FF 011: 'The Savviest Investors Don't Ask What If' with Ben Nader, CEO & Founder @ Butterfleye

Ben Nader is Founder and CEO at Butterfleye, the most advanced wireless home monitoring system. In other words, Google Nest meets Dropcam. Butterfleye's investors include some of the biggest and most prominent names in the industry including our friends and past guests Brad Feld and Jason Calacanis. Butterfleye currently have a campaign on Indiegogo, which you can support here! In Today's Episode You Will Learn: 1.) How did Ben come up with Butterfleye? 2.) How does Butterfleye differentiate itself from other competitors like Dropcam? 3.) How much better does a new product have to be to beat the existing incumbents? 4.) Does Ben prefer mass market testing or small targeted testing with fewer individuals? 5.) How did Ben get his first customers? 6.) What has Ben done to drive the success of his Indiegogo campaign? What tips would he give to founders looking to raise on these platforms? 7.) How did Ben get Jason Calacanis as an angel? How did Ben find the fundraising process? Items Mentioned In Today's Show: Ben's Fave Book: The Alchemist by Paolo Coelho Ben's Fave Newsletter or Blog: Brad Feld's Feld.com, Jason Calacanis' Launch Ticker Ben's Fave Productivity Apps: Asana, Sunrise Calendar, Calm Meditation App As always you can follow Harry, The Twenty Minute VC, Ben and Butterfleye on Twitter here! If you would like to see a more colourful side to Harry with some mojito sessions to come, you can follow him on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  It's Friday and that can only mean one thing here at the 20 Minute VC. It's time to welcome a brilliant founder to the show. And today we have the fantastic Ben Nader, CEO and co-founder at Butterfly, the home security camera that can learn what not to record. It's probably best described as if Google Nest and Dropcam were to have a baby, Butterfly would be the product. Their investors number some of the best and most prominent in the industry, including our dear friends and past guests Brad Feld and Jason Calacanis, who I would like to say a special thank you to for introducing us to Ben. And Butterfly currently have a campaign on Indiegogo and you can find all the links for that in the show's description. But before we jump into today's interview,

• 0:44Harry Stebbings?

  a real problem many founders have in scaling their business is in the hiring process. And that's where HiringScreen can help. I spoke to one of their customers the other day and he said it's where recruitment meets rocket science, after having saved two days of work through using HiringScreen's Blink algorithm to analyse the CVs of potential candidates. So check out HiringScreen at www.hiringscreen.com for rocket science hiring without the lab coats. But now it's time for me to shut up. So without further ado, I'm so thrilled to welcome the inspiring Ben Nader, CEO and co-founder at Butterfly.

• 1:28Speaker 01

  You have now arrived at your destination.

• 1:31Harry Stebbings?

  Can you start us off today, Ben, by telling us a little about yourself and a little about Butterfly and how you came up with the idea?

• 1:39Speaker 02

  Absolutely. Well, thank you very much for having me. So yeah, a little bit about my background. So I was born in the Middle East, actually. And when I was in high school, my family me granted to States. And I went to high school and college here. I studied electrical engineering. Ever since I was a little kid, I loved the gadgets and electronics and building things. So electrical engineering was really a great match for what I was interested in and what I wanted to do. And so I went to school to study engineering, uh and then after after I graduated from school. I started doing engineering, hardware engineering, electrical engineering work for a few years.

• 2:21Speaker 02

  After that, I moved in to do business management and product management. But I was always, I happened to take an internship in the in the world of videos and cameras when I was uh. Just my third year in college. And that really opened up my eyes on how much I love cameras and videos and I consider myself a camera nerd. And that led to, that led to always staying the last ten years before starting a company when I was working in corporate. I was always around cameras or or video uh displays and I for for many years I worked for a component maker. A semiconductor maker called Texas Instruments and I I started as an engineer, but I towards the end I managed their.

• 3:03Speaker 02

  Video chipset product line. So these are the main components that go inside a camera, the electronic components that go inside of it.

• 3:10Harry Stebbings?

  And what made you make the jump from being in the corporate world to being an entrepreneur now?

