#1257 Peter Pham on How To Raise Millions For Your Startup

Peter Pham is the co-founder & managing director of Science, an incubator based in Los Angeles. This conversation was recorded at the BUILD Summit in New York. In this conversation, we talk about the art of fundraising for founders with startups, materials to use, timing & process, how to create a bidding war, and why up & to the right charts are so important. Peter is one of the best fundraisers I have ever met, and he drops insanely valuable information in this episode. ======================= Trust and Will has simplified the process of creating and managing your will or trust online. They leverage a data-driven, design-first approach and amazing customer support to help you protect your legacy from the comfort of your home starting at just $159. Sign up today for 10% off using ⁠⁠⁠⁠⁠⁠⁠⁠https://trustandwill.com/pomp⁠⁠⁠⁠⁠⁠⁠ ======================= Get Better Crypto Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠velowaitlist.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. The following episode is with Peter Pham, the co-founder and managing director of Science, an incubator based in Los Angeles. In this conversation, we talk about the art of fundraising for founders with startups. This includes what materials to use, the timing and process you should pursue,

• 0:46Anthony Pompliano?

  how you can create a bidding war, and why up and to the right charts are so important. Science has incubated companies like Dollar Shave Club, Liquid Death, and many others. Peter is one of the best fundraisers that I've ever met, and he drops insanely valuable information in this episode. So I really hope that you take notes and you take away things that you can go implement tomorrow. Here is my conversation with Peter Pham.

• 1:10Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:34Anthony Pompliano?

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• 2:15Anthony Pompliano?

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• 2:59Anthony Pompliano?

  trustandwill.com/pomp. Before we get into this episode, I also want to tell you about a brand new product called Velo. Velo is faster, easier crypto data. Everyone in the industry is always looking for, what's the price? What's going on on the exchanges? Where are assets flowing or not flowing? How is things like open interest and derivatives actually playing out in the market? Well, that's where Velo comes in. It's faster and easier crypto data. You can go to velowaitlist.com today. Myself and a couple of friends, we invested in the business, we're advising the founder, and we think it's pretty cool. This one is something that keeps me informed on a daily basis. So you should check them out at velowaitlist.com. That's V E L O waitlist.com.

• 3:45Anthony Pompliano?

  If you want to raise money, need to raise money, or trying to figure out how to raise money, this is probably one of the best fundraisers I know. So buckle up. Mr. Peter Pham.

• 4:02Anthony Pompliano?

  So Peter and I met a couple of years ago. We were in Puerto Rico at a conference. I don't know if I really cared about the conference or he did. I don't know how either one of us got there. We looked at each other and we said, hey, you want to go get dinner? We went and got dinner. And about three o'clock in the morning, we were like, man, we're Still not at dinner, but we are dancing, drinking, having a blast all throughout Puerto Rico. And somehow we stayed friends, which may be a testament to you. And along the way, I've watched you do some incredible things. You run a product studio. For those that don't know, Science is probably the leading product studio in the country. And you guys have incubated Dollar Shave Club, Liquid Death, many, many other companies.

• 4:46Anthony Pompliano?

  Can you just tell us the Dollar Shave Club story first, specifically between great marketing, great product, and funding something that was different? And you had to do a lot of work, I think, to kind of make sure that you guys had the capital you needed to scale that to a billion dollar business?

• 5:01Speaker 02

  Yeah, so raising money, it turns out, I'm just really good at it. I think.

• 5:07Anthony Pompliano?

  Put the microphone like.

• 5:09Speaker 02

  Raising money is fairly easy to me now, mostly because it's repetition, right? I've had somewhere between seven to eight thousand no's at this point. And the way Science works, I've run a venture fund, L.A., I help our founders raise money. So we're basically helping them co-found the business, they move into the offices, and it's a grind. And so Dollar Shave Club, friend of a friend introduced us, Michael Dubin. And we'll get to Liquid Death, similar story. He worked at an agency, super creative, had this crazy idea.

• 5:39Speaker 02

  Through a random friend of a friend, ended up with a little warehouse full of razor blades that was being stored at a church. And I think that I, you gotta, we could wind back the clock a little. This is, nobody had ever shipped, there was, subscription did not exist on, online, right? It was built on Magento, so this is pre-Shopify, right? This is like Stripe had just started and nothing existed for consumers to buy stuff online to get shipped to the house. So here's the pitch. Dollar Shave Club, today people go to the razors at the CVS, spend thirty dollars, it's locked behind the cabinets.

