LA’s Startup Ecosystem: Talent, Capital, and… Velocity?

Many of us who’ve never lived in Los Angeles have strong opinions about the place. It’s the galactic center of the media universe, but we snark about its cultural inferiority, inauthenticity and general lack of seriousness.

All prejudice is based on ignorance; arguably, the Southland encompasses the nation’s most diverse startup ecosystem. Between Santa Barbara and San Diego, “there’s a huge spread of startups,” said Andrei Marinescu, a 500 Startups LA-based Partner on the Distribution Team. Increased access to capital and a more mature talent base have helped make the difference, he said.

There hasn’t been a shortage of people who are entrepreneurial and had fun or crazy ideas, but the ability to execute on those ideas was lacking for a long time. — Andrei Marinescu

According to Built in Los Angeles’s 2015 report, the last three years have shown steady growth in regional startup funding. Last year, 202 companies received $3.065B, and 67 of those firms garnered $2.156B through exits.

andrei
500 Startups Partner Andrei Marinescu

“In 2010, if you’d said, ‘hey, in a couple of years there will be three really strong mobile companies in LA, I would have said, you’re ****ing nuts,” said Marinescu. “If you look at Tinder, Whisper and Snapchat, those have been great success stories and very illustrative of the shift in LA — more focused on product, engineering and user experience.”

“Los Angeles always seems to get short shrift relative to the Bay Area because Silicon Valley has such a clean and simple story,” he said. Stanford, Xerox PARC and the geniuses in garages they sparked are essential Silicon Valley’s creation myth. Los Angeles lacks a similarly compelling narrative.

“In the Bay Area, there’s this attitude, ‘we’re the cradle of entrepreneurship,'” said Marinescu. “LA itself is actually an incredibly entrepreneurial place, partially because it’s so diverse. There’s a lot of inherent hustle in LA because of that.”

A lot of Bay Area investors didn’t feel like dealing with LA, like, ‘why bother getting on a plane and flying for an hour when I can focus on all the stuff happening outside my door?’ — Andrei Marinescu

Access to capital has definitely opened up in the last five years, Marinescu noted. “Today, there are a fair number of angel investors down here who are smart, savvy, value-add, have really relevant operating experience, are aggressive, and write big checks,” he said.

Despite that shift, “you still have a lot of founders who want to, or feel like they need to raise money from Bay Area VCs,” said Marinescu, adding that VCs have gotten more accustomed to flying down to LA and taking meetings.

Trina Spear, co-founder FIGS
Trina Spear, co-founder FIGS

For Trina Spear, co-founder of medical apparel company FIGS, the City of Angels is a very down-to-earth place to work.

“It feels funny saying LA is more real, because it’s kind of a fake town, but if you meet with entrepreneurs here, they’re very much focused on the reality of where their business is, where it’s headed, who they’re targeting and how to engage their consumers on a daily basis,” she said.

“Here, there’s a balance between pushing on innovation and meeting the customers where they are right now,” said Spear. “in Silicon Valley, the view is that if you’re focusing on customer needs, you’re too late.”

Because of that cultural difference, Spear said SoCal entrepreneurs are more focused on problems facing today’s consumers, whereas “Silicon Valley in general is focused on solving problems that maybe don’t even exist yet.”

“They’re working on them today and getting people to believe in them,” said Spear. “In LA, it’s more about building companies now that will be more sustainable over time.”

Before moving to LA last year, Albert founder and CEO Yinon Ravid lived in Manhattan for his entire adult life. “The idea of leaving New York City was very big move for a lifetime east coaster, but starting somewhere new really recalibrates the wires in many ways,” he said.

It’s very different to operate in a new scene instead of someplace that’s been around for a while. — Yinon Ravid

“There really aren’t that many choices you have in terms of a big-city ecosystem for startups,” said Ravid, who’s been shuttling back and forth between LA and SF to join the current Batch. “New York, San Francisco, LA, and maybe Chicago. I really liked the idea of getting out to California, where it’s been the Gold Rush proverbially for many years.”

Albert founder Yinon Ravid
Albert founder Yinon Ravid

Because LA now offers a stable and growing ecosystem, “you’re seeing a lot of talent move in pretty fast,” he added. Given the lower cost of living compared to the Bay Area, “building a company in LA is extremely cheaper than building one in San Francisco,” said Ravid. “Rents in West Hollywood versus SoMa are half. Literally half.”

“From buying food to having a place to live, it’s all a lot cheaper, so you can do a lot more with the same amount of capital,” he said. “There are enough challenges launching a business, so getting your capital to go twice as far is very powerful.”

Ravid said Albert’s first hire, who lives on the east coast, is “excited” about relocating to Los Angeles. “Location is so fluid to people those days, and a lot of people are wiling to move,” he said. “It’s important to sit shoulder to shoulder when we’re building a company.”

“We look for people in LA,” said Spear, “but we’ve hired people from other parts of the country, and outside the country as well. There’s some skill sets you may not be able to find in your backyard,” she said, “but you can find good people anywhere if you have a mission that people are excited about and a company that people can feel aligned with.”

If you feel like SF is the only place you can find talent, then you probably shouldn’t do what you’re doing, because you can find good people everywhere. — Trina Spear

According to Andrei, greater access to technical talent has been one of the primary drivers behind the region’s stability and success. “When I was at Hulu, it was a big challenge for recruiters to meet our hiring needs because the talent pools they were trying to draw from were in Silicon Valley and Seattle,” he said. “The challenge they’d run into time and time again as they tried to recruit engineers is that these folks said, ‘it’s high risk for me to move to LA. What happens after Hulu? Where do I go next?'”

Through the increased presence of companies like Google and Facebook, “that has changed,” said Marinescu. “It brought a lot more technical talent down here, but it’s also given people a clear sense that if they join a startup in LA that doesn’t work out, there’s a Plan B.”

LA is much more diverse than the Bay Area, certainly more than SF proper. There’s a lot of inherent hustle in LA because of that. — Andrei Marinescu

The cultural differences between LA’s startup environment and the Bay Area are as apparent as the weather, said Marinescu, who’s lived in Northern California. “People in San Francisco sort of look down their noses at LA because of stereotypes about the traffic, the entertainment industry and hot people who are dumb and narcissistic, but in LA, it’s exactly the opposite,” he said.

“You ask people what they think of the Bay Area, and you will not meet a single person who has something negative to say,” said Marinescu. “The attitude down here is that people aren’t comparing and contrasting themselves.” LA’s founders are in their own mode, and their community is thriving, he said.

“‘Silicon Beach,’ even though it’s a term I hate, it’s really stuck. People in Santa Monica on the west side of LA really embrace the term; I would say that’s the center of gravity for LA tech,” he added.

Ravid agrees: “In Santa Monica, you definitely do walk down the pier and you do hear the same chatter you hear when you walk around the Mission: people talking about KPIs and email retention rates. Still, LA has 15 million people sprawled across a very large swath of land, so the pockets are more disjoined,” he said.

“I’ve been here for four or five months, and I’ve definitely built relationships in the tech community — I do end up talking to the same groups of people who’ve founded companies on the tech side, the finance side, so I guess you gravitate towards the people that do the same things as you.”

In LA, you’re less likely to be held up against an insanely high bar that may not even be relevant to what you’re building. — Trina Spear

Spear said she preferred to build her company outside of the Bay Area bubble.

“Silcon Valley is massive, you have every kind of company there,” she said. “In any city outside of that world, you’re outside the magnifying glass and you can really focus on your business with less pressure. In LA, you’re less likely to be held up against an insanely high bar that may not even be relevant to what you’re building.”

“LA is way more diverse than San Francsico in terms of the way people think, act and work,” she added. “In SF, you walk into a company and it’s 4 pm and everyone’s playing ping pong, and then it’s 8 pm and everyone’s eating dinner together, and it’s 10 pm an people are still there.”

“At my company, some people have kids, or their commute is longer, or they have lives outside of the company, and we view that as a good thing,” she said.

