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How to Communicate Traction to Investors with Brendan Baker and Hiten Shah


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Deck from 10.20.11 class in SF.

How to Communicate Traction to Investors with Brendan Baker and Hiten Shah

  1. How To CommunicateTraction to Investors @brendanbaker + @hnshah Skillshare – October 20, 2011
  2. @brendanbaker @hnshah Brendan Baker, Hiten Shah
  3. Today1 How do investors think?2 What is traction?3 Building a traction Story Brendan Baker, Hiten Shah
  4. 1How do investors think? Brendan Baker, Hiten Shah
  5. Investors respond to a story. Brendan Baker, Hiten Shah
  6. Momentum Green is good. Brendan Baker, Hiten Shah
  7. Excitement > Hesitation Amplify and focus on the excitement points. Surface and deal with the hesitation points. Brendan Baker, Hiten Shah
  8. They’ve seen everything Don’t try to fit in. Be unique. Brendan Baker, Hiten Shah
  9. FOMOFear of Missing out. Brendan Baker, Hiten Shah
  10. Derisking Can they build the product? Will people use it?Risk Will people pay for it? Will people come in mass? Progress Derisking often happens in steps. These steps may vary for different startups. Brendan Baker, Hiten Shah
  11. 2What is traction? Brendan Baker, Hiten Shah
  12. Traction is your story ofmomentum, told through quantified evidence ofmarket demand for your product. Brendan Baker, Hiten Shah
  13. “your story” Not told directly, but implied in examples of evidence.Your traction is unique – use examples that are unique. Don’t hide weaknesses, but do frame them. Brendan Baker, Hiten Shah
  14. “quantified evidence” Yes Maybe Profits Cohort progress Revenues Engagement progress Active users Product velocity Engagement Customers/clients Registered Users No Downloads Press Partnerships Testimonials Traffic* This isn’t a set list. Use evidence that makes sense for you. Brendan Baker, Hiten Shah
  15. “Market demand” Aka ‘people want your shit’Use evidence that describes momentum, and hints at market potential. Brendan Baker, Hiten Shah
  16. <pause> 8 Words* that truly suck 1) Gamechanging/er 5) Groundbreaking 2) Visionary 6) Innovative 3) Next-generation 7) Disruptive/or 4) Seasoned Professional 8) ©®™ βBaker’s Rule Actual Progress = Number of times these words are used in your pitch* Fine – and symbols Brendan Baker, Hiten Shah
  17. 3Building a traction story Brendan Baker, Hiten Shah
  18. The story is the implied message you want to send. It’s not something you’ll say directly. Think of it this way: say you pitched an Associate at a VCfirm. She liked you, and had a minute to describe your status and progress to a Partner. What would you want her to say? That’s your target story. Tell it with traction. Brendan Baker, Hiten Shah
  19. Your traction story: Is unique to you. Is concrete and evidence-based. Shows a path to world domination. Brendan Baker, Hiten Shah
  20. Some examples Brendan Baker, Hiten Shah
  21. story “They’re super early, but they build and learn fast. They’re worth betting on.”traction Brendan Baker, Hiten Shah
  22. story“They’re creating a marketplace. That’s hard, but they know it. They knew they had to build the supply side first, and they nailed it. Now they’re tackling the demand side. Early indications are good, and I think they know how to ramp it up.”tractionLaunched in March 2011:- 25,000 vendors, with avg 25 items (growing 20-30%/month)- 11K uniques (growing 40%/month), with 3% conversion- avg purchase of $45 (growing 5%/month)- $120,000 revenue run rate (increasing 30%/month)- Just signed partnership with Yahoo! and ramping up ads. Brendan Baker, Hiten Shah
  23. storyThe product is pre-product-market fit, but they’re working in a high potential space, and the founder has a huge vision. Plus, he’s crazy smart. This is a founder worth backing.traction Working to enable one-click populated third party accounts, giving the user ability to manage privacy setting from one dashboard. Founder:- Won an NSA hacking competition by outsmarting the organizers- Secured 100s of trading applications and developed security language for a top global investment bank.- Founded an RFID security consumer product company which has multi millions in revenues, and is growing 50-100%/year. Brendan Baker, Hiten Shah
  24. story“They’re accelerating their school by school rollout. The first schools are showing faster adoption than Facebook at their start, and are already nearing local market saturation. They’ve started in the next set of schools, and adoption and engagement is even higher. They’re releasing faster than anyone I’ve ever seen, and it’s working.” traction Launched 2 months ago in first school: - Downloaded by 80% of addressable population - Weekly actives: 55% - Feature requests: course sets, note sharing, daily deals  V2 With V2, now ramping to 10 more schools in 3 months: - 3 launched to date - Each school population is downloading the app at a 15% faster rate - Engagement (photos shared, messages, etc) has increased 40%+ over V1 Currently found a way to roll out much more rapidly to new schools, in under a few hours each. Brendan Baker, Hiten Shah
  25. Resources KISSmetrics How to Communicate Traction to Investors How to Hustle with AngelList in 10 StepsAnatomy of Seed: An Inside Look at a $1M Seed Round Brendan Baker, Hiten Shah
  26. Thank you.Thank you for building kick-ass companies. @brendanbaker & @hnshah Brendan Baker, Hiten Shah