20 VC FF 031: James Beshara @ Tilt on Crowdfunding For A Mobile World, Finding The Perfect Co-Founder & Beer Pong!

James Beshara is the Co-Founder @ Tilt the micro-crowdfunding platform that allows you to receive funding from friends—changing the way collaborative funding works. Tilt has raised $37 million from 3 rounds of funding from the likes of Andreesen, SV Angel, Alexis Ohanian, Naval Ravikant and Sean Parker just to name a few. As for James Before co-founding Tilt, he studied Development Economics as an undergrad and then went on to build dvelo.org, a site for crowdfunding loans and donations to poverty-alleviation organizations in developing countries. In order to vote for who you think will win James and Harry's beer pong match, head over to @twentyminutevc on Twitter and vote using our poll. A special thank you to Mattermark for providing all the data displayed in today's show and you can find out more about Mattermark here! Click To Play In Today's Episode You Will Learn: 1.) What were the origins of Tilt? How did James go from a micro loans collector in Africa to founder of one of SF's hottest startups? 2.) What does James make of the current crowdfunding landscape? What will it take for crowdfunding to go mass market? 3.) What are Tilt doing to make crowdfunding more bite sized and consumer friendly? How important is the on boarding process for Tilt? How are Tilt approaching customer retention? What are James' targets for the year ahead with Tilt? 4.) With investors like Andreesen, SV Angel, Naval Ravikant, Sean Parker just to name a few, what the investment journey like? I heard the first funding took 6-8 months and the series A took 6 days with a16z. What changed to turn it around? 5.) On PH LIVE James stated that founding a company is a destination less journey and although admirable I struggle with that from the investors perspective. How did James sell a startup in a pitch with no exit strategy? 6.) What was it that attracted James to the investors that he chose? What value add was James most attracted to? Items Mentioned In Today's Episode: James' Fave Book: 100 Years of Solitude, The Power Of Now As always you can follow The Twenty Minute VC, Harry and James on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, 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?

  You are listening to the 20 Minute VC with your host, Harry Stebbings, and as it is Friday, that can only mean one thing. It's time to bring out a world-beating founder. So, joining me today, I'm delighted to welcome James Beshara. James is the co-founder at Tilt, the micro crowdfunding platform that allows you to receive funding from friends, changing the way collaborative funding works. Tilt has raised $37 million from three rounds of funding, and it's probably got one of the most insane cap tables I've ever seen, with the likes of Andreessen Horowitz, SV Angel, Alexis Ohanian from Reddit, Naval Ravikant from Angel List, and Sean Parker, just to name a few. And as for James, before co-founding Tilt, he studied development economics as an undergrad,

• 0:45Harry Stebbings?

  and then went on to build dvelo.org, a site for crowdfunding loans and donations for poverty alleviation organisations in developing countries. Now, in today's episode, I challenge James to a beer pong match, a bit out of the ordinary for the 20 Minute VC, but you can have your say on Twitter as to who will win, so head over to @20minetc on Twitter and vote using the poll pinned to our page. But before we dive into the Tilt fundraising journey now, I'd like to say a huge thank you to Matamark for providing all the data and analysis for the show today. Anyone looking for more startup and VC reading material, check out the amazing Matamark Daily by Nick Frost, @thinker on Twitter, for all the best startup and VC articles.

• 1:29Harry Stebbings?

  However, enough from me, so without further ado, I'm delighted to hand over the reins to James Beshara, co-founder at Tilt.

• 1:43Speaker 01

  You have now arrived at your destination.

• 1:46Harry Stebbings?

  James, a very warm welcome to the 20 Minute VC and Founders Friday today. It's such a pleasure to have you on the show.

• 1:53Speaker 02

  Thank you, Harry. Thank you for inviting me to be on the show.

• 1:56Harry Stebbings?

  Now, I'd love to kick off today's show by hearing a little about your rather unusual background and the origins of Tilt, so could you tell us a little bit about that?

• 2:06Speaker 02

  Sure, the high level is, it really is kind of a circuitous path to starting Tilt. But the high level is I studied, my background is in economic development, development economics specifically was my degree. But I picked up web development in college and right when I graduated while working on the ground in poverty alleviation in Cape Town, South Africa, just outside of Cape Town, I got to marry those two passions. And I started to build out a, essentially what ended up becoming a crowdfunding platform for poverty alleviation through microfinance, microinsurance, total mouthful, won't get

• 2:46Speaker 02

  into what that is, but it definitely, it definitely showed me the power of social software around, around money and what it can, what it can become. And so while building that, had this one insight of, wow, crowdfunding, this crowdfunding thing that seems to be, you know, caught, it was codified by a journalist in like 2010. I was like, wow, this is gonna be really big, much bigger than the way I'm building it. And then the second insight, truthfully, it was, it was kind of in 2011 feeling like, alright, this is gonna be bigger than my narrow focus, but also, I don't know if any platform is really building it for a mobile world and thinking about kind of what's on

• 3:25Speaker 02

  the horizon, which is, you know, just a much more mobile-driven web and digital ecosystem. And so started, combined those two insights and that birthed Tilt, a mobile-focused crowdfunding platform.

