48Hrs in the Valley: If You Build it, They Will Come
Capital Matters: Human. Social. Financial.
After hours of deliberation in an iconic Sand Hill Road boardroom among some of the Valley’s most influential VCs, C100 selected a handful of Canada’s most promising startups for the June 2016 48Hrs in the Valley. These post-seed companies range in areas as diverse Biometrics and Cloud Diagnostics to Travel, Machine Learning, AI and Robotics. Collectively, the companies that participated have raised over US$50 million in private funding to date and employ on average 19 people per company.
Nearly two months later, 15 startups descended on San Francisco to participate in two days of mentorship, networking, speaker sessions, workshops and investor meetings alongside fellow promising Canadian companies. In an effort to connect the cohort with one another organically, C100 split them into teams and sent them on a surprise scavenger hunt around San Francisco. Their initial reluctance gave way when they realized it was an effective way to bring them closer to one another while enjoying much of what the city has to offer. The cohort was led past handfuls of well-known startups such as Mozilla, Salesforce, Zynga, etc., enjoying local coffee and even jumping in the chilly Bay water for extra points before adjourning at Bloomberg Tech for a networking lunch to kick off the afternoon sessions.
Day 1: Startups in Beta
Our host, Bloomberg Beta, is an early stage strategic venture fund within Bloomberg that invests in startups primarily in AI, Machine Intelligence, Big Data and Media Intelligence technologies. Shivon Zilis, one of C100’s earliest Charter Members, is a founding partner at the fund.
48Hrs Alums: Where are they now?
The first afternoon session began with a 48Hrs Alumni panel, including two founders from the most recent outgoing cohort: Charles Bovet of BONE Structure and John Philip Green, CEO of Careguide. BONE Structure builds beautifully customized, sustainable prefab homes in a matter of weeks. Careguide connects families and individuals with care givers including pet sitters, nannies, housekeepers and caretakers for the elderly. The moderator Mike McCauley is one of C100’s youngest Charter Members and after founding a company acquired by Google in 2012, he works as a PM at Google X working on early stage “moonshoots”.
The two founders shared their experiences from the December 48Hrs with the June cohort. Charles encouraged companies to leverage connections within their cohort as much as possible as “48 hours is way too short.” He added that being a part of the cohort gives founders access to a community that never goes away, adding, “I still feel like we’re a part of 48Hrs right now.” John Philip echoed his sentiment, encouraging startups to focus on helping one another.
Entrepreneurship is often a long, lonely journey and camaraderie with other founders is extremely important. Having a network of likeminded individuals experiencing similar challenges can be instrumental in decision making, problem solving and accountability. The panel continued covering topics from the pros and cons of doing a party round, the importance of where personal introductions come from and the challenges that arise when building a culture in a company that spans both Canada and the US.
The Hare Redefines the Race
Next, the cohort welcomed C100’s former Co-Chair and founder of GGV Capital, Scott Bonham, for a fireside chat with Anthony Lacavera, CEO of Globalive Holdings. Anthony is an investor, longtime CEO, thought leader who sold his company Wind Mobile for $1.6 Billion in 2015. His path in entrepreneurship, fundraising and now investing has been far from ordinary.
“I’ve been an entrepreneur my whole life,” Lacavera began. With a technical background as an engineer but possessing a cool, charismatic demeanor, Anthony is an extremely effective storyteller and captivating leader. Both he and Scott emphasized the importance of being able to sell. He said, “The narrative that you put around your story to investors is huge. I spent as much time practicing pitching to investors as I did pitching to customers.” He went on to remind founders that passion is palpable, adding, “That first minute with an investor is everything… they can tell right away if they’re going to invest in you.”
The two continued with a debate about the famous fable The Tortoise and the Hare. “The tortoise gets up at 5:00 in the morning every day and does the same routine, goes to bed and repeats” Scott said. “The hare, on the other hand, redefines the race and really enjoys the process,” he quipped. Anthony explained that his experience as a CEO has been a long and steady journey where showing up consistently and relentlessly pursuing his dream was always been the model that works for him. “There were points, however,” Anthony said, “where if I wasn’t sprinting, I wouldn’t have won.”
Anthony is known for having raised over $700 million dollars in private funding. He addresses this point, stating, “When people ask, ‘how did you raise $700 million dollars in 2009?’, the answer is that I didn’t raise that amount in 2009, I raised $25K in 1998 and I paid it back. Then I borrowed a little more and paid that back. Then I did a venture round of $1.3 million in 2003 then I paid those investors back, followed by $100 million dollars and so forth. It was really a 10-year story of driving real returns for investors in telecom.” He went on to encourage the cohort, “Anybody actually can do it. There’s no crazy IP that I had. It was the age old adage of entrepreneurship: perseverance and good old fashioned hard work.”