Marinescu also said Los Angelinos are living more rounded lives than their Bay Area cousins.  “I think there’s more of a work/life balance. The challenge with San Francisco and the Bay Area in general is the echo chamber effect where it’s pretty much everybody you see: all your friends, everyone you see in cafes — they’re all in tech. and that is not the case in LA.”

As a result, LA has “less of that self-reinforcing dynamic where people constantly feel like they’re ranking themselves relative to their friends and their neighbors and the guy at the next table in the cafe,” he said. “It lends more of an even keel.”

There’s more diversity of viewpoint about how people approach the startup world and in our office, the hoodie-wearing bro engineer is not at our company, nor a lot really alive in a lot of other LA companies that I’ve seen. — Trina Spear

Spear concurred that LA encourages more individual thought and less groupthink. “People are focused on disrupting the industry that they’re in and bringing interesting products to the world, but you don’t need to all think the same things to get there,” she said, adding that diverse points of view make for a more inclusive class of entrepreneurs.

“I’ve met a lot of female entrepreneurs in LA, more than in San Francisco,” she said. When you have female entrepreneurs, that diversity alone allows room for other types of diversity and creativity within a company.”

For Ravid, “the most interesting thing about is LA is that you feel like you’re out on the new frontier when you’re doing tech here. And it’s only 45 minutes away from Silicon Valley, which makes it a very interesting business opportunity.”

 

Photo: Nathan Makan/Flickr

500 Mentor Profile: Julie Zhou’s discipline of growth

Today’s post comes from Parker Tarun at Mixpanel, and features 500 Mentor and badass growth hacker Julie Zhou

Julie’s interview is part of a series that shares how people, businesses, and the world are better off being “data-driven” and gets into exactly what that means for growth and product.

Julie is a 500 Mentor and you can catch her on Twitter here.

linkedin_2015

———-

“Oh my God. How do you do that?”

This is the slack-jawed question for Julie Zhou when friends learn that, after turning off the lights at Yik Yak’s West Coast office, she hits the gym and pumps 240 lbs. of pure iron. But Julie weighs in at just over 100 lbs. How can she lift something at that scale?

Her answer, as it turns out, is fairly rote and unexciting: “Every single week, you lift one amount. Next week, you add five more pounds. Then, you add five more.”

And yet there may be a deceptive genius here. Deadlifter by night, Julie effects a similar magic in her work life. She helps startups get swole.

Currently, Julie is heading up Growth at Yik Yak, a location-based social network that is mega-popular on college campuses. Before that, she was Growthmaster at Hipmunk and had worked in product marketing at Google. She teaches at General Assembly, mentors at 500 Startups, and is putting together a “practical guide” on the topic.

“I’m someone who’s lived it and breathed it and been in the trenches,” Julie says.

And out of the trenches, she’s returned with wisdom. But it’s not for the faint of heart.

Do you even “growth hack?”

Julie’s first trench was Google. She had joined the juggernaut’s Product Marketing organization. While it wasn’t exactly Growth, it taught her some things, like how to win attention inside of the engineering-driven machine.

“Anything marketing wanted to do had to be backed up with data,” she says. “It had to always have some quantitative justification around why company resources should be spent on those efforts versus anything else.”

One of the major projects Julie took on at Google was text ads, an undertaking she at first mischaracterized as “un-exciting.” But after looking into the data behind text ads, Julie realized just how much power was at her disposal. On Forbes, Julie wrote: “On a canvas of 95 text characters, tiny changes had massive effects –clever capitalization and site links increased engagement rate by three or four times.”

Her team was then able to transfer these learnings into larger channels, such as display and video.

“Refining the science of our marketing at the text ad level allowed us to avoid costly mistakes in less measurable channels with far more variables – background color, logo size, color matching, vocal tone, billboard angle.”

Julie was laying the groundwork for what would become her expertise.

“The first four years of my career were just boot camp data-driven marketing as a science.”

To continue growing herself, all she needed was to have the massive budget vanish.

Spotting

Today, Hipmunk has a solid reputation as a travel booking site. But when Julie joined the startup, there were only nine employees.

“I did not have nearly the budget I did at Google,” she recalls. “In fact, I had very, very little budget and quickly realized that was no way for Hipmunk to grow. Our resources as far as paid advertising were way too small to make a large impact. So I started looking for other ways to grow.”

Minor product tweaks, of the sort Julie had specialized in at Google, didn’t seem likely to improve Hipmunk. The company had already developed a great product. It just couldn’t rely on traditional paid growth channels, which were dominated by competition with far deeper pockets. Increasingly, it became clear that hacking growth would mean tapping into channels vs. product.

“Analytics is more important the scarcer your resources are.”

Luckily, they had done the math.

“Analytics is more important the scarcer your resources are,” Julie says.

Users who got on-app actually liked Hipmunk. In this case, the app’s gatekeepers were the sellers. After their iOS app had been featured in the “New and Noteworthy” section of Apple’s App Store, it experienced strong adoption. In comparison, Android adoption was at a standstill, but not for any difference in quality.

The approach had to be more classically biz dev. But unlike a lot of biz dev, it had to be on the cheaper end.Julie calls these kinds of partnerships “atomic bonding.” Atomic bonding means finding a way to link a larger partner’s success to your own. For Android, the partnership she wanted to cinch was Google.

So commenced a full-court press of emails and LinkedIn messages to old colleagues. Julie wanted to figure out who she needed to talk to at her former employer. Eventually, she learned that to be front-and-center on the Google Play store, she needed to woo a department deep within Google: Developer Relations.

Going before Developer Relations, they asked a simple question: What could Hipmunk do to convince Developer Relations of the strength of their app?

Developer Relations presented them with a challenge.

Google I/O was fast-approaching and the Nexus 7, a new tablet, would be premiering there. The Nexus 7 had its own crowd to please. It needed to appear handsome with a suite of design-savvy apps. If they so chose, Hipmunk could try to win Google’s favor by optimizing its Android app for the tablet and in accordance with Google’s newest design guidelines.

There’s a certain hustle to what Julie Zhou does. Here, her to-do list changed with the rules of engagement. So when Google said two weeks, that became Hipmunk’s calendar. And despite forging the relationship, Julie delegated its execution to her developer. She had to hedge on other players and circumstances.

“Growth is everyone’s responsibility,” she says. “It’s not just the role of marketing, it’s the role of the entire company and every single department needs to be involved.”

The powers at Google decided to feature Hipmunk on the Play store. It was quid pro quo, no money exchanged. After I/O, Hipmunk’s daily active Android users skyrocketed.

Still, it’d be foolish to think of this strategy as something turnkey. It’d be more foolish yet to think of it as an endorsement of “It’s who you know.”

Julie’s growth effort required analytics upfront to acknowledge where Hipmunk was prospering. It identified how past successes could be replicated in new relationships. Research granted them access to the right decision makers within the leviathan. Julie and Hipmunk had to make a promise to prove their value. Finally, Julie entrusted a department outside of her own to deliver.

If Julie had pigeonholed herself in product tweaks, the Android app would still be in some deep layer of the Google Play store. Instead, she recognized what the app needed to grow in particular.

Where does growth belong?

Moving on to Yik Yak meant Julie rethinking her skill set. Social apps fill a different role in users’ lives than a retail site.

“There are many companies that are small enough or have strong enough vision that growth can be shared among a lot of different orgs,” Julie says. “Invariably, departments start siloing themselves and losing the big picture as companies get bigger. At that point, it’s worth creating a central growth effort. Many companies do it differently. Some have growth living within product. Others have growth living within marketing. Other companies still have growth as its own org that has its own marketing and engineering design and analytics team.”

At Hipmunk, growth opportunities came from top-of-the-funnel. But Yik Yak’s growth opportunities occurred after a user had already landed on app. As a result, the majority of growth initiatives from within the product team.

Getting Yik Yak in front of users was a non-question. Retention was the focus. But before making hard and fast decisions, Julie had to run some tests.

One experiment at Yik Yak was around re-engagement notifications. If Yik Yak told its less engaged users they were missing their school’s feed, would they feel the FOMO?