• 3:42Harry Stebbings?

  And talk to me about your co-founder, Khalid.

• 3:44Speaker 02

  Yeah. Khalid is, he is, I will preface it by saying it's the luckiest thing that ever happened to the company was the introduction to Khalid. He was helping run strategy at Rackspace even as a 26-year-old and was, is a phenomenal technologist, developer, strategist, just a great all-around person that could be a CEO of any company. And when I started building out the first version of Tilt, an investor put us in touch and I was able to convince him to, to not start his own company, but come join me and build out Tilt together.

• 4:24Harry Stebbings?

  And I heard about your hunt for a co-founder there and in your interview with Eric on Product Hunt. And it made me wonder, why did you decide to look for a co-founder rather than going down the solo route on your own?

• 4:35Speaker 02

  Well, there's a simple answer and a little more nuanced. The simple one is an investor said, "Hey, you need a co-founder. This thing is going to be so, it's going to be so hard." You don't, you don't even know how hard it's going to be that you really, just especially for young founders, he really recommended a co-founder. The more nuanced answer is really just an understanding of my limitations. I am a pretty poor developer and what we are going to be building is, there's no two ways about it. It's going to be a pretty, what we aim to build is a massive technology company and really needed an excellent technologist and CTO to join me. So, those two things combined and they presented the need. The

• 5:18Speaker 02

  intro to Kalen kind of presented the solution of, "Wow, yeah, this is the guy. Even in a three-hour coffee with him, I could tell, I gotta get this guy on board."

• 5:26Harry Stebbings?

  Okay, so let's dive then straight into the crowdfunding, the crowdfunding market now at present. Where do you think we are now and what's it going to take to get mass market crowdfunding?

• 5:37Speaker 02

  So, it's, you know, it's a couple hundred thousand that have started crowdfunding campaigns. A few million, about 10 million have backed campaigns. But, yeah, you're right. It's still, it's kind of, it is so indicative of just the early innings of where we are with crowdfunding and the fact that it's the only couple hundred thousand people have started a crowdfunding campaign. We're five, six years into this, this being a topic that people have talked a lot about, but there's 2 billion connected devices in the world and that number is really small. And so then start to ask yourself why. And our hypothesis is, is that crowdfunding will have a very similar narrative arc to blogging, to where, you know, 12, 13 years ago, blogging was this thing that had a lot of hand-waving,

• 6:22Speaker 02

  had a lot of, it was on the tips of, you know, journalists' tongues of the, you know, what is, what's going to happen in the world when everyone has, you know, ink by the barrel and blogging just ruins journalistic integrity and takes, and, and obviously, none of that has really come to, it hasn't been that alarming. And by and large, it's been a really democratizing shift in the way information is published with blogging, but it took a few years. And actually, in our view, it took really the second generation of blogging platforms that really took it to the mainstream. Things like Twitter. That had a more bite-sized, simpler version, a more accessible version for you to publish information online.

• 7:02Speaker 02

  And in something like WordPress, that was much more powerful and robust. Very different than LiveJournal and Blogger. Those platforms were and are awesome. But Blogger getting to one to two million active users in the first few years, and Twitter really getting into 300 million active users. It kind of shows, in our view, it kind of shows if you can make crowdfunding a little more accessible, a little more bite-sized, a little bit built for the everyman and woman, then you might be able to introduce it into people's daily lives a little bit easier. So, we think that that might be the case with the second generation of crowdfunding tools and crowdfunding arc.

• 7:43Harry Stebbings?

  And so what are you doing at Tilt then to make it more bite-sized, more accessible, more maybe consumer-friendly to this second generation of crowdfunding?