While Silicon Valley remains the world’s primary destination for venture capital, two other major resources necessary for growth include human and social capital, which should be accumulated early and are far more qualitative. Anthony agreed on the importance of senior-level team members visiting Silicon Valley frequently. “It’s more than the total time here, it’s about consistency,” he said. “Make it part of your schedule to be here as often as you can. As much as we might not love it as Canadians, this is the center of the universe. You have to have consistent presence here. You’ll have some rough commutes, but it’s worth it. It’s worth it,” he repeated.
ABR: Always Be Recruiting
The last session of the day highlighted one of the most important issues faced by the cohort: human resources and recruiting initiatives. Long-time C100 Charter Member, experienced entrepreneur and executive, Sukhinder Singh-Cassidy, sparked a conversation on this topic with her presentation.
Sukhinder is currently the CEO of Joyus.com, a company that enhances the online shopping experience through using short videos as a platform for promoting brands. In her presentation on “The CEO’s Journey”, she emphasized the importance of focusing on hiring the number 2 person, avoiding rushing in the process, backchannel reference questions, and the importance of understanding your strengths and weaknesses as a CEO. She encouraged founders to ask prospective employees questions such as, “What would you want to know if you were me?” and explained the importance of walking into meetings with a vision in mind. Sukhinder went on to clarify why many high performance people are high maintenance and how to manage these types of hires. Made evident by a handful of CEOs who raved about her insight after the session, the topic was extremely relevant at the current stage of most companies in the room.
C100 Demo Day: 48Hrs Pitch Competition
After an evening mingling with Charter Members, speakers and fellow startups, the 48Hrs cohort arose early for a networking breakfast at the 500 Startups offices in San Francisco. Prior to the event, each company was matched with a mentor based on their business and their mentor’s area of expertise. The morning gave the mentors and companies an opportunity to connect in person before kicking off the second day with the first-ever 48Hrs Pitch Competition.
The purpose of the competition was to give founders the opportunity not only to share with the room what they’re working on but to receive critical, honest feedback on their pitch style and delivery. Each company was given 3 minutes to pitch and the panel offered 3 minutes of feedback to the founder(s). The panel of judges included Robert Simon, Managing Partner at BDC Capital, Jon Quick, General Partner at AIEST Capital, Shivon Zilis, Founding Venture Partner at Bloomberg Beta, Deepak Kamra, General Partner at Canaan Partners, and Josh Constine, Editor-at-Large at TechCrunch.
While the feedback on their pitch style and delivery was important, the investors on the panel naturally couldn't help themselves but dig into each company's business model, market, asking questions that helped founders better clarify the problem they're attempting to solve.
Human Capital: How to attract, engage and grow talent (Canada vs. The Valley)
When first visiting the Bay Area, international entrepreneurs observe a steep learning curve with regard to the three aforementioned forms of capital necessary for growth. First, effectively accumulating and managing human capital, comprised of the talent and the amount of knowledge employees possess within a company and how it is transmitted into the business, is crucial at the point when a startup is ready to scale. The first panel of the day was on Human Capital, comprised of Jen Holmstrom, Talent Partner at Highland Capital Partners, Ellen Dunne, Senior Product Manager at Shopify, Brian Wong, CEO of Kiip, and was moderated by Phil Cutler, CEO of Gradeslam. In a discussion on how to hire and retain high-quality employees, Jen spoke about creative and targeted recruiting practices, encouraging founders to have existing employees reach out to desired candidates during the process. Ellen echoed her suggestions and added that the CEO of the company should be the closer in the earlier stages of the company, making a concerted effort to meet with each prospective employee when possible. As Sukhinder said the night before, "No one can sell the vision of the company as well as you [the CEO]."
Silicon Valley and the War on Talent
International founders need to acknowledge that talent is far more difficult to retain and astronomically more expensive in a place like Silicon Valley compared to Toronto or Vancouver and now even New York or London. In addition, the exponentially higher rate of change here has an enormous impact on the hiring process. "The whole Valley is like one big company and every company is an office. People are just moving from office to office," said Brian. He went on to share that most employees in the Valley shouldn't be expected to stay over two years before jumping ship. "Don't be surprised," he said, "if they leave your company, start their own and recruit your employees to join them."