• 6:24Speaker 02

  You feel like a criminal. Now in SF, if I guess you buy eggs, it's behind you. Locked, and we're gonna ship to consumers direct, but humor drives everything. So my basis of everything is always culture, and he is just funny and creative. In that video, that original cost sixty-five hundred dollars, right? And YouTube had just, this is like early YouTube days and the ideas was like, well, can we drive virality? Let's put the video on the homepage. Him and I actually argued to like five in the morning on launch day. Homepage autoplay, homepage autoplay. He's like, absolutely not, absolutely not. Six in the morning, he relents, he put on the homepage, it auto plays, it crashes the servers. And that, like, that was the moment,

• 7:09Speaker 02

  right? It's like, that's for me, the moment I understand like, okay, social drives commerce. And so back then, the idea of raising money for the video and selling razor blades online, we got no's everywhere. Kirsten Green at Forerunner, she hadn't even closed her fund yet. I begged her to invest. Eileen, who essentially is Cowboy Ventures now, she was at Kleiner, begged her to invest. Two hundred fifty, two hundred fifty. I didn't sink it. Felicia's Ventures, like, these are some of the best firms today. Begged, he put in a hundred. The rest was like begging and stealing fifty thousand, fifty to raise the first million. And I probably went through seventy-five to eighty no's. And like, these are personal friends of mine. Trust me, this is gonna work, this is gonna work. So that first million,

• 7:54Speaker 02

  right? And so it's one of these things where you just gotta hit it over and over and over. And I now, raising money for me is, it is not personal when someone says no, it's just not for them. That's okay. Like music, I went, I was at Gospel last night, so they close at four thirty. I don't know why. You either dance to the music or you don't, right? You hear a song, you're like, oh, who is that? I, I wanna listen to it again. Who's the artist? Put it on my playlist. But then you hear their songs, like, oh, that's not for me. Like Metallica's not for me. They are clearly the, one of the best heavy metal bands in the world. That's okay. And I don't want that investor. So when people say no, that's okay. Wake up, there's always another, another, another.

• 8:37Anthony Pompliano?

  I know you were out late because I was in the WhatsApp group while you were planning, and then I saw I got removed at twelve thirty while I was sleeping. And I was like, damn, there's still planning a lot in there, I guess.

• 8:48Speaker 02

  For me, it was only one thirty time. I'm from L.A., so.

• 8:52Anthony Pompliano?

  Let's talk Liquid Death, I think a similar story. And what's interesting is you called me and you were like, hey, we're gonna do water in a can. And I said, Peter, I love you. Uh, no, that's stupid. And then you were like, no pomp, seriously, like, trust me. And I was like, eh, let me think about it. And then I saw you in Austin, Texas, South by Southwest. Plin and I were both there. And you literally had a cooler of Liquid Death that you were carrying around. You were handing them out to people. And I'll never forget, we were in a bar and you handed one to both of us. She drinks slow, so we were leaving the bar, she still had hers. And we went to leave and the bouncer was like, hey, you can't leave with alcohol. And it hit me. I was like, holy shit.

• 9:35Anthony Pompliano?

  Every single person's gonna think this is alcohol, but it's actually water. And then you explained kind of the social component of you wanna look cool at the bar. You don't wanna have the Dasani bottle, blah, blah, whatever. What was that fundraising experience like? Cause it took me multiple times in a personal relationship and you basically twisting my arm. And then it finally was like, alright, fine, here.

• 9:53Speaker 02

  I had, um, so I was an angel investor in Ring and Jamie Simonoff, I called and I said, if you invest, I, it's the only person I did it for because he made me, he made me money.

• 10:03Anthony Pompliano?

  Yeah, you didn't offer me this deal, go ahead.

• 10:05Speaker 02

  And I said, if you invest, I will personally guarantee that you will not lose money. I will, I will write a check out of my pocket if, if this thing doesn't work, please invest. And so I knew, so my thing is about culture, which is honestly why I, excuse, why I go out last night, is understanding in the moment when I got pitched this idea. You know, I was doing this similar talk for Snapchat's accelerator. So Spiegel had asked me to like, they were doing early days of their accelerator. Hey, talk to entrepreneurs, how to raise money. And this guy, Michael, who was running the accelerator said, hey, there's a company that applied. It's not for us, it's for Snapchat, but I think you'd like it, Liquid Death. Here's their Facebook page. And it was just a three, it's a, this image of a can on a Facebook page and a fan page.

• 10:49Speaker 02

  And people were just commenting how stupid it was, this is idiotic, et cetera. And I just knew it was gonna work. Mostly because I have the experience of Dollar Shave Club, but comedy works. And it was just, is this video where someone's like, Liquid Death, it murders your thirst, but here's how water kills you. Waterboarding, surfing, drowning, like people die with water all the time. Let's do Liquid Death. And it's just this funny commercial where at the end of it. She's waterboarding somebody, right? Dark humor, obviously. And, but we just banned plastic straws. The Atlantic had just wrote an article on how China's not buying our trash anymore to recycle. Plastic bottle, water bottles to me were like the next generation's cigarette butt. It's like, ew, why?

• 11:33Speaker 02

  And I don't drink, right? As much as I dance, I just don't drink. And I think weed had just become legal in Denver. I was like, huh, psychedelics, like, hmm, friends are doing shrooms, ready? And BMs, the party, I, I go to EDM, it's like, nobody's doing alcohol. It'll work. Pitching Liquid Death in Cannes, that's insane. Like, it, it just didn't make sense to people because it's a $2 can of water. But for me-

• 11:58Anthony Pompliano?

  But one, once I had invested, I think that maybe it was I was paying more attention, but also they started to kind of figure out, like, they literally were building a cult. Right? We've heard from a couple of people in terms of like, really, really doubling and tripling down on the people who believe. And so, people were getting tattoos, they were taking the haters' comments and turning them into rock songs. Like, they really went and were like, we are gonna build something that people feel an emotional connection to.

