This week I was lucky enough to interview Greg Gottesman from Madrona Venture at the April Startup Grind event. First off it was a great turnout, we had 85 people there and people standing in the back… so I am happy our event continues to get the recognition it deserves. We ran low on food but that is an easy fix and one big bonus was since we had outstanding weather, we had an absolutely stunning view from the deck at Graham & Dunn. Enough about the venue…
The reason I am posting this is I wanted to recognize Greg as being one of the more humble and open VC’s in Seattle. He is of course extremely smart and a big supporter of the startup ecosystem in Seattle. But he is very true to his word and is not afraid to answer any type of question in front of a crowd. He has been in front of many many startup groups in Seattle over the years so he has his normal things to say about how great Seattle is to start a company, how hard it is to be successful and you need to cultivate relationships with funding sources over time. But I think what you get from Greg that you may not get from another VC unless of course you know them personally, is a complete understanding of how he wants to help you run your company only when you need the help. He doesn’t want to stick his nose in where it is not wanted or needed. I am not speaking from experience working with him but I sure have worked with other investors who are not that way and have an ability to really mess things up very quickly.
Greg shared a couple of things that I want to share; you have to build trust with your investors and vice versa. This trust will be invaluable as the rough spots show up… and they will show up. There is a certain level of trust or they wouldn’t have invested in your company, in the first place but this trust has to grow and you need to cultivate that trust. It is on the CEO’s shoulders to gain the trust and to facilitate meetings, etc that will build the trust. As that trust grows and investors see you are doing what you say you are going to do… many will (some will still keep their nose in your business) back away and let the CEO do what he or she is there to do. This trust will grow over years and different projects and if you are lucky enough you will always have a source of capital. As Greg stated it… there are some people that you would write a $25,000 check before you ever heard the idea just because you knew the founder and trusted their instincts. That is what many strive for and very few achieve. Greg could think of a few people he would do that with.
The second thing is focusing on customers in a pitch to an investor. Talk about customer experiences with your product. Tell stories about how your customers that are using your product. He said you cannot talk enough about the customers. If you have a lot of customer stories then you must have a lot of customers… which would be a great thing. Limit the discussion on possible uses but actual use cases by actual customers you have talked with.
One other point I would like to make is I interviewed Michelle Goldberg from Ignition Partners in March and one thing that she echoed was that even if you don’t have deep industry knowledge of your chosen company if you have deep customer knowledge that will make up for the lack of industry knowledge. As she put it… you can’t know too much about your customers. Michelle has a deep belief in making things easier for consumers at every level and if you have a startup then you should get an introduction to her somehow. That is a sniff test with many VC’s. If you can’t find a way to get an introduction to a local investor then maybe you are not made to be an entrepreneur.