• 7:52Speaker 02

  Yeah, I think a lot of it starts with just the product hypothesis, product design from the beginning, and then a lot of it is really, you see it when you download the app. I mean, you can quite literally start a quote-unquote crowdfunding campaign. Our crowdfunding campaigns really are built around smaller, it's not for $50,000 documentaries. It's really built for $500 for a group gift for someone in the office, $5,000 for renting a cabin for the winter, for a ski trip, $2,000 for a neighborhood cause. Something to where you don't need to make a five-minute video, eight levels, nine levels

• 8:35Speaker 02

  of rewards, nine paragraphs, but it's, hey, we really want to raise $2,100 to be able to beautify the median in our community, in our street, or fix the potholes on our block.

• 8:51Speaker 02

  And in college kids, you know, one of our fastest growing demographics is colleges. And it's, hey, we want to collect fifteen hundred dollars for our, for our party bus. Or, or a thousand dollars for a really awesome, you know, late night party. Those types of groups and kind of groups of friends and borrowing our favorite elements of crowdfunding, but providing for groups of friends in a smaller way, that, that started with product design. And you really see it, when you download the app, you can quite literally start a tilt and quote unquote crowdfunding campaign in fifteen seconds, the time it takes to write a tweet.

• 9:26Harry Stebbings?

  Yeah, I, I, I saw it because obviously, obviously I downloaded it many months ago, but revisited it before our interview today. And so was that a big part of the product design in terms of minimizing the onboarding process to make sure that starting a campaign was so easy, unlike doing a very tailored video? Was that crucial to your growth?

• 9:46Speaker 02

  A thousand percent. In fact, I'd say that's one of the big, that was, has been one of the biggest challenges as a company or as a, for a product is to take something that's conventionally been pretty ornate, a pretty involved process and break it down into its simplest form. I think, you know, when a casual user downloads the app and is able to start a crowdfunding campaign and collect payments from around the world in, in twelve, thirteen, fifteen seconds, I don't, I think they will feel, and we hear this pretty often, wow, that was simple, that was awesome. But I don't know if they'll know how much, how much pain and consternation and focus, maniacal obsession over simplifying it has, has taken place behind the scenes to fit

• 10:31Speaker 02

  that into a mobile UX. So yeah, absolutely, it's, it is been a ma, it still is a major focus of ours to continually obsessively simplify it.

• 10:42Harry Stebbings?

  And then in terms of, we spoke about onboarding users there, how, how do you deal with customer retention then? I mean, with raising money for a particular project, say, you know, a nephew's operation. Once that project is funded, how do you retain those customers for future projects? Is it purely through being so successful in delivering on that first promise?

• 11:04Speaker 02

  Yeah, I think it's, uh, that's definitely part of it. People having their first experience be a successful one. Eighty-two percent of, of tilts are successful. So that's, uh, you're very different than most crowdfunding campaigns where the majority don't reach their goal. Uh, the vast majority exceed their goal. And actually, um, you know, if, if you have a successful tilt, um, on our platform or a successful campaign on our platform, then, um, the average successful campaign raises a hundred ninety-two percent of its goal. So basically gets two X what they set out to raise on average. That's one of my favorite stats. It just shows the effectiveness of, you know, we, we really are creating a lot of value for a user that comes in to use the product for the first time. And that is huge.

• 11:49Speaker 02

  Second part of it and, and kind of where we, uh, where we grow is then people that join that first campaign because it's really built for a much more accessible version of crowdfunding, kind of to where it's, you know, we feel like almost everyone in the world over the next twelve weeks will have a chance to use Tilt. If we can make the product good enough, uh, the experience, uh, good enough, then you'll want to recommend it to the friend that after you join that nephew's campaign, you'll be on an email chain seven weeks later of someone trying to collect money for, you know, a, a group gift for the office admin, um, uh, who's having a baby. Or there's going to be, you know, a family friend that says, uh, you know, uh, is dealing with a fire and, uh, on their house and, and has another cause that you say, you know

• 12:33Speaker 02

  what, we should use Tilt for this. And so contributors to one campaign become word of mouth drivers for, for, uh, subsequent ones.

• 12:42Harry Stebbings?

  And so you entice users in with maybe more trivial, you know, party bus, uh, what do you call them, campaigns? Um, and then later on down the line comes the more serious grandmother's operation or water well in, in parts of Africa style. Is that it?

• 12:57Speaker 02

  Absolutely, and the idea is really making it so simple that whenever you think of groups and money, whenever you think of collecting money from a group, fundraising from a crowd or selling to your community, we've just started to release some really cool commerce features in the last 12 months that allow you to sell. And so instead of tilting at, you know, your goal is $500 or $1,500, now we've built in features for you to be able to tilt it, a number of items sold. So if you want to sell tickets to an event, and the event only happens if you sell, you know, 35 tickets or 135 tickets. Or you want to

• 13:36Speaker 02

  produce a really simple item, you know, you don't need to do a complex crowdfunding campaign of, you know, where you have to make a five-minute video and eight levels of rewards, but you just want to sell one item and it tilts it 25 sold, then you can do that really easily through these commerce features that we built. And one of the great things about that simplicity is you're going to see those contributors start their own campaigns, and you're going to get a notification of them inviting you to their campaigns. And it becomes a self-reinforcing communal tool that you just start using with your group over and over again.