• 3:15Speaker 02

  Yeah, okay, a couple of different things, but the idea around Butterfly and how it all started. Was really as a series of frustration, personal frustration and shortcomings of the products I bought in the market. So I had a, I had a simple need and I had a, I had a problem of I wanted a simple. Security or simple peace of mind device I can put in my garage and keep an eye on my bikes, my bicycles, I'm into cycling. And and I bought every product, this is back in two thousand twelve, two thousand, yeah, two thousand eleven to two thousand thirteen, those three years. I bought everything that was available on the market at the time and there were so many different shortcomings and.

• 3:57Speaker 02

  Because if you will, because I was in that field and in that area and I kind of knew where the technology was going. And I felt like I have the, there's so much things you can do with where the technology is going. And why are these solutions or have so many different shortcomings and many of those shortcomings led to many of the design decisions. At Butterfly and what the product is today, which we can dive into as well.

• 4:20Harry Stebbings?

  Sure, absolutely. And how did you go about designing your product from the offset, from the blank piece of paper and for people? Maybe considering designing their product, where did you start?

• 4:30Speaker 02

  So it all started from a personal problem and buying everything in the market and nothing, nothing uh working solve your problem. Then, uh of course, doing some research and figuring out where the technology going and and. Uh seeing the opportunities really there and other people want, other people have the same problem as you and other people want a solution. So this was all the preliminary work, but a biggest step for me was when I made the jump. Um from corporate guy to, okay, I want to be entrepreneur and I want to go and pursue this. Two hundred percent of my time wanna put on there and uh. Uh and that resulted in being able to recruit some really smart people around me.

• 5:14Speaker 02

  To be able to do a lot of the, so to complement, I guess, my skill set. I I knew some about the electronics from the hardware. But I had no clue about the design of this product, how should it look and feel. So one of the first thing I did when I left my job and do this uh full time. Is to look to find industrial designer to join me. I always knew if this is a consumer electronic product, it has to sit in your home. It's gonna be part of your home. It has to look and feel good. So I wanted to have a designer. So I wanted to start finding uh people that have this skill set. And then grew from there.

• 5:48Harry Stebbings?

  And how did you go about hiring that team? Was it through connections or did you use uh the internet?

• 5:55Speaker 02

  Uh, a little bit of everything, yes. So it did help that I lived in Bay Area for six, seven years. And just, just, you know, being in the, uh, just living in city or around the city and being with other entrepreneurs. Or having, finding roommates throughout the years to uh to to through friends of friends. Uh, so a lot of different networking and friends recommendation, of course, I spent a bunch of time on Angel List and LinkedIn. See who are the different people that might be interested. But the most important one was the recommendation from friend of a friend or from some in- some industry. Expert that I knew from a previous job that knew somebody else, so.

• 6:35Harry Stebbings?

  So now, so now we have the product. How does Butterfly differentiate itself from other people in the market like Dropcam?

• 6:44Speaker 02

  Sure, so in in many ways, but uh literally over a dozen features, but let me just focus on top three here. So the first one, so cameras like Dropcam has existed for many years, you know, when you walk to a security. Uh when you walk through the airport, there are many security and surveillance cameras. So what these cameras do is a twenty four seven passive recording of what's happening. What they see and it's it's just that, it's just a dumb recording of everything as long as the camera is turned on. And we didn't wanna start Butterfly and make another camera that just does this. The idea and the core fundamental uh differentiation with our product is this this patent pending technology we call ABR.

• 7:27Speaker 02

  What ABR allows us to do, ABR is basically uh putting a computer and putting a brain, if you will, inside the camera. That can start making making a sense of the content. What is the camera is looking at, are there any humans there, are there any pets there? Or is it no, there's no live being in in that in that video footage? And if it's a live being, who is it, is it a homeowner, maybe I should give him privacy and not record them. And build this smart into the camera and then the camera should behave differently depending on what it sees and uh what it sees in front of it. So that was our first big differentiation, go away from the twenty four seven surveillance.

• 8:07Speaker 02

  To a smart camera that can analyze what's going on in front of it and only record when something important happens. Uh the second problem was solved and the second differentiation we have is the cameras. We know, we made uh people have made point and shoot cameras for many years cordless and battery operated. Why don't nobody has made a surveillance camera um uh um battery operated? My specific uh my specific problem was I wanted to put these cameras in my garage. And my garage doesn't have power outlets where I wanted to set this thing up. So that's how it all started, I was like, okay, there's many places you don't have outlets or there's wiring the outlets, it might be ugly.