“We had a targeted group and control group, and we carefully measured the return rate for the targeted versus the control group because there were some people who would come back anyway,” Julie says. “There was a massive difference immediately in the targeted users versus the control users. But that was somewhat to be expected if you get a notification.”

It turned out notifications were an effective way to herd yaks. They not only brought users back, but saw them returning with regularity. The task was now to make this data actionable.

Knowing this behavior, you could try and manage users’ lifecycles more closely with a volume of notifications or personalized notifications. You could also could try both, measure which is more effective, and select from there.

One may prove stronger in the long-term. For a hot startup like Yik Yak, keeping return behavior strong may be the rule of engagement now, but the tactics will have to change over time.

“Yik Yak is very, very strong in the college community, but we want to be equally as strong when our current users graduate and go to cities,” Julie says. “There, the metrics become different.”

Today’s growtherati need to know more than how to transition from one type of company to another. They need to grow their skillsets as the DNA of their company changes.

240 lbs.

Julie’s career so far has been a crash course in growth hacking, but that doesn’t mean it provides a template.

Growth can be a slog. Her advice for growth hacking is similar to her advice for deadlifting over twice your weight: If you want to surmount massive problems at scale, a combination of different exercises over time is the surest key to success.

But she cautions: “It’s very boring. It’s not like I did this and suddenly became strong.”

Rather, the process of weightlifting is quantitative. It’s iterative. It requires that she frequently run tests and track progress according to those.

“With weightlifting, it’s very easy to tell when you’ve made progress. There’s a higher number that you write down in a spreadsheet. It’s very, very applicable to growth. I’m very much a motivation-by-progress person. Here’s the KPI that I want to have by the end of the quarter. Let’s just track how we’re doing every week.”

So, Julie marches in to Yik Yak’s West Coast office and flips the lights on. She asks herself: “Are we better or worse off than we were last week?”

 

I did it!!! PR on deadlift at 240lbs, more than 2x bodyweight

A video posted by @jyzhou on May 15, 2015 at 11:27am PDT

From “Dormant” List to 66% Open Rate, to 48K Subscribers — Here’s How.

Last Updated: August 29, 2016

Today I want to get into all the juicy details for how I got a 66% open rate to 48K subscribers (over 60% that would count as “dormant”) within 24 hours.

A couple of weeks ago, I decided it was time to reactivate the 500 Startups email list.

It’s not a huge email list, because we’re niche and are only looking to target specific, relevant audiences. But it’s decent. About 48K give or take, as I’m writing this.

In my previous post about email marketing, I talked about unsubscribes and tired, beaten lists where all your subscribers are annoyed at you for blasting them with irrelevant content at high (or low) frequency.

This was exactly what I was staring down late last week with our own list.

So I put my thinking cap on, actually whipped out my own Playbook of email scripts (yes even I use it… hey, sometimes I forget what all is in there!), and starting pulling pieces together.

The email I sent to 48K subscribers resulted in a 66% open rate within 24 hours of sending.

I don’t know if I can reveal much more publicly, but this was between a 3X and 4X multiple over the historic open rate for that same list.

The point of me sharing this is not to brag outright (although, dayummmm right?).

The point is that anyone CAN warm up a tired list.

All it takes is the right script.

In the next section, I’m going to share with you the exact script I used to resurrect the 500 Startups email list.

Here goes.

Subject: Changes

Hey there,

You signed up for the 500 newsletter because, well, either you came to one of our many nerd parties, uh… conferences and events, or you hunted us down out of fascination and (self?) interest.

So that’s why we wanted to let you know today that there are some changes coming…

Wait! Don’t worry.

It’s a love revolution.

In the future editions of this newsletter, we’ll be presenting regular roundups of great articles, hand-wavy-yet-fact-based opinions, implementable how-tos and most of all, ET CETERA, from us, our founders, and other good writers.

(Scroll down to see today’s roundup.)

But first, a little housecleaning.

We want to make sure you actually WANT what we are sending, and we want to give you some choices.

So, update your subscription preferences here:

manage your email preferences (Editor’s note: not a real subscription link! Subscribe from the top of this page if you want)

And, check out today’s curated roundup below (not everything makes the cut, JUST THE GOOD STUFF).

—–

500 Founding Partner Christine Tsai reflects on a recent day of service at Solano State Prison with Defy Ventures, an organization that brings together volunteers and inmates for entrepreneurship coaching.

>> 4 Realizations From My Day In Prison <<

—–

Revenue means money. Or does it?

500 EIR Carl Fritjofsson breaks down the acronyms that too many confused founders are hiding behind.

>> How to Talk About Revenue — What VCs Really Look For <<

—–

Ever feel like taking a $25K course on venture capital investing at Stanford, but couldn’t pony up the funds?

No worries, we got you covered. Paulina Szyrmer shares key takeaways from our Silicon Valley investing course in partnership with Stanford Center for Professional Development.

>> Venture Capital is More Art than Science: 5 Secrets of VC Revealed <<

—–

What is it like to sell to Uber? Definitely not as fun as owning a little teeny share of Uber, but possibly the next best thing.

Aircall, a 500 portfolio company who recently raised $2M, discuss the growth tactics that helped them close clients in high places.

>> Growth Case Study: Aircall on One Metric That Matters & Selling to Uber <<

—–

And finally, new funds! In case you missed the news:

Introducing Specialty Tracks at 500 Startups: Beauty and the B2Beast

500 Startups Announces $10M Vietnam-focused Fund

500 Startups Announces 500 Kulfi: $25M India Fund

500 Startups Announces $25M FinTech Fund

This email was lovingly compiled and psychologically copywritten by Susan Su, Partner on the Distro Team at 500 Startups.

——————–

How / why did this simple, “roundup” style email work so well and get over 35,000 people to open it?

Let’s break it down.

SUBJECT LINE

This email uses a single-word subject line, “Changes.

Now, if you see a subject line like “Changes” in your inbox all of a sudden on a Thursday afternoon at 4 pm, you might be thinking…

HUH???! Am I getting fired? Is this company going out of business? What the heck is changing?

You see, people are at worst afraid of change, and at best very, very curious about it.

“Changes” is an effective “curiosity gap” subject line that makes opening the email an irresistible foregone conclusion: you must find out what is changing.

Plus, I have found that really short, even 1-word, subject lines are working incredibly well these days. Sometimes long ones do too. You have to try it and by “try it,” I mean, send yourself the email as a test and FEEL the emotional reaction that bubbles up.

This is the most UNDERESTIMATED way that email marketers, and copywriters in general, can “figure out” whether a message is destined to be opened

KEY SUBJECT LINE TAKEAWAYS

1. Apply “curiosity gap” to your subject line.

Ask yourself, what would generate a “MUST CLICK NOW” feeling if you yourself were to receive this email?

2. Try a VERY SHORT / one word subject line.

We all know about “Hey” during the Obama campaign, which I personally think has run its course because so many “email marketing blogs” have outed it. But there are many others if you get creative.

HUMOR

I try to be funny. Sometimes I succeed, sometimes I don’t, and often times it’s even funnier that way.

On my original sales page for the Email For Startups Playbook, I thought I would be really clever and title one of the page sections “Insert Social Proof here.”

It was my way of poking fun at the overly template-ized way that copywriting and online marketing are done today.

Well, a lot of people wrote in angrily — yup angrily! — and said, You can’t even bother to replace your template text, what kind of marketer are you???

It was a joke, people! But as they teach us in grade school, a joke’s not funny unless it’s funny to EVERYONE.

So the thing with using humor is that it’s important to be natural, and not to OVERwrite your humor, to “lay it on thick” as they say.

Humor tends to disarm people and make them a little more warmed up and open to what you have to say.

KEY HUMOR TAKEAWAYS:

1. Apply humor sparingly, and always use a LIGHT hand.

2. When in doubt, send it to yourself or a friend and see if it makes sense in the world outside your own head.

3. Self-deprecating humor, as long as its not awkwardly self-deprecating, can go a long way as it is almost “victim-less”

PATTERN-DISRUPTION COPY

This is similar to using humor, but a little bit different.

The main point here is that you want to disrupt the mental and emotional pattern that people are in when they receive your content.