• 14:12Harry Stebbings?

  And in the research for this interview, I had a check out of the investors that you have for Tilt. What can I say? I mean, they're absolutely insane. You've got Andreessen, you've got SV Angel, Navar Ravikant, Sean Parker, just naming a few. Obviously, there are many more amazing angels, but the fundraising process hasn't always been so easy. I heard the first funding took six to eight months, but the Series A took six days with Andreessen. Can you tell us about the funding process for you and what changed it around from that massive dichotomy?

• 14:46Speaker 02

  Sure. It's a question I don't get asked very often. You know, for the entrepreneurs out there, the thing that I'll tell you is, is one of the best things that we ever went through was the fundraising process when it was just two of us in Texas, way outside of Silicon Valley, trying to fundraise from, you know, quite literally investors that invest in real estate and, you know, oil and gas and, you know, hardware companies. I mean, Austin, Texas is, you know, the home of Dell computers. And so that's kind of the world that they understand and understood. And being

• 15:25Speaker 02

  Being in that situation where we had to hone our pitch down to 90 seconds, be able to give our value prop instantaneously and be able to communicate why we were building what we're building is special is, uh, was a very formative experience, incredibly formative. It's, you know, paid off in subsequent financings, uh, in recruiting and getting into Y Combinator. Uh, it was just, you know, that 10 minute interview to get into Y C was, uh, we just had so much just kind of road testing before we even had that interview. But it, I mean, there's no denying it was, it was a grind and it was really, really tough. I remember a lot of sleepless nights and a lot of just questioning, were we doing the right things?

• 16:07Speaker 02

  And is there some, maybe there's writing on the wall if we, if it's taking so long to raise just $500,000. But by kind of continuing with it and, and being really persistent and really believing in what we're building, um, it ended up being a really formative experience that, that honed our pitch for subsequent financings. It made the, the other ones, uh, much easier. The other thing that we had in our, uh, in our bag that, that made it helpful was that we had a growth graph going into our, our series A and a growth graph that we didn't really have in our seed.

• 16:39Harry Stebbings?

  And it was a hockey stick.

• 16:41Speaker 02

  Yep. Being able to put that makes, uh, makes things, um, they definitely make things a little bit easier.

• 16:48Harry Stebbings?

  But, but I'm very intrigued in talking of investors and we heard on, on Product Hunt Live with Eric again, you stated that founding a company is a bit of a destinationless journey. And, and although very admirable and inspiring, it's, it's slightly hard, is it not, for investors to digest that information? I mean, how do you sell a startup to an investor when there's no clear exit strategy? Was that a problem?

• 17:12Speaker 02

  No, it wasn't. And I'd say that is the virtue of investors in Silicon Valley. They absolutely have a destination mind, but their destination is, you know, the, the ultimate one is, is being a standalone, durable, long-lasting company. And in going public, that might be their destination. You know, as we have all seen, any company that goes public, it's for the for the founders, the entrepreneurs, the leaders in that company, for the entire company, it's kind of like it all starts over again, it resets to zero, now you've got to prove the world that prove the world wrong all over again. We've seen that with Facebook and we're seeing that now with Twitter, it kind of, it's as if the previous seven, eight years never even happened. You know, for the founder, it really is better to have that mindset of it being

• 17:56Speaker 02

  destinationless, because then you really, at least for us, you build on fundamentals and you think about it in terms of, all right, what's going to build the most value over time. But yeah, for investors, for sure, they're thinking about a destination and a return on their capital. But I think the best investors, they want to hear that these guys, our girls are going for broke and they're swinging really big.

• 18:20Harry Stebbings?

  And talking of then Tilt's journey, what about your journey? What have you said been your biggest personal developments or personal learning experiences in the Tilt journey, before we dive into a quick fire round?