• 8:45Speaker 02

  And uh why can't we have a camera that you can move it around and uh and it lasts on battery for decent amount of life? The third differentiation is about the automatic built-in storage. So what we learn after we set up and and tried all these these cameras. Um. So the internet connection, the wireless connectivity is are just not hundred percent reliable. Especially when you have this internet constant stream of video. Wouldn't it be smart if the camera had built in a storage? And it could decide between depending on its internet connection between uploading the videos to a cloud storage. Or uploading videos or keeping videos locally.

• 9:28Speaker 02

  And making a decision on what to do depending on whenever the internet comes available, next time the internet comes available.

• 9:34Harry Stebbings?

  You said that there were twelve features that kind of differentiate yourself. So how much better do you think a new product has to be to beat the existing incumbents? We often say that here that it's, you know, you have to be ten times better, otherwise it's not gonna work. How much better do you think it has to be?

• 9:52Speaker 02

  Uh. Yeah, I I many times I heard about the ten X, ten X better as well. I believed in that too. I think I think what I recently, the more I engage with our customers, the more I learn about. How they tell us they're gonna use the product, how they actually use the product when they get one of these beta samples in their hand. Um. I think it's really one or two features at the end of it that's gonna matter. And you really in this one or two features, you really got to advance the con- a customer and a consumer experience. And you gotta really, you gotta really solve their problem and and make it so much easier. Um. But you don't need to have tw- twelve different uh twelve different things, all different at the same time.

• 10:34Speaker 02

  That's that was one of the learnings that probably the last six months I've come to come to realize that. Pick one or two feature by really enhance the consumer experience on those. It's my, it's my latest uh findings.

• 10:47Harry Stebbings?

  And what sort of testing do you prefer? Do you prefer mass market testing where you kind of distribute to as many as possible in the early? This is in the very early stages, where you distribute to as many as possible and get a huge amount of feedback? Or do you prefer the kind of very narrow, very targeted feedback of a hundred individuals or so?

• 11:06Speaker 02

  Uh, the hundred individuals, the hundred individuals.

• 11:10Harry Stebbings?

  And why is that?

• 11:11Speaker 02

  Uh, it's a lot more controlled, it's a lot more focused on who is that hundred people. And I can even, it's even smaller than that. In case of a hardware, one of the things I learned about um and this connected devices. I used to try to, on every different feature, we used to go twenty, thirty different feedback. Or twenty, thirty different people play with it, use it and give us feedback. What I learned was really interesting. After three to five, somewhere between three to five people. The, I didn't need to do anymore. I found the problem. I found, everybody else was almost identical answer. It was rewarding it differently. So you need a, I think you need a small group, but you need to know that group really well. So if you just go.

• 11:54Speaker 02

  You need to know that group. Um, okay, I'm going after males between this age and this age with this kind of lifestyle. They have iPhone, they have, they wear iWatch. They do this, that, this and that. But then I think you just need a small set of feedback. And that will, you will, you will know it. By the time you talk to five people. You've got the, you've got the message of this, this feature is not very useful or no, this feature is really useful.

• 12:16Harry Stebbings?

  And a lot of people struggle with getting their first customers. How did you get your first customers then, excluding, say, friends and family?

• 12:24Speaker 02

  Um, so Indiegogo has been amazing. So Indiegogo is a perfect platform for us to go on there. And, and get our customers. So in the world of connected devices and I O T world. So we're fortunate that we, there are these platforms called Indiegogo and Kickstarter. And uh, these, these platforms have a amazing group of early adopters, which is perfect, which is the people we are trying to find. Trying to talk to and um, and we get, uh, we, we show them the product. We give them some discounts for being the early and the first one to get on the product. And then these guys are, are really gonna shape the last, let's say, the last ten percent of the product and, and the.

• 13:05Speaker 02

  The things that we wanna get feedback on, especially the things we can reiterate and especially on the software side and we can change a little bit. So highly recommend platforms like Indiegogo and Kickstarter.

• 13:15Harry Stebbings?

  So let's talk about your Indiegogo campaign that's live now, and it's doing exceedingly well, so congratulations on that.