For example, if people are receiving your email in a WORK context, as with my email, then you will go AGAINST THE GRAIN and stand out from all other communications they receive in that inbox, by being casual or humorous (or using words like “nerd parties”).

If people are receiving your email in a play or home context, then look at the majority of the other communications that they receive in that context (Banana Republic sales promotions? News digests? internet marketing “get rich quick” courses?) and go against THAT grain.

Whatever it is, slant against it.

The key to successfully using pattern disruption is to understand EXACTLY what mental and emotional context people are in when they receive your email.

You can understand your recipients’ context by understanding:

  1. What inbox they are using. Is it their personal? Work? The one “just for marketing stuff?”
  2. What state of mind they are in when they access it. What time of day is it? Is it a work day? What are they probably doing at 4 pm when you send it?
  3. Zooming in on their individual context as much as possible, and being “Orange” if everything else is “Black.”

TEXT ONLY

This one is so simple, so obvious, and yet broadly overlooked.

You see, images are so pretty. And for their creators, they can be a source of pride and joy.

Understandable.

BUT, remember the Number One Rule of Marketing?

It’s not about YOU, it’s about them.

Pretty images may be nice, but if they are blocking your email from achieving a 99.5%-PLUS deliverability rate, then they are not working for you. Those images should be “fired” immediately.

If your email doesn’t get delivered, it doesn’t get opened. If it doesn’t get opened… well you know the rest.

Additionally, even if you are getting high deliverability rates, images larger than 300 to 350 pixels (by my experimentation) are almost always a trigger for Promotions inbox or even the Spam filter.

Finally, Gmail — and other providers — will “truncate” (or cut off) messages that are larger than 102KB in size. And yes, the biggest culprit in making emails bulky is IMAGES.

What happens if your email is truncated?

You can’t track opens (it typically cuts off the tracking code at the end of the message), and your end-of-email CTA may be hidden.  

Not good.

If you doubt this, or if you are really attached to those images (or perhaps you are selling physical products via ecommerce), then try an A/B test with text only and see what works best.

Remember, never trust the “email marketing experts” 🙂

———-

Ok that’s all for today kids. I’m beat and ready to go lay down for a little while.

In case you are too, and want to skip all this book-learnin’ and go straight for the shortcuts, please be my guest:

https://emailforstartups.com/get

Or, check out these additional free and ample resources on email marketing:

Email for Startups PART 1: Email Marketing Fundamentals [Webinar]

Email for Startups PART 2: The Next-Level Rules of Email Marketing For Startups [Webinar]

Before You Acquire, Reactivate — How to Reactivate Your Dormant Email List (Includes Scripts)

7 Little Known Techniques in the NEW Email Marketing

 

500’s Tammy Camp: “Growth Hackers Hate The Term ‘Growth Hacker.'”

If getting your startup off the ground is war, you want Tammy Camp in your foxhole.

Tammy is a master tactician; a 500 Startups Partner since November 2014, she creates the curriculum for the accelerator’s growth-hacking program in Silicon Valley, which includes an infamous Marketing Hell Week.

Tammy Camp
Tammy Camp

When she’s not working with the latest batch of entrepreneurs, Tammy brings her skills to bear for 500.

As with other seasoned commandos, many of her missions remain classified, but it can be revealed that she led the company’s HubSpot integration, assists internal fundraising teams with internal processes and uses her unique skill set to help convert prospects into LPs.

Like other members of the Distro team, Tammy’s also an investor who offers input on which companies are accepted into the accelerator and which seeds get watered when 500 decides to make it rain.

She’s also a founder: Tammy is working on her next product Palytte.  Palytte creates a better shopping experience by curating the top fashion brands and delivering tailored recommendations according to your style, budget, and color expression right to your inbox.

A lot of people think there’s a secret trick or a hack, but it’s really just getting data behind all of the experiments that you run and making faster, better-educated decisions about what you do with that data.

Working with founders “is basically the process of rapid experimentation,” said Tammy. In the first week of each four-month batch, “we step back and define what their one metric that matters is — their true North. That’s their focus during the accelerator,” she explained.

After identifying core metrics, Tammy collaborates with entrepreneurs to create a pipeline of at least 30 experiments. “Then, we just try to go through three or four of those experiments per week,” she said, using a series of weekly meetings to compare expectations to results.

Founders have to be savvy to make the cut, but Tammy still finds herself bursting bubbles when each batch begins.

“Some of them think that there’s one silver bullet that will fix everything for them, but there isn’t,” she said. “It’s about experimenting a lot, and once you find something that works, doubling down on that.”

Marketing Hell Week is scheduled “right up front, so we’re working on it continuously throughout the batch,” said Tammy. “It’s exactly what it sounds like; a week-long crash course in startup marketing.”

On the first day, attendees concentrate on “the one metric that matters, analytics, and a process that puts structure around how you approach growth,” she explained. “Tuesday is usually about old-school acquisition channels like search, Google AdWords and display, along with SEO, email and content marketing.”

All growth hackers hate the term ‘growth hacker.’ We’re more like ‘growth scientists,’ since we’re not like some guy in his mom’s basement trying to take down servers.

On Wednesdays, “we’ll get into new-school topics, such as Instagram, Pinterest and some other emerging channels,” she said. “Thursdays are more acquisition channels, like YouTube, viral videos and B2B sales. Fridays are about how to build a team.”

Four times a year, Tammy creates new templates, training and presentation materials for Marketing Hell Week. “I’ve created four of these hell weeks, and I’ve learned something new every time,” she said. “It was the number one reason why I liked 500.”

Joining 500 “was a natural fit” that’s already helped her hone her skills for media pricing and positioning and become more adept at developing experiments that test assumptions and uncover pathways to growth.

“It’s been really awesome for me to meet all the top people in the industry who are great in those areas,” she said.

I’ve become a better growth hacker than I was when I first started because I’m more well-versed in all of these areas that at one point or another, have to seamlessly flow together.

“A lot of people here are entrepreneurs themselves, so they’re very supportive of me taking a breath of fresh air, hitting the reset button, and still working on projects that I’m passionate about.”

For Tammy, it’s the best of both worlds. “I’m very openly working on my next startup, but at the same time, I get to share my experience and the depth of knowledge I have with the portfolio companies,” she said. “It’s awesome! Who could turn that down?”

 

 

Photo: Todd Lappin/Flickr

Inside the 500 Accelerator, Weeks 11, 12 & 13: The Hardest Question

Inside the 500 Accelerator is a weekly series by 500 founder Troy Sultan. Now, 13 weeks in, Troy gets real and shares the hardest question that he — and many other founders — have had to face. 

“Dude, how’s it going?”

It’s quite literally the hardest question you can ask me.

A few years ago I wouldn’t have minded as much. I had a canned answer I got good at reciting. It told a story of things going great, because that was the path of least resistance. I’d keep it surface-level, short and always positive. Because no one asks questions when things are going good. And honestly, who the hell wants to hear about my problems?

I’ve been practicing vulnerability for the past year, challenging myself to step outside the closed, unemotional shell I’ve lived in for so long (my whole life, to be exact).

It’s working. I’ve grown more vulnerable at a material rate. I’m opening up with ease and connecting more deeply with friends and colleagues who’ve begun to understand what’s behind the confident persona I’ve spent a lifetime building up.

“Are you a super-human?”

No, but I’ve spent so much time wanting people to believe I was.

Last week I performed a solo on stage, for 15 minutes, in front of a sold out crowd of 80 people — one of the most vulnerable moments of my entire life. It was the result of months of challenging myself to dig up my deepest struggles, embarrassing tendencies, and memories I’ve chosen to keep buried for so damn long.

Ultimately, I was admitting to the world my single biggest insecurity:

I’m not perfect.

As a leader, it seems necessary to build a moat around your emotions, not letting anyone break beyond the surface to see what you’re really thinking or worrying about, because admitting that your shit isn’t entirely together is the moment everyone loses faith in you, right?

I believed this for so long. Yet, I couldn’t have been more wrong.

People are, well, people. And they understand you’re one of those too. While you need to both understand and believe in the future you‘re creating, you don’t always need to have the answers.