• 12:23Speaker 02

  Yeah, it's, if you look at today's culture, we have two sides, right? People just automatically pick a side, just like human nature. And if you know what you are and you own it, people respect that way, way more, right? And you pick that side. We picked one side, like, it's fucking funny. You know who's our audience? People who don't take themselves seriously. That's it. Some people take themselves too seriously and they, they don't like it. That's okay. And so, Mike Cesario, Dollar Shaved up, right? This is Liquid Death, also of Mike. Both worked at an agency, both did creative work, both had this crazy idea while working at a creative agency, saying, hey. All he did was, he was making these commercials for like, brands that were good for you, but

• 13:08Speaker 02

  it was always like streams and grass and it's like, well, why is it Red Bull and Taco Bell and, and Mountain Dew? It's like, the worst thing for you in the world, but like, exciting. Why don't we make something good for you, but exciting? And also, by the way, if you think about the biggest impact that Tesla, like, it's like, my stretch is always Tesla- The biggest impact is they made electric cars cool. And guess what? Every manufacturing world is now making electric cars. We're making beverage in can, cool water. So it's not that, look, we'll sell hundreds of millions of cans and eventually billions of cans. But Coke and Pepsi produce like a billion plastic bottles a day. Right? So culture.

• 13:49Speaker 02

  To your point, why this? Over time, the seed round, million dollars, big sale. Like at this point, I have a fund, so we funded it. And every single round got harder and harder. And then it got easier, like everything else, right? And what I say is fundraising is, the world used to look like this. So the tips of always fundraising is, the format is, the world used to be like this. The world now has this. I'm building this thing that's taking advantage of this. And this is how the world will be over here, right?

• 14:25Anthony Pompliano?

  So repeat this again. So this is the format that you guys use in the pitches and in the decks. And just for context, when I say that Peter is one of the best fundraisers I know, any major venture fund is probably invested in one of the companies. Literally, he many times goes and raises the money, not the CEO of the business, because he is so good at doing it. And it's the same exact formula every single time.

• 14:48Speaker 02

  Yeah, my favorite was I was in bench, I was sitting at, we were raising for Dog VK. And at Benchmark, and Bill Gurley looks at me and goes, Peter, what are you doing in the meeting? Like, like, you know what you're doing. Aaron's a first time founder, like, I'm here to translate. Like, half the questions you ask, he doesn't even understand, right? And Bill Gurley eventually invested and was on the board. We merged with Rover, it's now public. But it's a communication, right? They're asking questions, I can read it. I know exactly what's happening in the room, what questions, why they're saying no. I can read a no a mile away. It's always, but think of all the biggest companies in the world. It was before Uber, right? It was, well, people would call taxis. But because of cellphone and GPS and smartphone,

• 15:32Speaker 02

  I can now hit a button and then people, cars will come. And because of eBay, because of this idea of an anonymous person, but well, we'll have five star reviews. This person I'm gonna start trusting, right? I actually think about like Ubers and the DoorDash and Lyft. Actually eBay started it. Oh, this anonymous person, lots of reviews, five stars. Yeah, I'll send money and they might send me stuff. Uber was the same thing, right? And so this is now how the world looked. Liquid death. Well, look, plastic water bottles, alcohol. The world now doesn't want plastic. They don't drink, they want something fun. And it turns out the insight of this, and I've handed out personally, somewhere between eight, nine thousand cans out of my hand, is that when you hold it, people talk to you. That's it.

• 16:16Speaker 02

  When you hold this, people, oh, what's that? This is either the stupidest idea in the world. Oh, my God, that is so dumb. Or it's funny and it's awesome, right? And that's it. And so this stranger, we're not talking about the weather anymore. We're not like, what you do during lockdown? Like, what's your startup? What do you do? Which is fucking terrible question. We're talking about something funny. Now, like, human, that human interaction of ha ha, funny connection. Well, Pavlovian response is when I'm at a concert, right? We're the official Waterfall Live Nation. When I go to the concession stand, I'm just, you're just thirsty. You're not actually caring what. When I grab a Coke, nobody talks to me. Grab a Bud Light, definitely nobody talks to me. I grab a Liquid Death, I always meet somebody funny and it's fun. Why not? So that, right?

• 16:59Speaker 02

  So cultural insight, so telling that story and showing people and the reaction. That's how you kind of get the story told. And fundraising is how the world was, how the world is now, what's happening? And how am I taking advantage of that moment? And this is the way the world's gonna look. Now, the secret of all fundraising, seed otherwise, usually pass seed. Seed is, I'll say the, the worst thing for your pitch is numbers. Like, like, like, everything is worse once you actually have revenue. Cause now, let's do multiples and let's do discounted cash flow. Like storytelling of a story, right? It's all about storytelling. And if you tell people, I hate this, like, oh, I'm a seed company. Here's my revenue in five years.