• 13:22Speaker 02

  Thank you, thank you.

• 13:23Harry Stebbings?

  So why did you choose Indiegogo over Kickstarter? And what do you think's driven the success of your campaign?

• 13:29Speaker 02

  You know Indiegogo or Kickstarter, both are awesome. We've talked to both of them. I think we would have, uh, I like to think we would have been successful if we'd have gone on Kickstarter as well. Um, I think it comes down to, we went with Indiegogo because we're based in San Francisco. Indiegogo team was based in San Francisco. And we just felt a little bit more, um, closer working, collaboration with them. We, there was lots of questions we had. Obviously, it was our first time doing it. And but for the Indiegogo or Kickstarter people, it's not their first time doing it. They've seen hundreds of thousands, if not millions of these campaigns. So we just felt a little closer with the Indiegogo people. I think part of it geographically, we were here and they would come to our office and show us some things and we would go to their office. Um, probably if we were New York based, maybe we'd have used Kickstarter.

• 14:14Harry Stebbings?

  And why do you think it's been so successful? Cause there's a huge amount of, um, products that go on there. Why do you think yours has been one of the top performing?

• 14:23Speaker 02

  Thank you. First of all, the big credit goes to the team. The team, I'm, I'm very fortunate to have an amazing team around me. From our marketing guy to our designer, uh, to the rest of the team, but specifically these, these two guys on the, on the Indiegogo, uh, campaign side. Uh, they have done a fantastic job of preparing for this. We didn't just put it up there and hope for best. So the last six weeks, we were aggressively preparing for this. The last week of it, I think there, the guys were pulling, you know, twelve, fourteen hour days, just preparing for this, uh, from, uh, obviously you need to have P R. From, um, uh, building an email list and a kind of momentum of the people behind you to get, get your social media right.

• 15:05Speaker 02

  Have a Facebook presence, have a Twitter presence, uh, to have a plan on, on what you're gonna do in day one. To that video has the messaging of that video, the messaging of the, the page. Uh, they're all a critical part of it. So preparation is the number one key.

• 15:20Harry Stebbings?

  And you've also raised funding from our dear friend and previous guest, Jason Calacanis.

• 15:26Speaker 02

  Yes.

• 15:26Harry Stebbings?

  How did that come about? And how did you find the fundraising process as a whole?

• 15:31Speaker 02

  Yes, um fundraising process, uh how did I met Jason, let's start from that.

• 15:38Speaker 02

  Yes, Jason is awesome. I think the world most helpful angel investor. Uh is is a fantastic and a very appropriate title for him. Uh I met him through Angelist.

• 15:49Harry Stebbings?

  Did you?

• 15:49Speaker 02

  Simple in that, yeah, and I love, I've come to love the Angelist platform, especially for early stage seed stage companies that. That need to meet angels, not necessarily the big venture capital. Angelist is awesome. So I met Jason through Angelist.

• 16:04Harry Stebbings?

  So did you reach out to him?

• 16:05Speaker 02

  Actually, no, he found us. Him and his chief of staff, they they wrote a note to me. And I followed up and we met a couple of times and then we did, at the time, I believe it was his biggest syndicate. At the time, he hadn't done a million dollar syndicate and and we did a million dollar syndicate with him. And it's just, we just got along really well. I learned a lot, you know, going through the process of angel invest, uh angel um. Funding and raising the the angel round and the seed round of the company. And when I met with Jason, it was just, it was, uh it was over time, uh over a couple of different meetings. But it was just a fantastic match and I really felt like, wow, he's there to really help me as an entrepreneur.

• 16:49Speaker 02

  And as a first time founder, to become successful, to figure out the next next things to do after. After the angel round, what are we gonna do for the V C round, and what are we gonna do with so many different things, so. It was no brainer to let's work together.

• 17:03Harry Stebbings?

  And what do you think the biggest benefit is he's brought? Is it the publicity that he brings? Or is it the guidance he brings from his experience? What is it for you?

• 17:12Speaker 02

  The biggest probably his guidance is is that he's been available for me over the weekends, over the. In the evenings, I've been able to send a quick text and chat about things that I'm going through. And he's been incredibly supportive. His advice has been very, very valuable.

• 17:27Harry Stebbings?

