3 Rookie Entrepreneurial Mistakes from 'Start-Ups: Silicon Valley'
Ever wonder what it was like during the early days of Facebook in Mark Zuckerberg's dorm room or as Twitter was born in Jack Dorsey's apartment? BravoTV hopes to capture that kind of excitement in Start-Ups: Silicon Valley, a new show that "explores the intertwining lives of a group of young entrepreneurs on the path to becoming Silicon Valley's next great success stories."
But remember, this is the channel that brought us The Real Housewives franchise -- a fact that quickly becomes apparent as the show's cast behaves more like reality TV stars than the success-driven computer nerds they insist they are.
In the first episode, we see brother-and-sister team Ben and Hermione Way pitch their life-expectancy-predicting software startup Ignite to prominent investor Dave McClure, founder of the business incubator 500 Startups. But in true reality-show style, we have to wade through 45 minutes of alcohol chugging, petty fighting, spray tanning and poolside toga partying to get there. Hermione proudly tells her brother she arranged the meeting after sending McClure a text message of her middle finger.
"[McClure] says if you're not upsetting someone in business, you're doing something wrong," she tells her brother. But the UK natives take the advice a little too far. The night before their meeting, Ben and Hermione host a party at their home and arrive to their meeting tired and unprepared. While showing up prepared to an investor meeting is a no-brainer, here are three errors the Way siblings commit during their meeting, that other young entrepreneurs should take note to avoid.
1. Asking for too much money. The duo knows McClure normally invests between $100,000 and $150,000 into each startup, but they asked for $500,000. Hermione says she knows her request is a "little bit high" but she's sure once he sees the presentation, he'll "throw down the cash."
Asking for three to five times the normal investment isn't a "little bit high," it's a sure way to get a ‘no.' McClure reaffirms this when he tells the duo, "We like to do businesses that aren't incredibly capital intensive."
2. Not showing focus. Ben tells McClure that Ignite is one of 43 companies he owns, adding that he's "never focused this much on one business." A surprised McClure says, "As an investor that's a bit of a distraction. Why... are you focused on 42 other businesses. I want you focused on the one that I'm putting money into."
Investors invest in the person as much as the idea. A business owner who isn't 100% focused doesn't get any cash.
3. Second-guessing an investor's business model. McClure tells Ben and Hermione, "It's not a yes. We are trying to do stuff that is somewhat predictable and not super expensive, on a very frequent production oriented basis. We are trying to be Henry Ford for venture capital." To which Hermione replies, "Then you're never going to make a BMW."
Don't try to tell a potential investor how to run their business. An irritated McClure tells Hermione, "If you look at the historical precedent, Henry Ford eventually became a multi-billion dollar industry. I'm not in the business of taking irrational risks."