"Your Network is Your Net Worth"
The second panel was moderated by Matt Wyndowe, Head of Product Partnerships at Uber. The topic, "How to Trade in Social Capital", emphasized the importance of understanding, accumulating, leveraging and spending social capital when building a company.
Mallorie Brodie, CEO of Bridgit, shared stories of unique ways to leave a lasting impression in a professional setting. She also touched on the importance of being a part of multiple networks rather than simply joining the “tech” or “startup” communities. With respect to spending social capital, Julio Vasconcellos, EIR at Benchmark Capital, explained, “You should think about social capital as a piggy bank that you deposit points in and withdraw points from.”
The Art of the Introduction
One of the most important topics related to social capital is introduction etiquette and best practices for getting what you need without irritating friends, colleagues and members of your network. The panel nodded in agreement that a “double opt-in” is absolutely necessary when initiating these conversations. “Always ask permission to make an introduction,” said Kevin Swan, VP of Corporate Development at AppDirect.
C100 receives dozens of inquiries on a weekly basis asking us to facilitate introductions to our Charter Member network along with many Silicon Valley celebrities. In these instances, we ask founders to provide answers to the following:
1. Who, specifically, do you want to meet and why?
2. What is your “ask”? What are you hoping to gain from the introduction?
3. What is your “give”? Why should this person be interested in meeting you?
Getting Past the Series A Crunch
The final panel of the day was entitled, “Financial Capital: If you build it, they will come,” which should have honestly ended with “maybe”. The fact of the matter is that the VC landscape is changing, not crippling, but changing. Moderated by Neil Sadaranganey, Partner at Docomo Ventures, the panel discussed the implications of this landscape as well as the differences between US and Canadian VCs, the “Series A Crunch”, alternative forms of capital, and the importance of carefully selecting which investors to work with.
Katherine Barr, Partner at Mohr Davidow Ventures and Founding Partner at Wildcat Ventures, said, “Don’t just take the money from anyone, be very careful who you’re working with.” She warned, “Over the next 18 months, be really thoughtful and careful about how you’re spending money.” In a lighter tone, she noted, “The best, unique, most differentiating companies are always going to raise funding.”
It’s likely that if you’re building something truly remarkable, investors will find you. While most VCs hope that the current landscape means that the noise will settle and they’ll be able to cherry pick the winners, it’s still important to be proactive and do sufficient research when raising. Arif Janmohamed, Partner at Lightspeed Ventures, said, “Be very careful who you talk to at various stages of your company when you’re in fundraising mode.” He continued, “If you’re raising a Series A, don’t talk to investors who only invest in B’s and C’s.”
Perhaps the most controversial of the panelists was Jon Quick, Founder of AEIST Capital and former Principal at VantagePoint. “Not every business is a VC business,” he began. “But, if the goal is to be a billion-dollar company, if the goal is to do more, VC is probably the route to do it.” With regard to the differences between US and Canadian fundraising, he said, “When you come to the US, [investors] care about global ambitions. They care about going big; about growth.” As a believer in the US mentality of, “If you build it they will come,” he continued, “There tends to be a different risk profile between Canadian and US investors. It’s not better or worse, just different.”
Digging Deeper: Roundtables, Workshops and Investor Meetings
Following the panel, over 40 pre-scheduled VC meetings took place scattered around the 500 Startups office, including investors from Andreessen Horowitz, Azure Capital, BDC, Venrock, Sierra Ventures, and Comcast ventures. Alongside these meetings, C100 partners participated in an intimate "Corporate Innovation" roundtable discussion while a handful of founders joined Oleg Rogynskyy for a workshop entitled, "Modern Go To Market Stack: building a lead assembly line".
Welcome to the Olympics: This is the Beginning
The Bay Area is what some call "the Olympics", home to some of the world's most talented individuals whose ambitions involve changing the world. The Valley continues to be the epicenter of technological innovation and a validation of success in the startup world. Companies have been flocking here for decades to expand their teams, solidify partnerships with large enterprise companies and most importantly, to raise capital in the world's largest hub for VCs.
However, with advances in technology allowing for more effective communication remotely, startups are becoming strategic with their geographical presence and are learning to accumulate and leverage the aforementioned forms of capital without necessarily relocating to the Valley. In doing so, companies are better equipped to preserve runway, scale steadily and hire employees who are committed to the company for the long-run. C100 has created the 48Hrs in the Valley program to give a handful of Canada's most promising entrepreneurs access to some of the Valley's most successful investors, mentors and CEOs.
We hope 48Hrs founders feel encouraged and inspired to challenge problems on a global scale, echoing C100's mission to "Unleash Canada's Innovation Economy".