I’ll admit I was pretty impressed with myself when I got the call. I definitely brushed my shoulder off.
At the time I was freelancing and working in a shared office space in Long Street, Cape Town. One day around 1pm I got The Phonecall That Changed My Life. It was from Johanna at Google’s shiny new tech start-up incubator called Umbono, saying that we had been picked from over 2,000 applicants! We were going to get beautiful office space, start-up funding, some very prestigious investors and loads of brand-association PR.
This was going to be epic.
And it was epic, for all of 3 months, until we got kicked out. But that’s another story.
Many folks have asked me how did we manage to raise investment from the mega-amaze, tech unicorn that is Google? It was quite a simple process actually:
Step 1: I filled in an application form on their Google incubator website.
Step 2: They asked us for a slide deck.
Step 3: They asked us to pitch in person.
This is not useful information. You didn’t just waste a minute of your life for this list of bullet points. Also I realise Google isn’t setting up incubators all over the place, so I was lucky enough to have time and place on my side. The more interesting info here is WHY did the team of investors that Google assembled choose US, and not the others. This is what I would like to share with you. This information should be transferrable to you when you are pitching for investment from other savvy investors.
1. TEAM COMPOSITION
Google said they had seen way too many start-up pitches by teams composed of one or two of the same people, for example two software developers, who happened to be friends. Devs are great people (I am one), we are logical, detail-oriented, have experience with and ability to create web apps, plus we are funny and good looking. However, building a business is more than simply building a product that works. A lot more.
Our founding team was not huge, it was just myself and my co-founder Marc, but we stood out for two reasons: our skills did not overlap at all, and our combined skill set was broad. I brought the ability to build software, as well as entrepreneurial experience. Marc brought his professional domain-specific knowledge (tax), as well as his financial training as a CA. Between us two we knew the customer, what needed to be built, how to take the business forward strategically and how to keep it financially afloat. Our only blind spot, which we later hired for, was Marketing.
It helped that our skills did not overlap in the slightest, because it meant that we trusted each other with our respective roles, and didn’t have to argue about the small details. It helps when you want to move quickly not to have endless debates.
Additionally I think it helped that we were not actually friends at the time. We had mutual friends, that was how we met, but had not hung out to any extent as buddies before that point. Friends going into business can be unwise because the priority is given to maintaining the friendship, not the business. Friends don’t want to rock the boat by stepping on toes and often this subverts tough, honest conversations that need to happen every now and then. Marc and I started off as strangers, but I now consider him one of the closest friends I have. Surviving small business tends to do that.
2. IDEA
Our idea ticked many boxes for a solid tech pitch:
1. Virtual product (so no inventory to hold)
2. High scalability / automation (so no reams of staff required)
3. Professional services industry (so prices can be high)
4. Niche problem being solved (so few competitors, and no competition on price)
5. Solves a real world problem for average people (so market is large)
6. UI was a chat client (so immediately usable for all ages and tech abilities)
7. Generic system architecture (so ready to port internationally)
These are great points, and you should strive to find a business model that checks all these boxes, but ultimately it was for a different reason that we were actually selected.
A few weeks into our life at the Google incubator we were told that we must speak to Peter because it was due to him that we actually got selected. In conversation we found out that our application was almost lost under a stack of papers, but was picked up by this guy because he recognised instantly what we were trying to do. Our business is an online tax business, and nobody does online consumer taxes better than Intuit’s TurboTax in the US. They make billions of dollars from that product and run SuperBowl ads with Danny deVito. Peter read our application and said “Wow, this is like an African TurboTax” and this gave us the magical glow required to be selected.
Why am I sharing this vignette? The reason is that investors see a LOT of pitches every day. Often times, especially if it is a tech start-up, the business model is rather complex and hard to explain. Busy people have no time for being explained. So if you can point to a massive success that already exists, has traction, a huge market (and ideas you can steal), you have already traversed 90% of your convincing journey. All that’s left is to then explain why your version or team will do it different and better this time around.
3. PAST FAILURES
Marc was new to the wonderful world of entrepreneurship, but for me it was in my blood from an early age. When I was 11 I really just wanted to write shitty QBASIC programs all day every day, but my Dad needed to use his computer. How dare he. I labeled a jam jar with “Evan’s computer fund” and filled it with some coins in an attempt to elicit parental sympathy, but this did not get me my own computer. At this point I picked up a simple book on Small Business and started scheming. Since then I have built multiple websites, online games, apps and tools. I have started four official businesses and managed to sell three of them.
This was important to the Google selection team because it showed that I knew what I was getting myself into. Entrepreneurship is not for sissies. Idealists also don’t thrive. Starting a business from scratch involves falling on your face, hard, multiple times, getting up again, then falling even harder. This is why most small businesses fail in the first year: because it’s kak, and it’s hard.
If you are pitching for investment, it helps to roll up your sleeves, show your scars and share some war stories. If you have built a business previously, or started a project from scratch and taken it places, those make for important indicators of resilience, creativity and essential survival skills. Failure has a silver lining to it – you learn something. If you started a business with a great idea, and everything unfolded perfectly to plan, one year in you would have learned absolutely nothing.
Failures are an asset, not a shame. Wear them proudly. If you have no failures to show, build a prototype, take it to market and collect some data on why it failed, then share that. Or find a teammate who brings that experience.