Dany, my soul partner in life, and I decided it was time to finally have a wedding celebration after being together for 11 years (now over 14!). As a part of that, we decided to take a one-way ticket trip around the world. We were living in San Francisco at the time and often people would get burned out working on a tech company and take a sabbatical for a year. That led us to dub our trip the sabbatimoon, a combination honeymoon sabbatical to recharge, energize, and deepen our relationship while seeing the world.
What we learned was that there is no perfect timing in life to completely change your direction, so we choose the beginning of 2018 to start, leave our jobs, and buy that one-way ticket. As part of that strategy, we took the time to outline key values we wanted to get out of the trip together and individually. You can see some of that initial strategy profiled on HeyWeDidThat.com, but in short, my themes were:
1. Places we can play (fun, outdoors, creativity)
2. Needles in the hay (mystery, spiritual communities, nature)
3. Beaches we can lay (tropical, islands, remote)
4. Ancient ruins in gray (temples, fortresses, history)
5. Share love, we may (relationship deepening, connections, impact)
After two years of traveling, we came back home to Minnesota at the beginning of 2020 to visit our families (with impeccable timing as COVID ramped up). We learned so much. It’s hard to outline it all, but we wrote a blog about some of the greater learnings of traveling for two years.
It’s also important to call out that traveling with a partner is different than traveling solo. There are benefits to both. In our case, being together during our most productive times of the day (i.e. 9 am - 5 pm) when we would normally be working helped us to talk more, observe more, and allow subtle things to bubble up and understand. Our relationship mindfulness reached an all-time high.
Our communication was never better. And our health and fitness were in peak form after those two years. We had so much time to find our optimal daily flows for maximum energy, happiness, and love. Those were some of the most impactful learnings that we are still benefiting from today.
Throw some light on 6 accelerator programs in San Francisco and Silicon Valley for 500 Startups.
Before leaving on our around-the-world trip, I had helped lead six different accelerator programs in San Francisco and Silicon Valley for 500 Startups (Batch 11, 12, 14, 16, 18, 21, 20) as an EIR or Entrepreneur in Residence. My role was to find, invest in, and mentor the best startups globally. Then bring them to San Francisco or Mountain View, California to our offices and coworking spaces to coach them on growth for 3-4 months. Startups would get between $100,000 to $200,000 in equity investment (the amount would change from program to program). Our job was to make sure they could ramp up their growth during their time with us.
Given the typical VC return on investment timeline of 7-10 years, I’m just now, about 5 years out from my first investment, seeing outcomes. I’ve had two of my portfolio companies get acquired (Baker, and one secured a major $425M exit just this week) Backlot Cars.
500 Startups also has an incredible program in Mexico City supporting all of Latin America that I’ve spent quite a bit of time at. The team there is phenomenal.
Please, tell us in brief about the first American collaborative startup accelerator in Russia and Saudi Arabia which you have built.
Yes, of course. While traveling from 2018-2020, Dany and I both helped launch the 500 Startups programs in Moscow, Russia, and Riyadh, Saudi Arabia. These were notable because they were the first American programs EVER in those countries. We were proud to bring more startup funding and entrepreneurial support to the local startup ecosystems in Eastern Europe and MENA. Through our work there we were able to not just more opportunities to startup founders, but also founders that were less represented in tech. 37% of the startups we funded in Saudi had at least one female founder. I think that’s a major turning point for the region.
Also, this blog post tells more about my strategy about building your own Silicon Valley without losing your soul.
What metrics do you look at when deciding on an investment. Are there any particular ratios you focus on more than others?
Great question! For early-stage investing it isn’t easy or as clear. Often you are assessing the founder’s ability to communicate their mission, why it’s a big market, why their team can be the ones to do it, and if they have a secret sauce in the solution. Ideas are easy, execution is hard. The best indicator you have might be the fact the founder has seen the path to outcomes before. They might have worked at Google and experienced how top teams perform or built startups before as a founder or early employee. That experience will help them flesh out the iterations necessary and go-to-market strategy necessary to get things off the ground and gain traction.
As you move from an angel or early-stage to a later early stage and seed, you will also be looking at growth rates. Are they growing 15-20% month over month? Are they retaining their customers? Do they have an idea of their ROI on marketing spend? What levers can they pull consistently for growth? Those are all questions you can ask once a startup has some traction, but often there isn’t enough information to understand repeatable patterns just yet. That’s why so much of the scrutiny falls on the founder’s pitch and presentation. You need to pitch like a rockstar.
Do you look for pure growth potential or a solid business model? Is there one that holds more weight than the other?
Growth potential ALWAYS matters most for traditional VC investing. They need a few companies out of their entire portfolio of 50-100+ investments to make it big. That’s the unicorn. The Airbnb, Lyft, Etsy that will return major profits to the investor’s investors, or LPs. Thus the term rocket ship growth. VCs need you to grow like crazy. Then IPO.
However, new models are emerging that support startup with different growth trajectories or who may not fit the traditional Silicon Valley venture capital mold. They might be companies based outside of major cities or building products that aren’t currently trending with VCs. Either way, the alternative venture capital options are growing for founders and that’s a good thing.
What’s the portion of the equity that investors should aim for to increase the probability of success?
Equity investing is a balance between the founder and investor. As an investor, you don’t want to take too much or you could ruin the chances that a founder could raise more money. I’ve seen this happen with uneducated investors and founders outside of Silicon Valley. An investor might ask for 50% of the company for a $100,000 investment. That amount doesn’t give the founder of any room to grow and give away more equity if their company takes off on the way to become a unicorn. On the flip side, a fair amount of equity at a seed round or Series A might be 15-20% of the company for a VC.
Either way, what’s important is that the founder understands the capital path they want to take. Are they trying to grow the VC route and pour money into hyper scaling or are they interested in owning a larger portion of the company and growing more organically? Both
routes are okay, but it’s important to understand where everyone sits. There are also more alternative routes popping up as new capital options become available for startups.
You have trained over 2,000 startup founders. What are the major takeaways for anyone who is attending your sessions?
Wow, so many thoughts. I’ll look at it from a high level. A few things to consider:
1. First, have a real passion for what you are doing and know the industry better than anyone else. Leave the world in a better place than it was before.
2. Once you do the above, trust yourself that you are the expert. No VC or sceptic will know more than you, but they may act like it. Take feedback with grace and keep growing.
3. As you grow, grow your mentors. Build your network with other founders in your industry who are a couple of steps ahead of you. That’s essential to making smart decisions and getting access to people and places you couldn’t reach before.
4. Finally, know where you want to go and keep working hard to get there. However, don’t burn yourself to the ground. Balance your life. Take time to exercise, get into nature, and spend quality time with the people you love. Don’t lose focus on the real prize: living a full life. If you do all that, you’ll be happy and have fun experimenting along the way.
Here are a few things I do daily to keep myself happy and healthy. Also, here are a few more. If you’d like to connect with Tristan, you can share ideas with him on Twitter, LinkedIn, and Tristanpollock.com
He also put down for Entrepreneur Magazine and his blog TristanToday.com.