Entrepreneur Myths (19 page)

What you wear depends on who you are. You want to be judged by who you are, not what you wear. I funded entrepreneurs who walked into my office wearing jeans.  And I turned down entrepreneurs who pitched me wearing designer suits and looking like a million bucks.

Two startup techies came into my office looking for money — dressed up in fancy suits. It was weird. They didn’t look right. If you sit at a desk punching software code for 24 hours straight, I doubt you’re wearing a suit and a tie. These poor guys looked so uncomfortable in their suits that it made me extremely uncomfortable just looking at them. But they needed the damn money. When they saw me in my T-shirt, they loosened up. They felt I was one of them.

Be yourself. When I consider an investment, I want to see the real you. If you dress up for the investment occasion and then loosen your tie during the meeting, it’s a little red flag. I wonder whether you’re telling me shit that’s real, or you’re faking it until you make it. Wear what makes you comfortable, and makes you feel like you’re you.

My friend Randy Jones, founder of Worth magazine, looks like a billion bucks when he wears a suit. The reason is because the suit doesn’t make him — he makes the suit. Randy was the youngest publisher in the magazine business as publisher of Esquire. He could be wearing the cheapest suit in the planet and he would still look like a billion bucks. He always wears nice clothes. It’s part of his personality and he’s comfortable wearing a suit.  Hell, he probably dresses up when he goes camping or to the beach. Randy’s a brilliant entrepreneur with or without the suit, but he wears one anyway — which makes him look even more successful.

Moral: If you want to dress in a suit like Randy Jones, then do it. If you want to be the dead fashionista like Mark Zuckerberg, that’s fine too. Just don’t fake it. Be yourself. What an entrepreneur wears is the least of my concerns as an investor, but there are a few investors who look at what an entrepreneur wears as an indication of their personality and success.

I have another entrepreneur friend who is even less of a fashionista than Zuckerberg. I guess he feels comfortable in wrinkled, soiled clothing. We were in San Francisco during one of our conferences and we stepped out to take a break. He was chasing one of my children around and acting silly when a homeless woman approached him. She was about to ask him for money, but suddenly turned and walked away. I realized my friend looked as if he didn’t have a penny in his pocket. Boy, was she wrong. This guy was worth millions.

Moral: You really can’t judge an entrepreneur by their clothes.

Some investors are more concerned with appearances than actions and results. Forget them.

But let me speak from both sides of my mouth. What you wear depends on the situation, the sector, the amount of money you’re seeking and the type of investors. There were times I sucked it up and wore my suit when presenting to institutional investors or “old money,” because I knew they’d be wearing suits themselves. I did it because I was asking for more than $300 million. But by the same token, I’ve worn jeans and a T-shirt to investor meetings asking for $100 million. I don’t have a problem wearing a suit, but I prefer my fucking comfortable Levis. That’s the bottom line.

If you don’t know what to wear to the investor dance, ask your spouse or other half (if you’re lucky enough to have one despite being a workaholic). Or ask your mother. She’ll make sure you don’t look like shit when pitching for money.

Just don’t be fucking stupid. Wear what you have to wear for the occasion. Just don’t wear something that isn’t you.

Oh, you don’t have to wear a suit if you pitch me for money. You can be in your pajamas but you better have a damn good pitch. 

Brain Candy: questions to consider and ponder

(Q1)
What should you wear during investor meetings?

(Q2)
If you’re a woman, do you wear sexy, attractive clothes to the investor meeting or do you dress conservatively?

(Q3)
Do you wear jeans and a T-Shirt to a meeting like I do? Are you fucking crazy or stupid enough (like me) to do that?

(Q4)
Do you wear a suit for venture capitalists and casual clothes for angel investors?

(Q5)
How do you determine what to wear for an investor meeting?

(Q6)
What kind of clothes do you wear? Is it better to wear a cheap suit or no suit? What if you’re a poor entrepreneur and can’t afford an Armani suit? How do you dress to look successful without looking cheap?

Entrepreneur
Myth 29
| You need capital to develop your product or service

An entrepreneur revolution has happened, and few are aware of it — except the smart angels and VCs. This has created a new category of entrepreneurs I like to call
“
revolutionpreneurs
.”

The reason for the revolution is simple. The cost of product development in the software spectrum has plummeted, due to maturing technologies and open source development. In the early 2000s, when I co-founded Futuredex, an online marketplace and media company for the private equity sector, the cost of developing the online marketplace was 10X what it is today. 