Being vulnerable enough to admit you’re not sure, and that you don’t have things entirely figured out but you’re doing everything you can— is a much more relatable stance, and one that levels you with those around you, allowing them empathize with your reality and connect with you on a much deeper level than before.

You become a human.

During these last few weeks, I’ve noticed my vulnerability showing up when someone queried with anything resembling “the question.”

Now, my answer varies depending on how I’m actually feeling that day or week. It’s a genuine summary of what’s on my mind at that moment. The sentiment may skew positive or negative, but it’s real. And the real answers aren’t always what you expect to hear.

Today I wonder whether my newfound vulnerability comes at the expense of confidence. These days, I’m waking up to a more real me — not just to those around me, but to myself. An honest, authentic me that’s missing it’s sense of irrational optimism and positivity (and maybe even naiveté). A me that’s facing the reality of the insanely high bar I’ve set for myself.

Part of me questions the self-fulfilling prophecy of telling everyone things are great. If I say it enough, will I start to believe it?

The challenging part for me is that things really are going great if I limit the context to what we’ve accomplished so far. I’m incredibly proud of myself and our team for where we are today vs. say, 6 months ago. But once my ambitions creep back into the frame and I consider what we’re after long-term, I question whether we’re moving fast enough; whether we’re building the right team, culture; whether we’re doing enough, period.

For now though, I’m enjoying it. I’m learning how I want to think. I know myself much better from the honesty. Just be warned — I might take you down a road less traveled if you happen to ask me how things are going. 😉

Oh, and some other stuff happened in the last 3 weeks as well:

  • Storytelling for Innovation w/ David Riemer
  • Batch 15 Demo Day Movie Night (this was fun)
  • Pitch prep w/ Andrea (check her out in Forbes!)
  • Fireside chat w/ Steli Efti, CEO of Close.io
  • VC Mingle
  • Late night pitch prep w/ Marvin
  • Fireside chat w/ Jason Van den Brand, CEO of Lenda
  • Fireside chat w/ Jessica Mah, CEO of InDinero
  • Pitch prep w/ Andrea
  • Late night pitch prep w/ Marvin (can you tell we care about pitching?)
  • Fireside chat w/ Ken Lin, CEO of CreditKarma
  • 10 Steps to Mastering the Art of Building a Consumer Unicorn w/ Jim Scheinman of Maven Ventures
  • Late night pitch prep w/ Marvin
  • Scaling From 0 to 300 Demos a Month w/ Greg Pietruszynski, CEO ofGrowbots
  • Fireside chat w/ Pivotal labs: Drunk User Testing
  • MOAR pitch prep w/ Andrea
  • Fireside chat w/ Hiten Shah, CEO of QuickSprout

Categories All

PR For Startups: The Art of the Press Release in 7 Steps

Editor’s Note: Today’s post comes from Conrad Egusa, CEO of Publicize and a 500 Startups Mentor specializing in PR and media. PR can be INCREDIBLY important for startups — not only as a one-time bump in growth but also for long-term amplification of your good efforts.

Good (positive) PR hits 2 major influence factors, social proof and authority, and even bad (negative) PR will drive a bump in traffic and attention. How you capture and convert is up to you, but the first step? GET INTERNET FAMOUS. 

Last note: have you ever tried to do PR for yourself or your company? It IS kind of scary, those journalists DO bite. As my friend Eric Eldon (former editor in chief at Techcrunch) used to say, “Never pick a fight with those who buy ink by the barrel.”

Today’s post breaks it down so you can avoid those reputation-tarnishing mistakes.

So you have a startup and it’s high time everyone else knew about it, right?

Maybe you have a new product, or a re-launch or some other event that is going to put your company on the map. But what is the goal of PR? And how can you channel your efforts into reaching that goal? Let’s see if we can’t answer these all important questions.

The goal of PR

Most people know what PR – aka, public relations – is.

Jokes aside, communicating you and your company’s message is an important part of expanding any business or startup and, nowadays, many businesses know that they need at least some PR function.

But, ultimately, the goal of PR is to own a space, to colonise an industry and make you or your company the go-to for comment and direction.

Of course, the immediate goal of PR is to generate press coverage, but by doing this effectively, you can ensure your business is mentioned in future articles even when you haven’t made an announcement; that is what owning a space is all about (i.e: how Dave Mcclure owns mind-share — and search results — when people think of accelerators and investments).

pasted image 0

It sounds hard but luckily, there are a number of ways to a this.

Two of the most effectives are:

1. Use guest articles – written by either a business leader or ghost written on their behalf – to build that person as an authority figure in their industry

2. Use press releases to inform journalists and news sites of new changes and events that are happening within your company. This article focuses on how to best craft, pitch and use a press release to gain meaningful coverage.

How to generate press coverage with press releases

So, as discussed, one of the best ways to generate press attention is by using a press release, which informs journalists and editors of the announcement you or your company is making.

To the uninitiated, or those who aren’t comfortable writing, this may seem like a daunting task. However, this doesn’t have to be the case.

Creating a press release and then pitching it to journalists can be broken down into just a few simple steps. Remember, if you aren’t confident in your literary skills, have a grammar-obsessed friend – we all know at least one – read over it, too.  

In the next section, I’ll go over the 7 steps to crafting a killer press release that won’t get ignored.

1. WHAT IS YOUR STORY?

Contrary to popular belief, the media is not a minefield and (most) journalists are not scary.

Many are just humble writers looking for the most interesting new story they can find. The key word in all of this is ‘new’. No self-respecting media outlet is going to touch yesterday’s story, unless you can offer them something, well, new.

To make sure your news is in fact newsworthy, you need to work out what announcement you are making. Company and product launches are often the most eye-catching, in addition to take-overs (the more aggressive/expensive the better) and funding announcements. However this list is not a ranking. Anything has the potential to be newsworthy if you get the timing right. Below is an example of TechCrunch covering a Version 1.0 launch.
pasted image 0 (1)

CRAFTING YOUR PRESS RELEASE

The press release and the email pitch are the most important elements of generating media attention. Communicating an announcement poorly is the most efficient way of making sure no one hears about it, ever.

Press releases should be about a page long and they must not leave factual holes.

Good releases should follow a format similar to the COPYABLE TEMPLATE below:

The title: A headline for your release, essentially in the format of: “Something/someone does/experiences/announces something new”.

First Paragraph: Discuss the larger mission of the new announcement, i.e. what it does and what it is for. Include a date and location at the very beginning.

Second paragraph: Delve into the specifics of your product / announcement.

Third paragraph: A quote from your CEO or a business co-founder explaining the announcement. This means that journalists won’t have to waste their time – or your company’s time – finding quotes for the article.

Fourth paragraph: Bring in trends to explain why this announcement is relevant to the larger industry / community that your business is a part of. Ideally this will include at least one data point (ex: how large the industry is).

Fifth paragraph: Wrap up with a final quote from your CEO or founder.

Sixth paragraph: Briefly sum up the history of your company and the background of its leader(s). Also include a contact for journalists to use if they aren’t happy sticking with the quotes in the press release, or if they want more in-depth information.

If you’d like to see, we have a few example press releases are here.

PITCH IT WELL

Pitching the press release will happen by email. The press release does not sell a journalist on covering the story, the email does. The press release then provides information to better help a reporter cover the story.

To increase chances of having your story ‘picked up’ – that is, published – make your email a bit more personal (more on email marketing ninja tricks here).

Research the journalist in question’s name and make sure you don’t use the wrong one. Remember, you only have one shot at a first impression and this isn’t amateur hour. You have to get it right first time. An example email is below (the subsequent media coverage is here).

pasted image 0 (2)

DEFINE YOUR “COVERAGE STRATEGY”

So you have your release and you have your email pitch; now what? Before sending your press release out into the world, it’s worth considering whether or not you want blanket coverage, or whether you want to offer your announcement as an exclusive.

If you opt for blanket coverage, i.e., sending your press release to as many journalists as possible, entrepreneurs coordinate that coverage by asking journalists to respect an embargo. This means that the journalist or publication will agree not to publish a story about your announcement before a set time or date.

