TheFunded.com Open Letter
Posted by Garfield on 2012-08-12
In the interest of putting my money where my mouth is (so to speak), I am including in this post a link to a YouTube video of my last pitch. Let me set the stage for you:
There is no shortage of pitching contests and groups that will take your money and promise you to put you in front of VC's and angels. They'll tell you that they will help you with your presentation; that rubbing shoulder with other entrepreneurs is somehow an advantage or a worthwhile way to spend your money; they'll even give you "access" to free "coaching" from 'best in the word' coaches and people (that turn out just to be their buddies).
Here was the forum of this particular circle jerk: You have to demo your product to 'the crowd' that attends. They all have fake money and they can invest in you. The top 5 of the top 10 startups that get the most crowd money get to pitch to a panel of VC's for 4 minutes.
When you sign up to do this, they give you a sheet that gives you some pointers on what kinds of things to cover in 4 minutes. This includes who you are, the problem, your product, your team, the business model, the channel/partners...I think that's it. Yeah, in four minutes. Ok.
Then, after the 4 minutes, they ask you questions for 2 minutes and then give you feedback for 4 minutes. THERE IS A FUNDAMENTAL FLAW IN THIS!!!!! I'm here to pitch you! I don't want your opinion of my pitch - I want you to say "yes I'm interested in learning more" or "no, take a hike". Argh. I'll proceed to show you why it's NEVER enough for these guys. Ever.
So I pitch (http://youtu.be/3lTxsv-CyoA). I included everything they asked. I did it in under 4 minutes (because if you go over, THAT'S what they'll criticize - they need to find something). After my pitch, they ask me a couple of questions (that demonstrated to me they didn't listen much). Then they gave me feedback for 4 minutes. During this feedback, I can't respond.
HAD THEY GIVEN ME THE 4 MINUTES THEY SPEND CRITICIZING ME, I COULD HAVE EXPLAINED THE BUSINESS TO THEM BETTER!!!! How is it possible to explain my business in 4 minutes in such a way that you won't have ANY questions?! This format is grossly flawed. I don't even think THEY understand it. As you can see in the video, they were not interested in learning more. They all said "that's very interesting, and I like what you're doing. But I would have liked to hear more about demand/security/privacy/team. OK THEN - GIVE ME AN APPOINTMENT AND I'LL TELL YOU ALL ABOUT IT! WTF IS WRONG WITH YOU?!
In case you didn't get it above, here is the link: http://youtu.be/3lTxsv-CyoA
Let me expand on my business really quick: I believe that I have figured out what people have been trying to for decades. I have found a way to make "online receipts" a reality for consumers (so you never have to worry about saving your receipts from your brick and mortar shopping). This reality enables a whole new game for merchants: We can look at consumer behavior at the LINE ITEM level across MULTIPLE merchants. This CANNOT be done today to this level of detail and accuracy. It is a massive game changer and we have been working with people like Walmart, Eddie Bauer, Capital One, American Express, BBDO, NRF, Experian, etc. It's not like we're sitting in a garage with an idea. But still, EVERY VC tells us that we're "too early". Never mind our channel development, team development, legal/patent work, market positioning, partners, and $500k invested thus far. We're too early?
What the hell does "early stage" mean then?!?!?!
Anyway, here I am. This is my pitch and my story. And it's not good enough. I'm convinced it doesn't matter what I have. If they don't know me or my team, they're not interested. They can't think for themselves enough to look at the market, truly look at what you have (for more than 4 minutes), and see if you really got it figured out.
However, look up Blippy.com. It's a great example of a company that got $13M before they had a product or a single customer. They essentially closed down. Look at Lemon.com - they got $12M before they had a product or any customers. They're our competitor but they have massively inferior technology and a terrible value prop.
We've nailed it for the consumer, the merchant, the credit card company, the bank - everyone that touches our solution is a winner. We spent 3 years developing it and we JUST started hitting the market to sell it. But it's not good enough. "Go get Walmart or Target and we'll look at what you have" says the VC. Wow. You guys are the biggest idiots in the room and don't even know it. I'm done with San Fran - you don't deserve me or my business.
(Except for this week. I have 2 more circle jerks to attend and I decided I'm TOTALLY changing my approach. It's going to be quite fun - I'm going to give them something they probably have never seen before. I'll let you know how it goes, but as far as traditionally pitching my business: no more.)