  And when you look back at the fundraising experience, was, is there anything you'd do differently?

• 17:33Speaker 02

  A lot, yes. Um, I've learned so much. So I think an angel round, uh, what, one of the things I didn't realize at the beginning. Is, and now that I've closed some, some angel funding, I think the best angel investors, and this is how it went with Jason's meeting too. Is they're spending so much of their time on you as a founder and the founding team around you. And your ability to execute, where were you before, where are you now in the last, like, let's say the six months you've been working on it before you met them. And maybe, and it's, it's a one or two months period of from, from when you met, meet them to probably when you get the money and how much execution are you doing during that time.

• 18:14Speaker 02

  Um, as opposed to some of the angel investor, and some of the other, my, some other meetings was going over. It's so many detail of, okay, well, this product, this, this is so focused on the different features of the product. Do you know what I mean? And, and some of these fe- features are, well, you don't have all your, uh, you don't have everything correct at hundred percent yet. So those features that you put on there. You're gonna go out there and get some feedback and realize, oh, no, that's a completely wrong feature. Nobody wants it. So why are you, why are you wasting engineering time building it? And, um, or too many what-if scenarios. My, one of my, uh, uh, radar detectors for, for a bad angel investor, if you will.

• 18:54Speaker 02

  Is if they're asking me as a founder, too many, what if this, what if that? There are a million what ifs it could go. My, my radar for a good angel investor is if they're asking me, uh, they're sitting down with me and asking me about the business case and asking me about. What is your vision of the company? Asking me about what, what, what execution have we done to get here? Where are we gonna go? It's too many what if this, what if that, what if, you know, your biggest competitor does this? What if your biggest, what if Google does that? And. There, there's so many different ways it can go. So I tried to avoid that. And I found the, the most savviest investors. Don't ask you that question. They spend a lot one-on-one time with you.

• 19:34Harry Stebbings?

  And how did you meet your other investors?

• 19:37Speaker 02

  Um. A lot of it came through Angelus. So before we met Jason. Um. We were still, so I I to to meet Jason and how Jason finds us, as you know, there are many startups on Angelus.

• 19:48Harry Stebbings?

  Yeah.

• 19:48Speaker 02

  I think one of the advice I give to my uh my other founder friends on um. Uh whether they're doing connected devices or software, as long as they're doing something consumer facing. I highly, highly recommend them, don't be in a stealth mode. Don't be in a stealth mode. They, nobody's gonna find out about you. You should talk about your idea and you should have a presence on Angelus. You should put pictures up. You should put uh detailed text of what you're building and and get yourself out there. So we got away, before we met Jason, we found a way to get featured on Angelus. The Angelus people liked us. There's a team on Angelus that. That features company and we got, we gave our name to them through some contacts and then they featured us. So that generated a lot of traction around.

• 20:33Speaker 02

  Around our company, just within the Angelus community and we closed on some individual investors there. At the very, very beginning before that was really friends round. I I use the executives of the corporate companies that I worked for to collect the first a few, you know, the hundred, hundred fifty thousand dollar checks. Um. And at the very first investor in my own company, uh of of Butterfly, I was, it was myself. I put myself, my own savings in there. It wasn't like I left my job and everybody was ready to give me a bunch of money, so had to make some progress first.

• 21:05Harry Stebbings?

  And I'd love to jump into a quick fire round now.

• 21:08Speaker 02

  Sure.

• 21:09Harry Stebbings?

  So your favorite book and why?

• 21:11Speaker 02

  My favorite book, probably uh Alchemist by Paolo Coelho.

• 21:16Harry Stebbings?

  Okay.

• 21:16Speaker 02

  And I love that book. That book because it changed my mindset that when things get really, really hard. It's a, it's a really good thing. It means you're that much closer to your end goal. Don't give up. You're so much closer. As opposed to most of the time when things get really, really hard, it's when you wanna give up. You're like, okay, I've had it. It completely changed my mindset about that.

• 21:39Harry Stebbings?

  And then which founder do you most look to emulate? Who's your kind of founder idol?