Depending on where you’re pitching, this can be tricky. For example, while journalists in the UK seem to take an embargo agreement as read – you can just put EMBARGO above your release in most cases – this is not always the case in the US. Remember, if in doubt, ask the journalist to agree to an embargo first. Still, this is no guarantee and is a reason why offering the story as an exclusive may be a better option.

EXCLUSIVES

To a reporter trying to publish stories ahead of competitors, the word ‘exclusive’ is music to their ears. Essentially it means that a specific publication will have the right to publish your announcement first, before you reach out to other outlets.

This is a particularly useful tactic in media zones where the embargo rule may or may not be followed. It prevents the occurrence of a journalist ‘breaking ranks’ and publishing a story before the embargo is lifted.

There are several other advantages to offering your release as an exclusive:

1. Larger publications – e.g. TechCrunch and VentureBeat – are more likely to take your press release seriously (and use it) if you offer it as an exclusive.

2. As it turns out, French philosopher Roland Barthes was totally right about that Death of the Author thing: journalists take stories from each other all the time, so offering an exclusive won’t stop other publications picking the story up.

3. Coverage on a bigger niche publication (in this case for the tech industry) opens doors to newspapers and more mainstream media coverage. As the saying goes: Aim high, shoot low.

If you are looking for journalists to contact, we have a list of reporter emails here, and we are happy to provide access to the media journalist database our team uses to friends of 500 Startups (please write info@publicize.co for access).

AMPLIFY THAT COVERAGE

Once the article comes online – the journalist writing the piece should give you a heads up – it’s action stations.

If you have social media accounts, share the piece. Send the story to investors, customers, your employees and even your parents, asking that everyone shares it via their own social media accounts.

After this step, email other publications with the press release and a link to the story. This can be a good way of getting them to notice your announcement but remember to be careful not to rub it in their faces. After all, it’s highly likely that you gave your announcement as an exclusive to a rival publication first. If this is the case it’s worth offering your CEO or founder’s time to other large media sources.

EAT, SLEEP, MEDIA: REPEAT

The work of building media coverage is never over. (sorry…)

If your announcement has been a success, no doubt your startup or business will have been featured on a number of big and small media outlets.

Pat yourself on the back, dust yourself off and then start working out what your next announcement will be. Press releases owe themselves well to establishing a media cycle, which ideally will be repeated every 8-12 weeks, or whenever you and your business have an announcement to make.

Conrad Egusa is the CEO of Publicize and is a Mentor at 500 Startups, specializing in PR and the media. He periodically contributes to publications including TechCrunch and Forbes. Conrad was earlier a writer for VentureBeat, and prior to this founded an angel-investor backed startup in Silicon Valley.

Our Accelerator Secrets, Revealed

Dave McClure often shows a slide when he is explaining how 500 Startups works. It only has three bullets:

  • Find Smart People.
  • Give Them Money.
  • Wait for Good Shit to Happen.

It seems simple but it pretty much sums up what makes 500 Startups so awesome. Our no bullshit style and #HaveFunGetShitDone motto has been one of the factors for the success of our accelerator program, which Dave McClure and Christine Tsai launched back in 2010.

The program runs four times a year and accepts less than 3% of applicants, so technically it’s harder to get into 500 Startups than an Ivy league college. Its also been named a top-tier accelerator in numerous studies, including one by the Kauffman Foundation that came out this week.

500’s managing partners are now opening the playbook and will be sharing how they achieved this feat in only six years of operation.  

Venture Capital Unlocked: Accelerator edition kicks off in just three weeks in San Francisco. Here we give you a sneak peek at some of the tips and tricks we will be sharing with participants. If you want find out more, join us May 2 – 6th in San Francisco.

VC_unlocked_AE_email-v4

1. Find your special sauce that will add value to startups (and market the hell out of it).

Studies have shown that the three major factors entrepreneurs consider when selecting a an accelerator program are: (1) brand (2) quality of mentors (3) networking opportunities. Meanwhile, the top reasons founders cite for not applying to an accelerator are lack of awareness of the program and lack of understanding of the benefits.[1]

The majority of accelerators are less than five years old and are still making a name for themselves. It’s important that they quickly identify their differentiating factor and clearly position themselves in the ecosystem.

Whether you are a corporate accelerator focused on digital health innovations or an accelerator within a public university with no sector focus, you need to be explicit about the benefits of your accelerator.

500 Startups became a top-ranked accelerator that is recognizable around the world by zeroing in on our secret sauce of making lots of little bets on companies and then helping them with distribution and growth (because we realized we were pretty good at that).

Having a strong brand and value proposition will in turn help you to attract good mentors and increase the quality of networking opportunities for your founders.

brand
Building our crazy sexy global brand

2. Don’t be afraid to iterate on your program.

We are constantly making adjustments to the design of our curriculum and trying out new programs in response to our founders’ feedback and the types of services we predict will be most helpful to them.

When we started out, we used to market 500 as “design, data and distribution” and then evolved to focus on “distro.”  As we have progressed, we have iterated numerous times on the curriculum, adding elements such as the hugely popular Marketing Hell Week (MHW – one week chockfull of talks on marketing).

In the batch thats kicks off in May, we switched the order around to start with MHW, then we’ll spend 2.5 months on Distro, followed by Demo Day pitch prep and DemoDay, and then the last month will be spent on fundraising.

We have tried several new programs in different geographies. We ran five accelerator programs in Mexico City focused on Latin American startups and their specific market needs.

We also launched a traveling Distro Dojo in ten different cities around the world to train post-seed, pre-A companies to do better growth marketing, and we give them the funding to do it. And we’ve even started running pre-accelerator programs in other countries to help companies get up to speed at the idea phase.

distro_dojo_new-big-21
Announcing one of our ten Distro Dojos

3. Find smart people (and give them money and wait for good shit to happen)

An accelerator is all about the people. Your accelerator will only be as good as your people, and that includes both your team and the founders they select to participate in the program.

Your team members recruit and select startups, implement the curriculum, organize events, and maintain the relationships with investors and mentors. All of this adds up to your reputation. You better trust them completely.

 

12402176_1178409385519980_1057615673578354980_o
Our incredible international team, looking all white and innocent

As for founders, you have to get out there and look for them. No matter how strong your reputation, you need to be continually recruiting quality founders.

As with most things in life, quality is much more important than quantity. A survey by Unitus seed fund found that even the accelerators with a well established brand put a significant amount of effort into sourcing quality applicants for their program. [2]

At 500 Startups, we do this by traveling all over the world to meet with founders and making ourselves available to them even if they don’t live in the top 5 startup hubs. We have partners on the ground in 20+ countries who help develop local ecosystems, create relationships with local entrepreneurs and keep tabs on founders who are ready for one of our accelerator programs.

4. Think your model works? Prove it by tracking KPIs and surveying your grads.

Start by defining what success means for your accelerator. Most measure the success of their programs using a range of criteria, including revenue growth, company survival rate, financing activity, follow on investment, investor returns, frequency and size of exits, alumni network, place in comparative accelerator rankings, job creation, impact etc. etc.

No matter how you define it, having a database of quantitative data to back up your claims is always a good idea. Its also a good practice to survey the companies in each batch both at the beginning of the program to measure expectations and at the end of the program to see how well they were met.

Asking for the Net Promoter Score is an important measure you can use to communicate how happy your founders were with the less quantifiable aspects such as quality of mentor advice or community building events.

demoween
Some of our accelerator grads, who we plan to track over the years.

5. Build the community you want to see. Be an important link in the innovation chain.

The reason accelerators exist in the first place is because human beings are social creatures. Entrepreneurs who go through a good accelerator program tend to be more successful than those who work on their own because they feel supported and part of a greater community. 

Your accelerator should play a key role in building this community and strengthening the innovation ecosystem in your geography or sector. This means bringing together many different actors including founders, investors, universities, VC funds, corporates, other accelerators, and a large number of supporting actors and organizations. You can’t create a “Silicon Valley” mindset overnight.

