Video of the Week – Zach King: The storyteller in all of us

For our video of the week, watch Zach King: The storyteller in all of us. Enjoy!

From YouTube: Zach is a filmmaker, born and raised in Portland. He started his film journey at age seven when his parents gave him a camera at a wedding. After being rejected from film school, he started the YouTube channel “FinalCutKing,” where he posted video editing tutorials. Zach has garnered more than 400,000 subscribers to his channel. In September 2013, he launched a Vine account based around his “magic” editing and has grown an audience of nearly 1 million fans.

SaaS 1,000 for Researching SaaS Startups

Tom Blue and his company published a cool little micro-site today called SaaS 1000. From the site:

The SaaS 1000 is a list of the top SaaS companies according to employee size growth. We have created a simple algorithm that tracks a SaaS company’s 6 month employee size growth and overall employee size to come up with the SaaS 1000 ranking.

One of my recommendations for entrepreneurs researching competitors, prospects, etc. is to go on LinkedIn and check out the respective employee count for the company. This SaaS 1000 list has that data and goes one step further showing the six month employee growth rate, which is great for understanding how fast the business is growing.

For entrepreneurs researching potential business ideas, this is a great way to understand companies that are hiring fast, and thus potential markets to build a competitor.

For entrepreneurs looking for peer groups of other entrepreneurs in their city, this is an excellent starting point (e.g. it lists 25 startups in Atlanta).

Interested in Software-as-a-Service? Check out SaaS 1000.

Desired Proof Points to Raise a Seed Round

Over the last few weeks several entrepreneurs have reached out asking for advice on what’s required to raise a seed round of several hundred thousand dollars. Now, most seed rounds are still a huge leap of faith, but with enough validation some of the risk can be reduced.

Here are a few desired proof points to raise a seed round:

  • A Must-Have Product – In the nice-to-have vs must-have product debate, it needs to be a clear must-have product (see 5 Questions to Determine a Must-Have Product).
  • Modest Metrics + Revenue – The seed stage is all about proving product/market fit and the start of a repeatable customer acquisition process. Progress with simple weekly metrics is important combined with low six-figures of recurring revenue.
  • Strong Weekly Growth – With modest metrics and revenue, the key is showing that they’re moving in the right direction on a weekly basis. Weekly revenue growth of at least 5% is ideal (see Recurring Revenue and Week Over Week Growth).

Raising a seed round is done based more on belief than hard facts, but having these three proof points greatly increases the chance of success.

What else? What are some more proof points to raise a seed round?

Make Something People Want

Almost 10 years ago Paul Graham wrote his famous Be Good essay. The premise is both simple and profound: the most important thing an entrepreneur needs to do is make something people want. That’s it. In only four simple words — make something people want — the key ingredient of all successful startups is defined.

Make something people want.

Thinking of starting your own company? Make something people want.

Struggling as an entrepreneur? Make something people want.

Deciding to join a startup? Make sure they’re making something people want.

Evaluating an angel investment opportunity? Make sure they’re making something people want.

While it sounds simple, it’s hard to make something new that people want.

What else? What are some more thoughts on the importance of making something people want?

8 Questions for a Product Entrepreneur

Continuing with yesterday’s post 4 Questions to Ask Before Making an Angel Investment, and the theme of angel investing, when talking to entrepreneurs it becomes clear if they are product-oriented innovators. I call them “product entrepreneurs” and you’ll know it immediately because they’re in love with their product.

When meeting with a product entrepreneur, ask these eight questions:

  1. How did you come up with the idea?
  2. Why did you decide on building this product?
  3. What’s the magic moment?
  4. What are the main product modules? What’s the most important module?
  5. What aspects of the product do you prioritize? Speed? User experience? Depth of functionality?
  6. What do the competitors do differently in their products?
  7. What’s the next major milestone for the product?
  8. If you could wave a magic wand, what would you instantly change in the product?

Product entrepreneurs obsess over their product and spend most of the time working to make it better. Use these questions to get a better understanding of how they think about it, what’s working well today, and what they’d like to improve.

What else? What are some more questions for product entrepreneurs?

4 Questions to Ask Before Making an Angel Investment

Continuing with yesterday’s post Book Review: Angel by Jason Calacanis, there are a number of recommendations and best practices that Jason uses as part of his angel investing strategy. Mid-way through the book he offers up four excellent questions to ask before making an angel investment.

From the book (pg. 141):

  1. Why has this founder chosen this business?
  2. How committed is this founder?
  3. What this founder’s chances of succeeding in this business–and in life?
  4. What does winning look like in terms of revenue and my return?

Too often, investors get enamored by the idea. Jason’s advice: it’s all about the founder. Ask these four questions the next time you’re considering an angel investment.

What else? What are some more questions you like to ask before making an angel investment?

Book Review: Angel by Jason Calacanis

When I read Jasaon Calacanis had a new book called Angel: How to Invest in Technology Startups, I knew I had to read it. Now, Jason’s style is very different from mine, but his wit and insight are excellent. Overall, I’d describe the book as a strong introduction to angel investing combined with a heavy dose of in-your-face attitude.

A few notes:

  • He invested $25,000 into Uber at a $5 million pre-money valuation (Uber is now valued at $70 billion)
  • Was one of the first Sequoia scouts where Sequoia supplied the capital and he received 45% of the profits
  • Prefers founders who are willing to pursue their visions long before an investor comes along
  • Recommends selling half the angel equity in future rounds, if possible (called “idiot insurance”)
  • Believes only way to be successful as angel investor requires being based in Silicon Valley (I believe angel investing should be viewed as charity work)
  • Offers starting with advising and/or AngelList as a no/low cost way to start investing

If you’re curious about angel investing in tech startups and want a heavily opinionated view point, Angel: How to Invest in Technology Startups is a great place to start.

What else? What are some more thoughts on the book?