Little Cairns scored big at the end of last month with another esteemed visiting entrepreneur brightening our doorstep: Co-founder and COO of Meta, Ben Sand. theSPACE Cairns was the last stop for Sand on his DSITI-sponsored state-wide tour.
As a Y-combinator graduate who has raised over US$23 million and sits at the helm of a tech company with reportedly 1000% yearly valuation growth, Sand had a thing or two to teach us about capital raising (and the differences between Australia and the US) and creative ways to attract talent when you’re bootstrapping.
Don’t underestimate the value of good relationships
As a startup founder it’s easy to get caught up in polishing your product and trying to find investors, but curiously a lot of Sand’s advice centred around “being a good citizen” and building a team that you can work well with, not only on the current startup, but potentially well into the future.
His point was that over time the value of solid reciprocal relationships with good people will far outweigh any quick bucks you might make along the way by cutting corners or trying to work with a mismatched team.
Sand’s advice was to think long-term, pointing out, “This will not be your last startup”.
He believes your most important assets are your relationships and your reputation, so do people favours, be respectful, and good things will come. Focus on being generous, even when you feel you don’t have much of value to give. Give advice, offer someone a lift, make an introduction between two people who can help each other, be on the lookout for simple ways to help others.
In Sand’s own words, “Tech people can be jerks”. His advice was to, well, not be one.
And this relationship-building philosophy doesn’t only apply to your immediate team members and mentors; it’s equally important to build relationships with potential investors, as they can become your greatest allies and help in more ways that just financially if you get the relationship right.
But it’s all well and good to say that you need to find great teammates. The question then becomes, how do you attract great people to your project when you have no money?
People are a startup’s biggest expense – find ways to save
The first thing to remember is that people need to be attracted to you and your mission as much as, if not more than, your product. Develop a clear vision, and seek out those who believe in it as much as you do. People will give you more for less if they’ve bought in to the “why”.
The second tip, and Sand himself is a great example of this, is to get creative. When it comes to finding and attracting people, brainstorm some perks you can offer in lieu of cash.
Sand gave the example of hiring cheap spaces in great countries and working together as a group on a project, one that the whole team believes in, in a foreign country that has plenty to explore in your down time. There are certainly people who are willing to be involved in something like that even if the money really isn’t there, because they’re happy just to be having an adventure with like-minded people.
Sand pointed out that this is where Queensland, and particularly the Cairns region, has a big advantage. With our beautiful coastal towns and laid-back tropical lifestyles, we have a huge drawcard right under our noses.
Having grown up here, many of us take palm-lined beach scenes for granted, but why wouldn’t a programmer based in a bustling US metropolis jump at the chance to come and work on an interesting project in a beautiful holiday destination? Location can be currency.
Sand, an Australian, currently lives in a stunning mansion right in Silicon Valley. Is it because he’s got cash to splash? No. It’s because he shares the place with members of his team, and as a result enjoys luxurious surrounds while paying lower rent than standard housing in the area.
Even when you start to experience a degree of success, Sand’s advice is to remain frugal and always look for ways to minimise costs. Don’t be afraid to couch surf and live on baked beans; potential investors will appreciate it.
Australian investors tend to be much more risk-averse than their overseas counterparts. It’s been said that just one investor located along Silicon Valley’s Sand Hill Road is likely to have about 10 times as much to invest as all the venture capitalists in Australia combined.
The good news is, Australian startups aren’t limited to Australian investment. Sand’s advice is to first work on making connections in the US and find someone who will invest in your Australian startup. Moving forward, it may be possible to get US/Australian co-investment.
Down the track, once we have a few more success stories Down Under, we might find that getting investment within Australia becomes easier. But for now it seems the US and China could be the best places to look.
Grant funding can be another option, but Sand prefers investment funds which also come with advice and connections. Even if you have to give up part of your equity to attract a good investor, it’s worth it. Rather than quibbling over the valuation, just take the money and work on building your reputation and your relationship with them.
Here are a few more nuggets from Sand that are well worth taking on board:
- Don’t just ‘take a punt’ with crowd-funding platforms. You will have much greater success if you do the work beforehand and develop a solid mailing list to promote your campaign as soon as it launches.
- Offer crowdfunding rewards that are easy to do. Nothing off-the-wall.
- Keep pushing, keep pushing, keep pushing (politely). Being told ‘no’ is not a reason to give up.
- Be a responsible citizen. From the moment you have money coming in, give (at least) 1% to charity.
- Spend as much time as possible on the value you’re adding, and as little as possible on general startup business ‘stuff’.
- Focus. Remember Steve Jobs’ saying, “I’m so proud of all the things we didn’t do.”
- Don’t confuse your message. Your MVP must be easy to understand, even if it’s not yet easy to use.
- Forget generalised marketing. Take your idea to the people who are in the most pain right now. They will accept the flaws and become your best referrers.
- Investors look for ambition, teamwork, determination and adaptability. Ticking these boxes is as important as getting the product right.
Sand’s presentation also covered some of the very exciting work that his augmented reality company, Meta, is involved in. A lot of what they do essentially appears to be moving ideas that were once science-fiction into the real world.
Using Meta’s augmented reality glasses, the wearer can see things right in front of them that just aren’t there, including non-existent objects, or people who are in fact many miles away. The technology is being directed not only towards endeavours like gaming and communication, but also to more serious applications such as allowing medical students to practice an operation on a simulated patient.
Another example that Sand showed during his presentation was a person designing and ‘sculpting’ a vase using augmented reality materials, and then inserting the final design into a 3D printer, out of which came a real version of the imagined product.
These are exciting times.