• 17:43Speaker 02

  I know you're making shit up. Why are we making, why are we making shit up? Right? Tell me a bigger story. In fact, you might be limiting yourself. So what the secret is, you say, oh, I'll be doing a hundred million dollars in two years. So now, as an investor, I'm like, oh, so that's capped. What if that's too small for me? We had this whole story about Masa and SoftBank. That's way too small. Let me, give me the tools for my imaginater, my imagination to run wild and, oh my God. He doesn't know what I know and if I invest, oh, it's gonna be so much bigger than that person knows. That, that makes me feel like I want to invest, right? Does that make sense? Like, I'm almost, in a way, kind of taking advantage of young buck over here. Let me give some money and he doesn't know what he's got.

• 18:28Speaker 02

  But if you, if you tell me what you got and I get to judge, I'm like, eh, too small. I was, in fundraising, there's three things people always focus for me, has always, always tell people. Focus on the three things. Meaning, you have a current business, whatever it is. If you are in the moment where you actually have users, acquisition, retention, revenue, strip yourself back as a founder and say, three things that go up and to the right. When I say up and right, it's this. Link, this is what I call linear, is flat. Linear and flat is, I'm doing a hundred thousand dollars in revenue a month, every month. Like, great. Call me back in 12 months and you do 1.2 million. Well, it'll come to be more expensive, of course. That's fine.

• 19:12Speaker 02

  I will, you're telling me I'm gonna reduce my risk by 99%, right? Reduce my risk and pay 2X all day. But if I tell you my revenue was, well, six months ago, it was a hundred thousand dollars and four months ago, it was 250, last month, it's like 800. I, I, I can't mathematically calculate what's happening in 12 months. So I have to, I have to invest now. Does that make sense? So, but it doesn't always have to be revenue. Look at things.

• 19:39Anthony Pompliano?

  So, hold on. These are like insights that he can unpack very deeply.

• 19:43Speaker 02

  I made each day so that I.

• 19:44Anthony Pompliano?

  The idea of creating urgency by having charts that go up and to the right.

• 19:51Speaker 02

  And it doesn't have to be revenue.

• 19:53Anthony Pompliano?

  Yes, explain this.

• 19:54Speaker 02

  Correlated revenue, it can be correlation. So enterprise sales, well, it used to take me six months to close a sale, six months ago, six months to six months. Three months ago, we got it down to like a month. Last week, people are like clicking on a button and signing up automatically without talking to me. Whoa, something, right? Like something's happening. Every scenario is like, well, users used to use the product six months ago. They'd come in and they use the product for like two minutes. Three months ago, 12 minutes. Last week, like 48 minutes. I don't know what's happening, but you tell them what's happening. But in a way, right, you're showing that if I give you money,

• 20:36Speaker 02

  if I as an investor give you money, what's your job? To get smarter and faster, right? And what's great is as an investor, oh, you took, you took his money and got smarter and faster and I get to jump on the coattails of that. Makes sense? So it makes me feel like, oh, all right. I didn't do it their last round. And instead of me thinking, oh, that investor got a better price than me. It's like, no, no, no. I got, I'm riding the backs of the last investor who took all the risk and that's founders now figured a lot of shit out. And if I give them more money, that means they're going to continue this acceleration path of figuring it out. It's faster. So it's velo, I call it velocity. Any metric in your business doesn't matter, doesn't have to not be revenue.

• 21:20Speaker 02

  Anything that has velocity, right? So enterprise sales to consumer products. It used to take X, right? Six months, you used to take this long to do this thing. Three months ago and a month ago, and I was still fine. For the next 30 days, if you just do that thing manually, I don't care if you've got to go flyer, cars and talk to people. You need to increase your retention. Call your customers. Investors didn't know that you physically called every customer. They just, I don't know, people just start coming back. Like do the hard work, right? And I think Kat said the thing, do the hard work. You better know the entire stack, the whole experience, but find little gaps in that business where you can say the whole team's going to focus on

• 22:05Speaker 02

  getting people to spend more money. Forget new customers. I want to know. People who spent money last month, did they come back? Did they refer a friend? Fine, convince everyone to refer. Six months ago, 2% of people would refer a friend. Three months ago, 4%. Last week, I don't know, like 30, 40%. Acceleration, velocity, velocity, because it doesn't have to tie to revenue.

• 22:26Anthony Pompliano?

  So, there's the story of acceleration, but what about the visual in the deck? Which is, I think, one of your greatest hacks. Explain this.

• 22:36Speaker 02

  So, right, linear is flat, meaning, like I said, 100,000, 100, 200, cumulative, like I can predict this. That acceleration curve, six months ago, it used to take this long. Speed, speed, speed. And all of a sudden, think, oh my gosh, like if I don't invest right now, in three months, they're gonna figure that out and the conversion is gonna go up to 70%, right? And like, it'll be such an obvious investment. I can't miss out. FOMO is real. If, this goes to the point of, when you read a room in investors, if they do not respond in 24 hours, they're not interested.

• 23:19Speaker 02

  Think about all, like, if you met somebody out last night, if they don't text you, you know, for a month, are they interested in you? No, of course not. Like, if they're liking your Instagram post like that night, that's good. Right? And I take any signal, I will take any signal of investor interest within 24 hours. It could be a retweet, it could be they checked out my LinkedIn profile. Ideally, they actually email me, thanking me, asking me follow-up questions, right? The reality is, when investors say, oh, it's too early. Oh, you know, come back when you're, they're just not interested. Just trying to be nice, right? Or 24 hours, we're not that busy. Well, I am.

