If Any Idiot Can Get Funding, How Do You Not Look Like Any Funded Idiot?
LAS VEGAS—With enough zeroes in its funding totals and the right boldface name among its funders, every startup can seem invincible. But there’s so much venture-capital money sloshing around the Bay Area, New York and other tech hubs—backed up by the growing possibility of crowdfunding through Kickstarter, IndieGoGo and other channels opened up by the JOBS Act—that even news sites can score multi-million-dollar funding rounds.
With all due respect to the startups that have worked hard to line up their Series A rounds, the yardstick of funding no longer runs so straight. I’ve seen too many me-too social-media sites and apps tout their VC backing, then vanish. So what should a startup do to get attention these days?
I’ve been going to pitch conferences the last few years to get a sense of that—and to see what new ideas are bubbling up across the country. Last week brought me to DEMO in Santa Clara, Calif., and this week has me in Vegas for Tech Cocktail Celebrate. (Stay tuned for when I check up on the finalists from last fall’s TechCrunch Disrupt and DEMO to see how they’re doing.)
The most enjoyable tactic is showmanship—pitch conferences often seem only a fight or a crying fit away from being reality TV, so you might as well give your audience something fun to watch.
At DEMO, for instance, Austin-based Pristine demonstrated how its Google Glass app could allow a doctor to get a remote consult from a colleague by simulating extracting a bullet from a dummy that spouted fake blood. At Celebrate, founders of the San Francisco workout-help service Sweat Guru jogged onstage and started doing push-ups, while D.C.-based Speek tempted fate by staging a live VOIP conference call… with actor Edward Norton, who’s become a fan of and investor in the service.
I keep expecting this kind of stage presence to amount to table stakes, but then I continue to see startups make such basic presentation mistakes as displaying fine-print slides that can barely be read from the front row.
Citing favorable press coverage is an easy way to shore up one’s credentials, but having seen enough startups successfully get the hype machine in gear, I don’t take that too seriously. The sources cited also matter; it’s not exactly a surprise to see a new app or service mentioned in tech-news sites that practice a paper-of-record strategy of noting almost every significant debut (some backed by the same VCs funding the companies they cover), but if that new product gets attention from outside the tech press it may be on to something.
User-engagement metrics have the advantage of, in theory, proving that people use the thing being demoed onstage. But it’s easy to lie or mislead with them—mere account registrations show nothing more than people’s willingness to share long-dormant Hotmail addresses with strange sites. I am much more interested by the time people spend interacting with a product.
The single most toxic claim a startup can make onstage, however, has to be bragging about having patents on the way. There’s no guarantee that the U.S. Patent and Trademark Office will look kindly on that filing—but most of the time, it’s worse if it does. I fear that the PTO will, in fact, smile upon such non-novel claims as designating a mutually agreeable time for an event by selecting a date and time from x and y axes (seriously, I heard this from one founder at SXSW) or playing interactive content after scanning a pattern of dots on clothing.
I will admit that trying to secure patents early on shows more business savvy than ignoring one’s intellectual-property risks entirely—but a denser, deeper patent thicket doesn’t help to the startups of next year and the next decade. Especially if the startups winning these patents wind up selling them off to a patent-trolling warehouse like Intellectual Ventures.
What does impress me is a startup that can clearly speak about its business model (“we’re focused on building a user base first” doesn’t count) and can cite people paying real money. A startup doing so well that it can finance its growth without hitting up venture capitalists at all? They do exist, and they’re seriously worth a look.