so much for sharing your time and your energy and your story with me today.

(44:29):
Oh, thank you so much for having me. This was a really fun show and I feel like you and I could talk for another three hours. Oh,

(44:36):
Oh, we could and have fun

(44:37):
With it.

(44:37):
<laugh> yeah, we totally could. So if people are interested in finding out more, getting in touch with you, following you, any of those kind of things, like what’s the best way for them to do that.

(44:47):
Check out. Founder, suite www do F O U N D E R S U I T e.com. Founder suite, or as my Polish people say founder suit <laugh> they, they, they like to pronounce it like that. Check out. Founder suite, also blog.foundersuite.com. We have a lot of good stuff on there. Articles, interviews with founders. How to stuff about raising money. I would say connect with me on LinkedIn and maybe put a little note that you found it on the Precursa podcast or something like that. Just so I kind of know who you are. Cause we share a lot of really good stuff on, on LinkedIn, like two or three times a week. We’ve put out like good articles, giveaways of like, here’s a term sheet. Here’s a pitch decks, like stuff like that. So a lot of really good stuff. I have a team helping me do that. It’s not all me to be awesome. Honest, but yeah. Follow me, follow me or connect with me on LinkedIn. And then also Twitter, just Twitter slash founder suite. And we’re not quite as active there, but decent stuff.

(45:42):
Yeah. Funny how, because we have several Twitter accounts as well across my startups and we’ve just become less and less active. And I don’t know why, like it’s weird. Right?

(45:51):
I feel like you almost have to like the people who are reading success on Twitter are like on there all day long. Yeah. And I dunno how they get their job done, cuz they’re seem to be on Twitter. <laugh> right.

(46:03):
It’s so true. It’s so true. It’s like you have three people who all they do is Twitter <laugh>.

(46:07):
Yeah.

(46:09):
But

(46:09):
That’s true. Maybe that’s your job. I don’t know. I guess that

(46:11):
Works. Yeah. Yeah. Maybe, maybe we just created a new job. That’d be awesome. All right. Thank you so much, sir, for being here, we really appreciate you and we appreciate everything that you do for this community.

(46:21):
Thanks Cynthia. Appreciate.

(46:23):
All right. Y’all thank you so much for joining us for this episode. I will be with you again soon, but in the meantime, as always happy entrepreneur and I will see all next time.

Thank you for listening to this episode of Precursa: The Startup Journey. If you have an idea for a startup and you want to explore the proven process of turning your idea into a viable business, check us out at precursa.com. Make sure to subscribe to this podcast wherever you listen to podcasts so you never miss an episode. Until next time…

(47:05):
Inspiration has STR you’ve stumbled upon a great idea that you just know will change the world. So now what at Precursa, we provide the best tools to help founders and entrepreneurs. Just like you turn their great ideas into great companies that solve real problems for real people. We believe you are the change makers, the innovators and the force that moves technology forward. All you need is an experienced guide to keep you on track and help you navigate the turbulent waters of starting up Precursa is that guide. And with us, your roadmap to successful launch is more direct with far fewer pitfalls, ready to change the world. Bria has your back.