• 24:04Speaker 02

  Most VCs, they're not that busy. Think about it. How many investments do they do a year? You're telling me, you do six a year. And if you're really, really interested, you can't like text me, email something the next day that you're, right?

• 24:22Speaker 02

  They're not, the moment you definitely they stop thinking about you. So they're done. Don't waste your time, move on. And so that's the pace is like, don't get drowned out and chase and spend so, people spend so much time chasing the no, it's not gonna happen, move on, right? Then you start, just like everything else in the real world, you start looking desperate.

• 24:41Anthony Pompliano?

  Game over. Alright, so you know you want to go fundraise, you come up with a story, right? You've walked us through that formula. You make your deck, deck looks pretty. Anyone who wants a hack, the number one FOMO metric in any deck, you can put your little bar chart and then just put a big fat fucking arrow on top of it and really hammer home, this shit's going to the up and to the right, works like a charm. You can even, people are gonna get mad, squeeze it, remember in college where you'd like widen the margins and shit? So that you could get that three-page paper when you really only wrote two and a half? You can do the same thing.

• 25:15Speaker 02

  Yeah, look.

• 25:16Anthony Pompliano?

  Humans are stupid and they're like, oh wow, that's a really steep curve.

• 25:20Speaker 02

  It's all storytelling, right? Now, of course, people always say it's not fraud, you just have to tell the story. Find things in your business that are just moving faster, whether, you know, it used to take you months to recruit somebody and it's fast, everything's just fast, everything just feels faster in the business. And again, let me make the, you know, this connection, like user growth is connected to this velocity that's really happening. Figuring it out in the business, it doesn't matter what it is, but there are moments in the business, if you focused on it, you can show me this like game, especially this room is all early-stage seed. There's no numbers, you have no numbers, nothing ruins a raise better than the numbers. Like just remember that, nothing ruins a raise better than numbers.

• 26:01Speaker 02

  The moment you have users, it's like, great, customer acquisition cost, retention. Like I should start digging in on that actual number. But you start talking about your user experience and how, again, you're, you're getting smarter and faster around that customers, getting to that customer, or driving the time it takes for customers to consider the purchase, right? Or the time it takes for them to refer, the time it takes to renew, the number of cancellations got reduced. Whatever it is, like these are the things, forget the top thing, focus on the underlying part of the business. And then less is more, every deck I see, every single deck, Darren knows.

• 26:45Speaker 02

  Like twenty percent less words. That's it. Like, nobody wants to read. It's a telephone game. If you pitch me, no matter what, I need to tell somebody. I need to tell somebody the story. And if it's a lot of words, I'm not gonna remember it. Like, it's just, and then I start feeling stupid. So think about that. Telephone game means when I go home, really, I'm out, I'm networking, I talk to my colleagues, I talk to my, I speak to other, I talk to my partners, I need to explain why I'm excited about this deal. And if it's not simple, a couple of people pitch me, and I'm like, what does it do? And they're using all these buzzwords, buzzwords, I'm like, I don't understa- what do you do?

• 27:28Speaker 02

  How do I explain? The elevated pitch is really about if you can get it concise, I can then go tell somebody else. That's it. Just remember, telephone game is they have to tell somebody else. If they can't tell their partner what, why they're doing the deal and what the company is, they're not gonna do the deal. And the moment they feel stupid, again, the moment they feel dumb, because someone says, well, why about this? And they don't have the answer, they're like, oh, you're right, it's not that good of an idea anyways. So simplify, less words. The deck, just short. ADHD, use chat GPT for God's sakes, just like shorten the thing up. Bullet points, how the world used to be, this is what I'm taking advantage of, and this is the way that I look at the world.

• 28:12Speaker 02

  Here's why I'm a badass. This goes back to early stage, super early stage, the founder, the founder, the founder. Your product will evolve. Why are you a badass? Like, tell people, why are you badass? And why is here, why is your team a badass? And that tells me that you're gonna be figuring shit out. Like, you will not survive if you can't figure things out. I met an NBA player last night, it's like, I love athletes, Olympians, think about Olympians. They train, ha- like, their whole lives for this one day, and then they're done and wait four years. Resilience is, it's like, resilience has to show up in that personality trait.

• 28:54Speaker 02

  Right? Cat yesterday, like, talk about resilient. That inspiration is like, oh, instantly, tell me your story, why?

• 29:04Speaker 02

  And then everything else like doesn't really so much matter because if you tell me your story, why you and then show me that you're strong. When people give you money, you figure shit out, you're smart, you figured it out faster, faster, faster. It's like, okay, that that's somebody that should back.

• 29:20Anthony Pompliano?

  Once you have the deck, the story, the great graphics, what's the process? How do you create FOMO? How do you make sure you're talking to enough investors? Like, what does that look like?