Software programmers are most aware of this entrepreneur revolution. When you can develop a kick-ass sophisticated app, application or platform, alone or with a few buddies in a college dorm, for basically nothing but the cost of brainpower — the entrepreneur dynamics have substantially changed. You no longer need capital to develop a product. Vision, desire, brainpower, frugality and resourcefulness are the new capital today. The power has shifted from capital to the revolutionpreneurs because once the product is developed they can test it out inexpensively in the marketplace.

Entrepreneurs have pitched me for money in order to develop their product or service. If it is hardware-related, I understand. If it is software-related and you’re a programmer needing capital to develop a beta, God help you. Why the fuck should I fund you when you can develop it with brainpower? There is no reason any
digital
product or service needs capital for development in today’s world of open source. Why seek capital in the seed stages of your venture and face dilution because you don’t have shit to show?

I know one kick-ass programmer who developed a very sophisticated product with just three people: he, himself and him. Devin Watson, founder of ScreenIQ, spent over a year developing the first of a suite of products that enables filmmakers, and web content creators to streamline the process of producing films, TV shows, and webisodes. Devin had a vision that came from reality. He wrote a screenplay, raised capital with his partners, and produced the film,
The Cursed
. During the film production process, because of his background in programming, he was frustrated and inspired to make the process easier.

Producing films is a complicated process. After burning the midnight oil and spending more than 7,000 hours, Devin became a revolutionpreneur and completed his first product. ScreenIQ enables video content creators at all levels to save money and streamline the film and video production process. He plans to launch it into the marketplace through guerrilla marketing. Now, this is how it’s done. This is the entrepreneur revolution. It has happened in the software and digital sector and it will continue to propagate into other sectors.

The revolutionpreneur formula is simple:

Revolutionpreneurs are changing the dynamics and value proposition of the venture capital industry. The VCs are fucked and most don’t know it or some don’t want to admit it. There is much you can do in product development that requires
no
money — just brains, passion and desire. I was influenced on the reduction of cost in product development by Taiichi Ohno, the father of the Toyota Just-in-Time production system, and by Preston G. Smith and Donald G. Reinertsen, authors of
Developing Products in Half the Time.

Smith and Reinertsen teach that you can develop products in less than half the time, and possibly even finish the product, without spending a lot of money or any money at all. And I’m not even talking about just software products. However, this is what’s happening today in the social media sector. Facebook was developed in a dorm room. With all the open source development tools available today, software developers have no excuse not to have a working beta or completed product before they go raise capital. The revolutionpreneurs actually launch the product into the marketplace and self-fund their venture. Why the fuck not?

I learned so many things from the great Taiichi Ohno about business, innovation and manufacturing that can be applied to any product or service. Mostly, I learned to think in a different way. I am forever grateful to his genius.

Think fuzzy if you want to develop products quickly

The “fuzzy front end” is the part of the product development cycle, according to Smith and Reinertsen, where the entrepreneur conceptualizes the product or service, builds a prototype, and even tests out the product or value proposition, while spending little or no money. This is a novel concept for some, but it’s pretty much how garage startups in Silicon Valley and Silicon Alley do it. Obviously you can’t do this for all products or services, but you’d be amazed in what you can do if you reframe your mind and believe you can build a prototype for nothing.

You can develop products through sweat equity and intellectual capital

Look at entrepreneurdex.com, for instance. We built the website with very little money because we leveraged an existing technology infrastructure. Our burn rate, to operate the IT infrastructure on a monthly basis, is less than $50 per month. Years ago, it would have cost me an arm and a leg to develop and operate it. In fact, eight years ago I spent over a million dollars setting up the infrastructure for the Futuredex website. The feature set was different but at least 40% of the Futuredex value proposition can be done with what is available on entrepreneurdex today.

Back then, with Futuredex, we were forced to be in the technology business of managing the infrastructure, as well as the publishing and media business. We were burning money creating content on one end, while developing the technology for new features for the website on the other end. Money was going out the door on both sides of the business. That was not fun.

For entrepreneurdex, we didn’t hire a company to do graphic design. A person on our team created the graphics for free. Shit, it cost me over $10K to develop the corporate identity for Futuredex. It cost us $0 to develop the corporate identity for entrepreneurdex. The website was built with sweat and intellectual capital. It’s not hard. You just have to use your brain.

Technology, in all forms, has become a huge enabler of getting products developed quickly, efficiently and inexpensively. That’s the entrepreneur revolution.