• 18:33Speaker 02

  I'd say, you know, a major one is, you know, having a lot of, probably overconfidence at the beginning was really key. We had to be really confident in what we were getting into and ignorance is bliss, we didn't really know. And I think that that was helpful for us. But it's been a very big transition to now, I'd say, I approach each day with questioning assumptions, daily or weekly, making sure organizationally, we're not overconfident, making sure that that we are very mindful of maybe some of the assumptions we had, we need to prove them out, they're not right. Kind of basically losing that overconfident certitude, that might have been helpful in the early days. Now, as a CEO, you really

• 19:17Speaker 02

  don't want that because it can really inhibit the growth of leaders around you. When you just operate each day like you know everything and you're super confident without data to back it up. And it's, that's been just a personal journey, is, I think it's, that's one of the hardest ones that founders that are maybe hardheaded, that are really, you know, dedicated to their ideas, have to come to terms with, because that flexibility is at, and the openness to being wrong is absolutely critical to being a good executive.

• 19:47Harry Stebbings?

  Absolutely. And I'd love to dive into a quick fire round now. So I say a short statement and say a 30 second response. How does that sound?

• 19:55Speaker 02

  Let's do it.

• 19:56Harry Stebbings?

  So your favourite book and why?

• 19:58Speaker 02

  Man, um, favourite book outside of, uh, outside of work, I would say, I love A Hundred Years of Solitude, but that has no relevance. Uh, and, uh, and I love the power of now, being able to live in the moment and appreciate the moment.

• 20:14Harry Stebbings?

  Your biggest productivity tips and tools?

• 20:17Speaker 02

  I write the three important tasks that I need to get done before I go to sleep on my hand. And, uh, I keep to-do lists that get to twelve, thirteen items, but the three most important that I do before I go to bed every night goes on my hand. It's worked since high school.

• 20:32Harry Stebbings?

  That's nice. I like that. I'm gonna adopt that. And a little birdie told me you cannot beat the English at beer pong and I'm coming to SF for Feb. So game on. What'd you say?

• 20:42Speaker 02

  Yeah, let's, uh, put that to the test. I think that's, and, uh, those are online rumours and, uh, I'll show you the, the truth.

• 20:49Harry Stebbings?

  Online rumours. Well, we'll, we'll have to see about that. We'll post some pictures later for you guys listening. Um.

• 20:54Speaker 02

  Good.

• 20:55Harry Stebbings?

  It's, it's a bet. Okay. And then your most read blog or newsletter?

• 20:59Speaker 02

  Yeah, I don't know if I, if I, if I read blogs nearly as much as I, as I did before. I think blogs, they give you this like, uh, it feels productive, but it's consumption, like watching TV. You feel like you learned something in little tidbits, but you know, one of the things that I, I think about a lot right now is, is really forming our own independent thinking, uh, and becoming experts in our own right in what we're doing.

• 21:20Harry Stebbings?

  And then startup mascots, needed or not, I know there's a little bit of a tilt mascot.

• 21:25Speaker 02

  Not needed. Very appealing, very attractive, um, and maybe helps, uh, some startups be able to build kind of a personality in the product, which is great. But, uh, definitely not needed.

• 21:36Harry Stebbings?

  Did you adopt Alexis's?

• 21:38Speaker 02

  No, we didn't. Uh, so the background there is the founder of Reddit, who has a very adorable mascot in, uh, Snu on, uh, that you see next to every Reddit logo. He built, he designed us a mascot and we ended up not using it.

• 21:53Harry Stebbings?

  Well done, well done. I mean, bold stand-up to Alexis. Um, and then finally, the, the next five years for you and for Tilt, what's on the cards?

• 22:02Speaker 02

  I think a lot of, uh, you know, five years out, it's, it's fun to think about what we have a chance to accomplish because that's a lot of time. I think five years out, we could be, uh, playing beer pong in San Francisco and, and what I hope the conversation we're having, uh, around is, is that we were able to build a Crowdfunding platform that took um this this really amazing behaviour, this really amazing instantaneous digital uh way for us to collaborate, how we spend our our money and taking it mainstream and mobile.

• 22:30Harry Stebbings?

  Well, I look very forward to it. Um a- and thank you so much for joining us on the show today. It's been an absolute pleasure having you and hearing more about the amazing rise of Tilt and we look very forward to seeing it in the future.

• 22:41Speaker 02

  Absolutely, Harry. Thanks for having me on.

• 22:43Harry Stebbings?

  What a fantastic and fun episode and I would like to say a huge thank you to James for giving up his time today to be on the show. And if you're loving the 20 Minute VC, sign up to our newsletter on the20minutvec.com so you never have to miss an episode or an update. As always, it's been a huge pleasure bringing you today's show and I would love to hear your thoughts, feedback and suggestions. So drop me a line at [email protected], all in letters. I'd absolutely love to hear your thoughts and reply to all emails. Thank you so much and stay tuned for next week's episode.