• 21:44Speaker 02

  Uh founder idol. Ah, lots of different ones. Ah, in the more recent years, guys like Travis Klenick at Uber. As the consumer electronic guys have been able to take a simple idea and have a massive, massive growth. And show massive worldwide adoption of people want this. Um, Brian Chesky at Airbnb is another one. And obviously on the more traditional one, guys like the Steve Jobs, obviously big, big inspiration.

• 22:13Harry Stebbings?

  Absolutely.

• 22:13Speaker 02

  I read about them, yeah.

• 22:14Harry Stebbings?

  What about your most read blog or newsletter?

• 22:18Speaker 02

  Blog or newsletter? Jason's stuff, I obviously read those. I read those before I met Jason. Uh, Brad Feld, Brad Feld is.

• 22:25Harry Stebbings?

  Brad is fantastic, yeah.

• 22:26Speaker 02

  That's, yes, it's been incredibly useful for the founder. Uh, yeah, so Brad and Jason are the top two. Um, that's it.

• 22:35Harry Stebbings?

  Don't worry, two previous guests, we like it that way.

• 22:38Speaker 02

  Awesome, awesome, good.

• 22:40Harry Stebbings?

  The highlight of the butterfly journey?

• 22:43Speaker 02

  The highlight of butterfly journey, being, um, so being in a consumer electronic and working for corporate. There's so many different ones, so many different ones, from hiring really awesome people, um, to joining us. But probably one, one, probably a smaller one, but it's a great highlight for me. I've gone to this consumer electronics show for eight or nine years in a row. Uh, always representing some big corporate company. This past year, we represented Butterfly at a booth and had a thing every day, of course, much smaller than these big. Uh, big brands and big consumer electronics, but it was so, I was so proud of the team and everybody that, hey, we, the company. Butterfly is now present on the show floor of the biggest electronics show in the world.

• 23:26Speaker 02

  Uh, and we have our own booth there and our own presence there. It was, I don't know, it was, it felt good to me.

• 23:31Harry Stebbings?

  Absolutely, I'm sure it did. And then must have apps or software for you?

• 23:37Speaker 02

  Must have apps or software, okay. Um, I use a sauna a lot. I use uh sunrise for calendar. Oh, and my latest new one that I did last month, I've been using it every day is the Calm meditation app. It's like meditation for dummies. I've been trying to do some meditation. People like Jason have told me about it. I haven't been able to stick to one till I found Calm app.

• 24:02Harry Stebbings?

  And have you felt better since using it?

• 24:04Speaker 02

  Yes, I highly recommend it. Ten minutes a day in the morning. I feel like the days I give up ten minutes to do that, I get more done throughout the day.

• 24:13Harry Stebbings?

  Ah fantastic, I'm definitely gonna try it on. Uh, and then next five years for you and for Butterfly.

• 24:21Speaker 02

  Oh, next, I I hope to get Butterfly to the level. So Butterfly will will have series of products and software services. Around the smart home and around connectivity of uh smart devices. Actually, it'll be home and outside of the home as well, home, office, small businesses. I hope to build the, I hope to build.

• 24:45Speaker 02

  To a brand that's at that's that's similar to what GoPro or guys on Beats by Dre have done. It's a consumer brand that consumer recognise and can trust.

• 24:56Harry Stebbings?

  Absolutely. And Ben, thank you so much for giving up your time to be on the show today. It's been an absolute pleasure having you.

• 25:02Speaker 02

  Thank you so much for having me, it's been great.

• 25:05Harry Stebbings?

  What an incredible interview there with Ben. And if you liked what you heard from Ben and Butterfly, then please don't forget to support the Butterfly Indiegogo campaign. Which the links can be found in the show description. As always, all the items and resources mentioned in today's show, including Jason's link to a launch ticket. And Brad Feld's Feld dot com can be found on the blog at W W W dot the twenty minute V C dot com. But before we leave you today, it's a common theme that first-rate people hire first-rate people, second-rate people hire third-rate people. So the whole ethos of your business is centered around what type of level people you hire. Make sure that that level is the highest it can be by heading.

• 25:46Harry Stebbings?

  ...over to www.hiringscreen where you can use their blink algorithm to analyse all the skills and qualities of the candidates applying to your job to ensure they are of the highest standard. And you can follow them on Twitter at HiringScreenRH. And again, the website is www.hiringscreen.com. Thank you so much as always for your continued support and we look forward to seeing you in the next episode.