2 tweets made me go Paleo for my startup

“There were no red bell peppers in the Stone Age!”

“You can only eat raw meat, right?”

“Is butter allowed?”

These are the questions I face as I take on the Paleo diet, from outsiders who know little about this new culinary choice. It’s a little painful and awkward to correct people.

A lot of Chewse customers and potentials have reached out to us about meal options for Paleo, and they are definitely feeling the pain. As a founder, I want to feel that pain too.

Twitter _ Interactions-1

And even MOAR pain:

matt harley (mattharley) on Twitter-1

One of our core beliefs at Chewse is that food is an emblem of identity. That what’s on your plate has become just as important as what’s in your closet or who you hang out with. And nothing has reminded me more of this fact than when I challenge myself to take on Paleo for 30 days — and not simply a new diet, but a new lifestyle.

What the hell is Paleo

Paleo diets encourage you to eat the right fats, anything that moves (animals), and to avoid grains. The basic health principle is that modern foods disrupt our digestive system and lead to killer diseases — foods that we should never have processed for consumption. This includes bread (celiac disease) and processed sugar (diabetes). The two things I love most.

As a diet that’s less than 15 years old and somewhat crowd-sourced, there is no single answer. In my opinion, the diet tries to maximize two feats: living primal and living healthy (which are sometimes mutually exclusive). So when I get questions about why I can’t eat legumes (beans, peas, lentils, peanuts etc.) even though ostensibly they were around in primal/caveman times, I understand why it’s confusing.
Note: Legumes apparently are poisonous in their raw form, due to certain chemicals that need to be processed in order to prevent them doing damage to the human body. Chemistry nerds can read up here.

For a great infographic on the subject, check out Paleohacks. For a cheatsheet, I reference Paleoeffect. And when I want some damn dessert, I salivate over recipes at paleOMG.

Why founders should always feel pain

While I’m still unconvinced of Paleo’s magic, I do prescribe to the underlying principle that founders should spend some quality time feeling the pain of their customers.

I worked with administrative assistants to order company meals while at USC. And the painful 2 hours that I took to order a catering for 30 people was the most valuable 120 minutes I’ve ever experienced.

2 hours of pain brought me through 3 years of my startup.

You know when you see someone get stabbed in a movie and you wince? A little flesh wound can be good for you as a founder (please don’t take that the wrong way!). There’s something utterly visceral about going through what they go through — and that fuels your need to build a product or service that solves it.

Go feel the burn. Your customers will love you for it.

Advertisements

Why Fundraising is Like Rock Climbing

Like a good SF resident, my friend Francis Pedraza took me and my co-founder on a rock climb when we visited from LA.

Good thing: I’m ambitious, I haven’t climbed before, and I have a hunger for adventure.
Unfortunately: I have weak upper body strength, I’m terrified of heights, and I was wearing jeggings.

With the odds against me, did I do the logical thing and bow out gracefully? Hardly. An hour later, I was near the top of this immense rock wall, sweating balls, with Francis patiently belaying me below.

Welcome to fundraising, my friends.

Fundraise as a Rock Climb-1

Here’s the deal: hearing the story about how entrepreneurs raise their round should not be the blueprint for how you bring your round together. There are some basic principles of how your round could come together, and it might make you feel more comfortable to map out. At the end of the day, just accept that as a first-time entrepreneur you can’t strategize how money is going to come together.

Raising Money in 3 Parts

I credit this philosophy with a wonderful entrepreneur who came out of the TechStars accelerator, which teaches that most rounds are raised in 3 parts:

  1. 1st Tranche: The Beginner’s Ledge
    • This looks easy, but tends to be the hardest piece of the raise. Getting that first investor to look around the room, see no one else vouching on your behalf, and then writing you a check in spite of it — that is ridiculously difficult. It looks like an easy ledge to get you to the promised land, but you’ve still got quite an initial sprint to clear it.
    • These investors are typically angels that put in smaller $5k – $25k checks. You let them in to build momentum in the round, even in those checks aren’t substantial.
    • Full Disclosure: It took me 6 months before I landed our first investor. And boy did we land a key one — thank you, 500 Startups! Once we had them on board, we raised an additional $50k that month.
  2. 2nd Tranche: No-Man’s Land
    • This is where you start to transition to bigger checks, better-known angels, and even micro-VCs. The waiting period can often be a little longer, but worth it. These guys and gals are generally more strategic, they focus heavily on the team, but they needed to see social proof of other investors before writing their own check.
    • The rock wall at this point looks sparse. Rocks are either level with your feet (making you feel like your moving sideways instead of upwards) or far out of reach. Hold out for those farther boulders — they will catapult you to the final tranche.
    • We spent months floating in this period. Having Demo Day at 500 Startups helped push some of the bigger players in our round because of the forcing function, which was immensely helpful — we closed 25% of our round in the 48 hours before Demo Day.
  3. 3rd Tranche: Hundreds of Foot Holds
    • Once you get those strategic names in your round and roughly 1/2 to 3/4 of the round committed, things get a ton easier. The fundraising game starts to become more inbound, leads close quicker, and investors that may have passed or been non-responsive before are now returning to set up a call.
    • Boulders and footholds are plentiful at this part of the rockwall. With the right amount of boost, you’ll reach the top in no time.
    • You hold the most leverage at this piece to be choosey with your investors. I’d argue you should always be testing how investors add value to your round.

Have a belayer you trust

There’s a rock climbing technique called “belaying” that requires a second person on the ground, wearing a harness, who controls the slack and friction on the rope to make sure the climber doesn’t fall too far. That support person, the belayer, is your absolute anchor.

As a first-time fundraiser, my lawyer was my belayer (my co-founder was my moral support cheering from the stands). I can’t tell you how many times I asked Gaurav all the questions that I felt too dumb to ask investors. He was calm, patient, and strategic. I trust him, and he has the informed experience that comes with seeing seed-stage deals consistently.

The decisions we came to together put my company in a strong position for success — not only helping me scale this wall, but he’ll definitely be my partner for future climbs. Find a lawyer you trust. I’m happy to refer you to ours 🙂

Don’t innovate on your financing, innovate on your business.

I was tempted to try to try to think of new, creative, quick ways to raise money — to effectively “outsmart” the round. But doing this is not only a complete waste of time, but it could be a red flag to established investors who would be stellar to bring onto your round. I would recommend using the Y-C standard termsheets and not spending more time tricking out your docs.

It might be helpful to set expectations for your round based on what others have done. Our law firm, Silicon Legal Strategy, released a Seed Financing Report this month that would have helped me understand what I was getting into.

Understanding your audience is key, so I would get familiar with the economics of angel investing. You’d be surprised how easily someone can “drop” a $50k check, unless you understand how it fits into their portfolio theory. Don’t let it surprise you when a 30-minute cup of coffee translates into six figures of investment.

“I knew you wouldn’t give up.” 

Francis will probably laugh remembering this story. I was perched near the top of that wall for a while trying to overcome the sheer exhaustion of getting to that point. But some odd mixture of pride and ambition forced me to the top, and I definitely refused to give up (as Francis pointed out when I was finally roped back down, happily panting and exhausted).

Fundraising requires that same tenacity. I hope your journey is shorter than mine.