• 29:32Speaker 02

  It's changed, I think, post-COVID because of Zoom. So it used to be that I'd fly up to Sand Hill and you can only, I kind of knew everybody, every firm and like red points next to Sequoia's office and IVP's upstairs, got Mendel's over, I can schedule them 15 minutes apart, drive across the street to Andreessen, right? Like, this is loop. But now on Zoom, the assumption is, well, you usually do a call every 30, 45 minutes. Remember, the investor, you also have to remember, which also means the investor that you're pitching has a little bit more FOMO these days because the assumption is, once I hang up this Zoom, this person's pitching 10, 15, 20 people a day, right? All over the world. So the process for me is still relatively

• 30:17Speaker 02

  pitch early, call it friendlies, people that probably wouldn't take their money, they're not that great. But like, they're gonna ask some good questions, some dumb questions. And the goal is after every meeting, what was the question that you can kind of see emotionally they got hung up on? How do I enter that into my story so that it's answered? That's super simple, right? But not a lot of people do that. What were the questions that they got hung up with and I felt like I spent too much time explaining myself? How do I incorporate that into the story in the deck so that question doesn't come up? It gets answered, right? Because the whole goal in a, if you get an hour or 30 minutes, if it's an hour, get through the story in 25 minutes, ideally, so that the rest is just discussion, right? It's just to get through. But if you're all the way in an hour, 58 minutes, and you're

• 31:02Speaker 02

  barely going to the last slide. It's not gonna work. You have to finish early, which means you're, you were concise. Twenty slides, twenty-five minutes. Ideally, like seventeen, sixteen slides, twenty-five minutes. Like, you know, you're just coming it through. And then you're inviting questions when you know they're layups. But if you get questions, they're like, I don't know, what about this? What about this? Oh, you know, well, I used to figure out, put that in the story early, answer it, put it in the deck. And the goal is early investors that you wouldn't, you'd take money from, or really small checks. They're gonna, you're gonna, they all kind of think alike, to be honest.

• 31:43Speaker 02

  So they'll have the same questions. Answer that. And then, second thing, slow investors. So there's slow yeses and fast yes investors.

• 31:54Speaker 02

  You're gonna pitch every single firm, every, I know every GP at every firm, I know the personalities, I know the slow people, the fast people. You pitch the slow people first, obviously, because it's a, it's a horse. At the end of, at the end of the cycle, I call thirty days, give yourself thirty days to pitch, thirty days to close. Going back to the three points that are up and to the right. Whatever those three data points that you do, you spend thirty days getting it there. But you gotta make sure for the next sixty, they continue to go up and to the right. Okay, I repeat, the next sixty, here's why.

• 32:26Anthony Pompliano?

  The FOMO update.

• 32:28Speaker 02

  Thirty days. Why are you raising? Well, you know, it used to take this long, and then this long, but the last thirty days, it's like, it's really exciting.

• 32:38Anthony Pompliano?

  It's working.

• 32:39Speaker 02

  It's working. So, you know, I don't, so I should raise some money. While I'm pitching, during the follow-ups, that week, next week, there's reasons for the follow-up. Oh, my God, you know, we met two weeks ago, and I told you that conversion funnel and retention went from here to here. Now it's this. FOMO starts kicking in. Does that make sense? And then term sheet diligence is 30 days. It better keep going because you won't get to the last, right? Money in the bank is what you need. 30 days of grinding that data, 30 days as it's coming up. You're pitching every week. There's something interesting new. I feel like I'm missing out. It's, it's going to get away from me.

• 33:23Speaker 02

  I give you a term sheet. I feel good. We're talking the data and then things are still feel going up during that. If it's still going up, I might start trying to bring more people into the realm, right? Like get me motivated, get me into the story. So that's a really important thing over the next 90, over 90 days. Slow investors, fast investors. There are some people who are like, yes, let's go. But you don't want that yes now. You want it when everyone else is at the same, right? Imagine a horse race. Some horses start off slow, some fast, that's the ones goes first. Fast ones catch up so that you're all kind of finishing up close at the same time. Your negotiation window for a term sheet is at most two weeks.

• 34:07Speaker 02

  You are rude and an asshole if all of a sudden you're like, I give you a term sheet and you just don't answer. Well, here's how you slow game the term sheet.

• 34:19Speaker 02

  Very simple. Let's get to know each other. Hey, this is marriage. Can we go out to dinner? Oh, I can't this week, next week. Like think about the things of like you, you, you gotta, you have a week, two weeks max, but you cannot just sit on term sheet because bird in hand, right? Like what if everybody else says no? So you, but you want them all getting to the same point. And all of a sudden you can start, if you want to get to the point of negotiation. Otherwise, I will say this, do not over optimize your price. Start off a binary. When I say that it either exits or it does not exit. You did not start this company because you want a job for the next 91 years making a hundred 25,000 a year, like, right?

• 35:03Speaker 02

  The difference at the end game is if you made a hundred million dollars. Well, if I didn't take that dilution, I would have made 119 million dollars. It doesn't matter. If you really mattered, you wouldn't live in fucking New York. You'd go to Florida.

• 35:21Anthony Pompliano?

  True.