Studies have also shown that accelerators that interact with their investors deeply and in a number of different ways are associated with large, involved investor networks as well as higher success metrics. [3] 

The more active you are in your community, the easier it will be to attract top mentors for your founders, not to mention investors who will start seeing you as a filtered source of deal flow, much the way top ranked universities provide a filtered source of candidates for top jobs.

500 Startups stands out as one of the only funds in Silicon Valley that is aggressive about investing in international markets.

From the getgo, we made it a top priority to be present in different countries and this strategy is paying off as we have become a brand name in many different entrepreneurship communities around the world, which helps us attract quality founders, mentors and investors and build a truly global entrepreneurship community. 

Shameless plug: If you want to know more and get into the nuts and bolts of how to run a top-notch accelerator, join our our one week bootcamp on how to run a successful accelerator on May 2- 6th in San Francisco.

art animation dog power gif art

 

VC_unlocked_AE_email-v4

Many thanks to Yiying for artwork and Christine Tsai, Bedy Yang, Susan Su, Marvin Liao and Tanya Soman for their help and input.

 

[1] Michael Birdsall, Clare Jones, Craig Lee, Charles Somerset and Sarah Takaki, “Business Accelerators: The evolution of a rapidly frowing industry.” University of Cambridge, Judge Business School. 5/1/2013 http://startup-accelerator.com/sites/default/files/cambridge_startup_%20accelerator_research.pdf

[2] Unitus Seed Fund, Capria Accelerator Fund: 2015 Global Best Practices Report on Incubation and Acceleration http://usf.vc/wp-content/uploads/2015/10/Unitus-Seed-Fund-2015-Global-Best-Practices-Survey-of-Incubators-and-Accelerators-1.pdf

[3] ibid

Categories All

Announcing the 500 Startups Kobe Pre-Accelerator

There’s something bubbling in Kobe… and it’s not just the waters of the Arima hot springs. 500 Startups in partnership with the government of Kobe, Japan is launching a new pre-accelerator that will be coming to the city this summer. The pre-accelerator is a 6 week course which will focus on bringing growth hacking techniques and Silicon Valley expertise to emerging companies in Kobe, while also boosting Japanese and domestic entrepreneurship in the city.

Space is limited to 15-20 startups and you can apply here. The deadline to apply is June 1, 2016.

After recently launching the $30M 500 Japan Fund in 2015, with the goal of engaging and investing in local startups, it naturally made sense to deepen our relationship with the city of Kobe by creating another resource for founders in the form of a pre-accelerator program*.

Most importantly, the program is open to startups from around the world. The international scope of the program aims not only to work with Japanese companies, but to help bring startups from around the world to work in one of Japan’s most cosmopolitan cities. Companies accepted into the program will also be given the opportunity to meet with some of Japan’s leading corporations.

The Kobe pre-accelerator is targeting companies with traction, a working product and a desire to become international growth NINJAS!

The 6 week intensive program will feature:

  • Sessions led by 500 Startups Partners
  • Sessions led by guest Japanese and international entrepreneurs
  • 4 weeks of curriculum, office hours, and pitch prep
  • A presentation day for the startups to put their learning into practice

Why Kobe Japan?

As a bustling port city, Kobe has always been a gateway to international cultures and commerce. Most recently, the city has served as a hot spot for Japanese startups and entrepreneurial activity and has funded several programs that provide seed investment to early stage companies. Alongside its work with companies in its own region, Kobe is ramping up its efforts by bringing international startups to its ecosystem to encourage entrepreneurial collaboration.

What’s 500 Startups role?

500 Startups will bring experts from our global team of partners, mentors and entrepreneurs to work closely with the startups to accelerate their development through best operational practices, growth hacking, marketing, data driven sales techniques, and tailored advice from successful Silicon Valley and global entrepreneurs. Our main goal is equipping the startup teams with the tools they need to become growth ninjas to help get their startups to the next milestone.

We are now accepting applications to the Kobe pre-accelerator. If you are a startup interested in participating, apply here. To contact the team, reach out here.

be Kobe

*Participants in the program in Kobe, Japan will receive mentoring, growth hacking learnings, and access to 500 Startups’ extensive ecosystem without financial investment from the firm. 500 Startups may decide to invest in these companies during future rounds of financing.

“Good Companies Solving Real Problems” — That Happen To Deal With Your Money

Before becoming 500 Startups’ FinTech manager, Sheel Mohnot consulted for a company that was striving to be more competitive after the 2008 financial crisis.

When pitching ideas, “the answer was often, ‘raise the fees on your customers,'” said Mohnot. “I didn’t like that.”

In his view, shaking users down for nickels and dimes creates little value over the long term. “I fundamentally believe that the way to build an amazing business is to make people’s lives better.”

Sheel Mohnot
Sheel Mohnot

Mohnot discovered his affinity for financial services and products as an early team member of Kiva, the social lending platform that’s granted more than $837M in micro loans to 1.9M people. “It has had a huge impact on what we’re trying to do at 500 FinTech,” he said, “which is, give customers a better user experience and make their lives easier.”

In Batch 16, there are nine companies on the FinTech track:

  • Albert gives simple, free financial advice and lets you act on the advice directly from the app.
  • Arrowpass is an NFC-based closed-loop payment solution and secure gate control for events.
  • Ethic offers effortless ethical and impact investing.
  • Finova Financial is a socially-responsible online lender that provides fast, affordable loans based on the equity in your car.
  • Float is a mobile-first credit card for millennials (minus the credit check).
  • iBillionaire is a mobile asset manager that lets you invest in the same strategies as billionaires with one click.
  • Qwil: Instant pay for independent contractors (b2b2c).
  • Rize is an automated savings tool based on behavioral science.
  • Romit is a wallet and payment platform that helps merchants with high chargebacks reduce fraud.

“We’ve got really good people,” said Mohnot. After Batch 16 concludes, “the only four companies that are based in San Francisco are all going to get an office together,” he noted. “They really enjoy each other’s company, and they’re in similar businesses, which mean they can help each other out.”

Is there a thread that connects Batch 16’s FinTech companies?

“They’re solving real problems,” Mohnot told me. “It just so happens that the problems they’re solving are in FinTech.” All nine firms have a unique focus, but they all support the same underlying goal, he said.

“For example, Ethic is about sustainable investing for all, and ibillionaire lets you track and directly invest in the portfolios of billionaires,” said Mohnot. “While they’re in totally different market segments, they’re also doing much the same thing, which is helping people invest money.”

Companies that are accepted into 500 are already operating at a higher level, Mohnot said. “Part of it is just coming into an environment where you’re expected to grow week after week after week. There’s something about being here that makes people want to work hard, and be excited about it.”

“Despite the fact that many of the founders have a background in finance, none of them are your ‘typical’ banker.” — Sheel Mohnot

Mohnot’s Batch 16’s companies go through the same 4-month bootcamp as other firms in the accelerator, but “because we have this track with FinTech, I’m able to bring in outstanding speakers,” said Mohnot. “Some of the speakers we’ve had include Ken Lin, CEO of Credit Karma (a 500 Startups portfolio company), Sasha Orloff (CEO of LendUp), and a bunch of other awesome speakers,” he said.

“We’re bringing in people for FinTech specifically,” he noted, including speakers who can speak knowledgeably about compliance economic modeling for specific market sectors. “You just learn a lot from people who’ve done it before you and have been successful,” he said. Because each batch has a critical mass of founders developing financial products and services, 500 attracts investors who are actively seeking opportunities, Mohnot added.

On May 9, Mohnot is producing 500 FinTech Preview Day for approximately 75 investors, press and potential partners only. “Typically, you’ll meet somebody who would invest in you, but the investment doesn’t necessarily happen there,” he said. “You meet someone, then the next week, you have two more meetings with them before the deal is done; that’s generally how it goes.”

“If we didn’t have a track, they probably wouldn’t come in to see just one or two companies,” said Mohnot. “Instead, they get to come in and meet with eight or nine companies at once, and they like that.”

