We had over a million in revenue when the possibility of joining the inaugural NYC TechStars class came up. I was interested – what CEO isn’t interested in “accelerating” – but I was also skeptical.
We’d bootstrapped to success. I was not convinced raising money was the right thing for us to do. This was my fourth company. It was easy for me to understand the present and probable future value of 6% of the company, but how could I measure the value of “mentorship”? Going into TechStars meant exchanging the known for the maybe.
It was an interesting decision process. I’m sharing the whole gory narrative here because I’m sure there are others like me who are currently wondering: “Are we too late for TechStars?” Perhaps my experience will be useful in your decision process.
First my various concerns about going into TechStars:
Mentoring – Will the advice be valuable? We had contracts and product, we weren’t going to pivot. There were some big names on the list, but would we actually get access to them? Would they even be the right people for us? Could I pay cash for consultants or just seek out mentors on my own to get the same benefit without the 6%?
Signaling – I was very proud of what we had accomplished. Would joining TechStars some how signal that we were insecure and didn’t know what we were doing?
Expensive – My company was far along. My 6% had validation in it and was therefore worth more. My ticket to ride was significantly more expensive than those around us, who had ideas but had not launched yet. Paying too much for something never sits well.
New Program – Boulder seemed strong with a track record and verifiable references. I could dig into which mentors did what, and could even talk to a later stage company like myself. New York was new, this first class were going to be guinea pigs.
Time - A growing company takes time. Clients take time. Would we be jeopardizing a very real bird in the hand while we went through the TechStars hops? Would we have time to get value out of the program?
So I went about exploring these questions. I started with a friend, Darrell Silver of Perpetually.com. Darrel has raised money and has traction, he could relate. More importantly he’s a clear thinker. I asked him if he thought I should apply for TechStars. Darrell gave me the answer I would come to love over the course of TechStars. The most valuable answer possible : “That’s not the right question.”
A better question, Darrell suggested, was “How can I use this decision to meet all of the mentors in the TechStars program?” He offered to introduce me to the TechStars mentors that he knew to start the process.
I met with 8 people – all of whom were fast, successful and inspiring. Some were entrepreneurs, some were VC. I left each meeting invigorated and percolating on some new thought from questions I was asked – “What’s your go to market strategy?” ”What can money not buy?” ”What’s the pacing of your market?” On the TechStars question specifically, people didn’t have answers for me. They couldn’t address my concerns – they weren’t about to say: “Well I’m a mentor and I’m awesome so you should do it” or “Everything will be great the first year of TechStars in NYC.” The unknowns were the unknowns.
There were some conversational tidbits outside of my thinking that shifted my frame – Amish from FirstMark capital mentioned that he thought the signal of being selected as 1 of 10 companies out of an applicant pool of 650 companies would increase the company’s valuation by more than 6%. He felt that, in the case of raising money, TechStars was pretty much free due to the valuation bump and any mentoring benefit was gravy. I just hadn’t thought about it that way. Sim from High Line Venture Partners wanted to know how much it would cost Red Rover in market share to move slowly with bootstrapping. I just hadn’t thought about it that way. Bootstrapping, by nature, is fairly myopic. Our early stage strategy had been focused on cash flow, not maximizing opportunity.
So I still had my concerns, but now I had some new ways of looking at my business and 8 new relationships which I could draw on for inspiration.
I met with David Tisch to get the sales pitch from the main guy in NYC. Tisch is hilarious. He pitches like he plays ping pong – wild and full of junk that has just enough spin to mess with you. He can crush it if he feels like it, but he’s very rarely that serious or focused. He’s a smart guy. His A game isn’t usually necessary and he loves to come from behind and surprise you.
In our meeting, Tisch said the value of TechStars was three things: 1) Mentorship (people will help you) 2) Networking (you can get to anyone) 3) PR (people will know you). He told me what I had read on the website. I wasn’t really convinced. It sounded like marketing and he couldn’t back it up with case studies yet – he was simply hoping that he could deliver in NYC.
I thanked him for the time and was getting ready to leave. Then Tisch pulled the classic come from behind card, with his simple statement: “For me, it’s about my whole life. I could be doing anything – and there is nothing I can think of where I would learn more. Being in the middle of TechStars is absolutely the best possible environment for me to learn as much as I can as fast as I can.”
That resonated. That was a case study. Here was Tisch, connected and wealthy, saying he is optimizing for learning and TechStars is the best thing he has found. That sounded good to me. Suddenly it wasn’t about what stage Red Rover was at, or how expensive our equity was, suddenly it was about me personally and our whole team learning as much as possible as fast as possible for the benefit of our whole lives as entrepreneurs. Yes our current company would benefit immensely, but this was a bigger game for everyone.
That viewpoint closed the deal for me. As a CEO, I make all kinds of decisions with imperfect information. Deciding to apply to TechStars was another one of those decisions, but it felt right. I was excited for our whole team.
My concerns and questions were completely valid and responsible. They were, however, the least interesting types of questions. They were mostly defensive. It was bootstrapping thinking – protecting what is there and getting by with the bare minimum – a focus on survival and stinginess. All of this is fine and necessary thinking, but it can also be limiting.
Other questions I could have asked myself: “What could Red Rover accomplish with a community of experienced financial partners, entrepreneurs, and operators around us?” “What pieces are we missing for Red Rover to be wildly successful? What is the fastest way we can add those pieces?” All of these would fit under playing offense instead of defense.
What I needed, and what I got from the TechStars process, was a huge shift in focus – from minimizing risk to maximizing the opportunity for Red Rover.
This shift happened over the course of 100 meetings. This happened under the influence of mentors who did not have “answers” but did have experience and knew what it was like to be in my shoes and knew what had made the difference for them.
This shift happened very very quickly because it had to, the program is only three months long. On Demo day I had to stand up and fit my whole worldview and plan into 6 minutes. There are an incredible number of decisions that went into every minute of that presentation.
What is this shift worth to Red Rover? A lot more than 6%.
Could we have done this without TechStars? Absolutely. It would have taken longer. Significantly longer. It would have taken me three months just to schedule 20% of those same meetings. Our particular market segment – social software for the enterprise – is a fast moving wave. For us, that lost time would have been incredibly expensive.
For me, and for my team, our time in TechStars was the right decision. We got what we hoped. The environment and process offered the absolute maximum amount of learning possible. It allowed us to grow in our thinking as much as we could as fast as we could. That learning greatly enhances our current company.
We, as individuals and a team, will have that learning the rest of our lives.