• 35:22Speaker 02

  So think of that dilution. So people focus so much, do the spreadsheet. I always encourage founders to do this. They're like, oh, 30% dilution is too much. I really don't, 25. It doesn't make a difference. Do a personal spreadsheet, your equity over rounds, C, A, B, C, D, E. At the end, it ends up being like 1% to 2%. It's not that big of a deal, right? So the best investors at the table, because they will help you, their job is to help you raise the next round, the next round, the next round, because you are always be raising, always, always, always be raising, right? It's like ABC is always be charging, always be closing, always be raising.

• 36:05Speaker 02

  So the pace is really important if you want this collective pressure at the end. I'm also talking to this firm, I'm also talking to this firm. And once I know you're talking to a lot of firms and everyone's set to finish, I want to close. If I know I'm the only investor at the front, I get to negotiate, I slow down my decision process.

• 36:28Anthony Pompliano?

  Yeah, it's ball control.

• 36:29Speaker 02

  Yeah, it's ball control.

• 36:32Anthony Pompliano?

  Obviously, it helps to have a good product, a good company, like it gives you the data, it does all these things.

• 36:37Speaker 02

  Early stage, look, water in can. It's the story, the story and belief of the team, right? And some things that will tell the story of why now.

• 36:50Speaker 02

  Advisors sometime work, it depends on investors. Some investors love that you have advisors. I hate it because it's bullshit, unless it's real, right? If it's somebody I know or somebody who truly has that insight or has the connections that can accelerate that business, it's the cheat code. So and so is on my board, so and so personally invested, so and so, I used to work for so and so. Like last night's dinner, the moment he told me, he was on founding team ButcherBox and then he's building this company.

• 37:21Speaker 02

  Let me give you money.

• 37:23Anthony Pompliano?

  No.

• 37:24Speaker 02

  Yeah, I know. I love that company. It's storytelling, but it's understanding the business. It's like, oh, why this person? Oh, he's done it, been there for one of the fastest scaling companies I know in the commerce space. The world used to look at this, they struggled through all these things. He helped figure all this stuff out and realized, well, that should just be a separate company. And if that's a separate company, here's the benefit for everybody else. Oh, the world used to like this, now with this, give me money because I'm building this. Simple, like literally is, that's it. That's the story. You just want to give that person money. It's not about the numbers.

• 37:59Anthony Pompliano?

  So, let's say that you're great at this and it works. Now, all of a sudden, all these venture funds want access. And I've seen this one time, I was working on something and it was the number one app in the App Store. And

• 38:18Speaker 02

  It was, right?

• 38:19Anthony Pompliano?

  Yes. I knew it

• 38:21Speaker 02

  Don't forget that.

• 38:22Anthony Pompliano?

  would only be. And so, venture capitals were literally sending, this is a true story, a pie to the office with a note that says, "We would love to get a piece of the pie." Real clever. I mean, like, that's the shit that was going on, right?

• 38:41Speaker 02

  I've had, I've no stories where like they'll, they'll send the private plane, the whole thing, yeah.

• 38:46Anthony Pompliano?

  They, they will show up. They, I mean, when it's game time and there's competition between, especially the major firms, they will pull every single thing out of the repertoire to impress a founder, et cetera. How do you enjoy the perks, but also balance not getting caught up emotionally and potentially making a bad decision or going with an investor that might not be the best one out of those that are interested?

• 39:09Speaker 02

  So investors, the whole, your job as a founder is obviously to fund the company, but honestly, spend more time on thinking about

• 39:18Speaker 02

  What's the possibility of this person being net negative? Okay, like boards, the board, their job to remind you is to decide, is this CEO doing their job and should they get fired?

• 39:37Speaker 02

  Board meeting, this is what I'm gonna tell you, this is how the company's doing, this is what we're gonna do before now and the next board meeting. Next board meeting, I told you what I was gonna do and this is what we did. If you, three strikes, you're out. If you show up to the board three times and you didn't do what you said you're gonna do, time to go. So remember, that, so I do take that seriously, it's a marriage, so spend the time doing diligence. It's crazy that not enough people check references, like truly, not the references they tell you to find everybody they said, look.

• 40:11Speaker 02

  People behave the way they are all the time, so find the people that they aren't telling you about. And there are stories, we all know who they are, you just gotta find, so I spend the time of like, who truly loves your song, right? Going back to music, obsessed with the song, has a playlist, truly can like, understand you and want to invest, not because they wanna make money, we can all make money somewhere, but they truly wanna be part of the journey, but more importantly, they're not assholes. And there's moments, there will be moments in the business where the highs are highs, as you know as a founder, the lows are low.

• 40:51Speaker 02

  And you want a person who's gonna be supporting you and not just thinking about the money. Because the moment they start thinking about money, they don't care about you and they make the worst decisions, they're pushing you out of the business and they start pushing to make decisions in the business that are the net negative, so it's, it's one of these things, when, yes, great firms, all this bidding war, spend time with it, spend time who's joining the board. That's like my only advice, just in due diligence for the love of God.

• 41:17Anthony Pompliano?

  So you and I have talked on the diligence side, the best founders to talk to in an investor's portfolio to get an honest assessment is go find the ones that didn't work.

• 41:26Speaker 02

  Yeah.

• 41:26Anthony Pompliano?

  Because you basically see the downside, and then the second thing is, never believe the first bad story, but listen to the second one. Right? Like, like everyone, whether you're a founder, an investor, whatever, everyone just didn't get along with someone, didn't like someone, they, you know. Took something personal, whatever, but if you hear it twice, then pay attention.

• 41:44Speaker 02

  Yeah, yeah, a lot of negative stories are just personal vendettas.

• 41:47Anthony Pompliano?

  Yes.

• 41:48Speaker 02

  They said no, so they're an asshole. Like, no, if they did real deep, dark, deep cut shit, like, that's the stuff you gotta find out about. Otherwise, enjoy it while it lasts, but remember, that firm on that round, their job is to help you get to the next round. Their job is to help recruit people. Their job is to open up the doors and help accelerate the business. We live in a world now, the, it's really interesting to me, part of the story, your moat, this is the last thing I thought I told you about, the world's changed this year. I didn't think of it as much before, but I do think about all the time now. In the world of AI, I don't know how to code, but I can probably clone every startup in here in a weekend.

• 42:30Speaker 02

  Right? Think about that. Like, whatever product you have, like, Pom and I, probably this weekend, we can clone it literally with ChatGPT, the UI, the experience, et cetera. And I don't, so, well, how do you win, right? What's the moat? The moat is so much more important. So, in a way, the advisory stuff does kinda help, right? Well, they have access to this, right? I have this, I have exclusive API access here, or I already have customer base here, or so and so is investing in the largest distributor on the eastern seaboard for this. Like, that's the moat. Otherwise,

• 43:05Speaker 02

  I can just think about, whatever you're pitching, trust me, there's, ah, it used to be maybe one or two, maybe another YC company, now it's like, a hundred companies, the, and the exact same thought you have, it's not that original, it's really not. Someone else is cloning. So now, the decision's like, okay, so much more now goes into why you versus this person and all these other hundred people who are using ChatGPT built the same thing. Why you? And then, what's the moat?

• 43:35Speaker 02

  Exclusive relationship with this Kaiser to roll out my SaaS off, whatever it is like, it's got to have some moat in there. It's going to be a little bit harder these days.

• 43:45Anthony Pompliano?

  The only other thing I'll add before we end is I'm surprised I've spent recently with two different founders, a bunch of fundraising meetings. And there's two kind of reminders, right? If you haven't done it in a while. One, every single venture capitalist will show up unprepared, like maybe late, right? But they get on, they haven't looked at your product yet. Maybe they looked at the deck and you'd be shocked because you're like, oh, I'm going to pitch them for money. And like, this is like, you know, you literally blocked this out. You prepared, you did all this stuff. It's like the most important meeting of the day. Unfortunately, you're one of many pitches. And so you have to be prepared for them to be like, so like, how does the product work? Whether that's sharing the screen, whether it's having the screenshots, like you have to anticipate some of this, which I think you were kind of mentioning. But the second thing is, you can't have the same exact pitch for every single investor.

• 44:31Anthony Pompliano?

  And so it can take you 10 minutes. If you know you're meeting with X partner at a venture firm, go on their Twitter account, see what they've been talking about. Go look at their blog post, go look at the industry trends, show up and, and guess what? They told you the answers to the test. They're interested in creator economy. Our SaaS tool has a really big thing in the creator economy, right? And you can talk through it, but the more that you kind of relate it to what they're interested in, obviously they're going to spend more time on it.

• 45:02Speaker 02

  Yeah, remember one of the things about when you're talking investors, it like 78,000, every round I've ever done, I've done, I'm somewhere like 150 rounds I've helped raise. Each round on average is 100 no's. Okay. 70 to 100 no's for every single yes. Okay. It just, you average that out. So just, you gotta keep at it. But in every story, you know, Ryan at Flexport, I remember.

• 45:32Speaker 02

  His seed round was done. His board member, Roy Baha, is a good friend of mine. He's like, he needs help raising A. Nobody wants to give him money. I'm like, uh. I sat down with him. Here's how did the world do? Oh, it's green screens. Oh, got it. All of shipping logistics in the world is green screens, right? And show the visual of literally on the screen, what are green screens? People don't know what that is. He's like, oh, really? What are you doing? Your beautiful web UI software. Oh, okay. Duh. Like that pitch alone, the whole world is working on literally green screen text-based logistics. And you're bringing a visual interface where you can track chips all over the world and tell you where the product is.

• 46:17Speaker 02

  That's the pitch. They raised A. B round, struggles again. Come back in. It was just storytelling. Flexport's now a 50 billion dollar company. Every founder has that story. It was always about just how to tell that story. The pitch is just, it's very slight tweak. It has to be simple, right? What was Flexport? The whole world shares in green screens. UI. This is like 10 years ago. That should work. What did they do, right? It's not complicated. You don't need to do the intricacies and use all these bullshit web terminology. Like, forget the terminology. What does the product do? And let me visualize it so that I can tell the story to my partners and understand it and give you money.

• 47:01Anthony Pompliano?

  Ladies and gentlemen, Peter Pham.