Most of the FinTech companies in Batch 16 focus on personal finance but “for whatever reason, a lot of these things go through cycles,” he said. “A few years ago, it was payments, then lending, and now, insurance is the next hot space, so I’m definitely looking to bring in some insurance companies in this next batch.” Although all 9 companies are US-based, Mohnot said he plans to bring in more international founders in future Batches.

Every founder must complete 500 Startups’ AngelList application, “but many of the companies on the FinTech track came through other VCs,” said Mohnot. “Going forward on the application, I think we’ll just have a checkbox for FinTech.” Applicants are encouraged to meet in San Francisco with Mohnot and his team.

“They should have a product that I can see,” he said. “I’m not really interested in talking to anyone who’s just got PowerPoint.” Does that mean applicants need to show up with a working prototype? “It doesn’t have to be live for the general public, it just has to be something that I can see,” explained Mohnot. “What I want is something that’s going to be live during the program, so we can add value.”

“You go to work, and you feel like someone’s really there for you.” — Yinon Ravid, Albert

Yinon Ravid co-founded his financial advice app, Albert, last December and began working on it in earnest shortly before being accepted into Batch 16. In his view, people feel stuck in their current economic circumstances because “it’s so difficult to take action.”

To give users confidence and direction, “Albert connects all your accounts, finds the three or four most important things you need to do right now, and we let you take action directly from the app,” said Ravid. The company has partnered with banks, investment firms and lenders and insurers “so users can seamlessly act on our guidance,” he said.

Although this is Ravid’s second FinTech play, “you start off again in this totally green field,” he explained. “The people here have been amazing, working with us on distribution, getting the word out, honing the message. It’s been great,” he said. “Nothing’s better than building within a community. You can really forge ahead that way.”

“When you have people working on the same thing in the same place, naturally, good things come of that,” he added.

Because most people don’t have enough assets to hire a financial advisor, individual savings and investment plans generally lack strategy, said Raul Moreno, co-founder of iBillionaire.

iBillionaire Raul Moreno founders
Raul Moreno and Alejandro Estrada of iBillionaire

To even the playing field, Moreno and his partner, Alejandro Estrada, analyzed investment data and strategies of leading billionaires to create an asset-management service.

“The great thing about the US is that the systems are so transparent that this information is actually public,” said Moreno. “But it’s hard to understand, hard to explain, and it takes a lot of time to digest the information.”

“Being in San Francisco has given us the know-how to reach consumers” and pin down key distro metrics, Moreno said. “Now, we’re talking to users and making changes very fast.” iBillionaire, an SEC registered investment advisor, will soon permit users located anywhere to invest via its app, he added. “The know-how to do that on a global scale is here, so we’ll stay in San Francisco.”

Moreno said he hopes to set up shop in the same space as another Batch 16 startup. “one of our team is sharing a house with someone from another company, so if we can share a house, I’m sure we can share an office,” he said.

 

photo: Gabe Rosiak/Flickr

4 “Crystal Ball” Analytics Tricks for Accelerating Growth

Today I’m going to share with you 4 “crystal ball” analytics tricks for accelerating growth.

I learned these tricks the hard way — I was doing them wrong for 2 and half years.

If you read closely, hopefully I can save you from the headaches I went through, not to mention then tens of thousands of dollars I wasted from not having my analytics dialed in.

Alright, I know what you’re thinking “This lady is no oracle, how is she going to tell me how to get more customers for my business when I’ve tested a ton of channels that didn’t work.”

Well, I’m going to stop you right there. Hey, believe it or not, it’s not your fault.  It’s hard to translate all the data your business produces let alone know what to measure.

But before I tell you how to build a crystal ball for you business, let me quickly tell you a bit about myself.

Affiliate Millions

I’m Tammy Camp, currently a Partner at 500 Startups, the most active venture capital firm in the world with over 1,500 companies in our portfolio.  

I specialize in growth marketing, so that means I help 500 portfolio companies with their growth strategy and implementation. Aka, getting more customers.

Over the course of 14 years, I’ve generated hundreds of millions of dollars in affiliated sales for companies such as Nordstrom, Expedia, Eddie Bauer, eBay, Amazon and Priceline — all while working for myself.

I also was on the demand generation team at Walmart Labs building out their product API that generated tens of million of dollars in revenue in the first few months.

In a nutshell my career has been 100% focused on getting more customers and generating more revenue.

I was Doing it Wrong

Before I pivoted my current company, Action Factory, I was spending about $100K per month on advertising AND MAKING A PROFIT.

Now, it didn’t start that way because I thought throwing up the Google analytics tracking code on the header of every page was enough.  

Seriously, I thought if that tracking code was on the header of every page, analytics would work like magic and alert me if something was wrong in my business.

There came a point in time early on when I was at my wit’s end with stress because I was barely breaking even with the cost of advertising and my business revenue, let alone paying payroll and keeping the lights on.

One weekend I decided to take a break from the stress of running a business and visited a northern Californian farm.

While on this farm, I realized I was isolated with no Internet and no mobile phone connection.  

I was trying to relax, but I was worrying if something went wrong with the advertising campaigns, I wouldn’t be able to manage it because I was 100% unplugged.

Being unplugged that weekend was probably the best thing that ever happened to me.  

It wasn’t because I came back relaxed, because I didn’t come back relaxed……It was because I made a mistake on a campaign end date and it ended 3 days prior when I arrived on the farm.

When I realized this, I immediately ran all my reports and discovered the most shocking thing — I had made the exact revenue with spending only 50% of my advertising budget for that weekend.

Let me say this again — I made the same amount of revenue with spending only 50% of my advertising budget.

“How could this be?” I ask myself.

Immediately I started breaking down what had happened.

From various reports, I found I was only making profit from a couple traffic sources and the rest was not profitable at all.  

It just happened that the campaign with the non-converting traffic ended while I was up at that farm with no Internet connection.

I was basically lighting dollar bills in flames of fire with the other traffic sources for over the course of 6 months wasting tens of thousands of dollars.

Do you know how irritating it is to waste money as an Asian person?  I mean, it’s like an abomination in my culture.

In the end, I felt pretty blessed to have found this sooner than later.

But as this unfolded I realized this one thing.  

This could have all been avoided if I knew what to measure with analytics and how to measure it.

The “RIGHT” Things to Measure

Here at 500 Startups we use Dave McClure’s infamous “Startup Metrics for Pirates”.  These metrics makeup the customer lifecycle, which is the DNA for a startups success. We call them AARRR:

Acquisition – users come to the site from various channels

Activation – users enjoy 1st visit: “happy” user experience

Retention – users come back, visit the site multiple times

Referral – users like the product enough to refer other

Revenue – users conduct some monetization behavior

We use these metrics to determine the outcome of our growth experiments. 

For instance, with the overwhelmingly large amount of acquisition channels out there, you’d be crazy not to have your analytics dialed in before you start your campaign.  

Again, take it from someone who’s lost tens of thousands of dollars with this mistake.

And if you are still and the fence about it, take a look at this example of what the acquisition channel landscape looks like these days.

Channels

To put “AARRR” into motion, here is an quick example of the customer lifecycle and conversion behavior.  Clearly, there is a lot going on here and it nearly impossible to track what is going if your marketing metrics are not clearly defined.

The Progression of Analytics

A very quick history lesson here. Bear with me… you’ll see why it’s useful in a sec.

1990s

The Internet has come along way since it became popular in the 1990s and ALOT has evolved.  Remember web counters?  Well, that was the start for analytics.

We all had them and who ever’s numbers was the highest was the “baller of the month”.

2000s

The 2000s were far more advanced with analytics companies like Urchin who provided not only page view data, but time on site, session time and country.  By the way, Urchin was acquired by Google and that is what is now Google Analytics.

Let’s fast forward to  2015…

Today we can literally track probably more than you are comfortable with (cough, thanks Edward Snowden)…. with dozens of analytics tools that you can see here.

BTW, there are so many analytics companies now that other companies have been created to aggregate all of this data (like Segment).

The 4 “Crystal Ball” analytics tricks

Now as I promised earlier, I going to share with you 4 crystal ball analytics tricks that will help you be the oracle of your business data.  

Please read this next section closely as this is probably the most tactical, yet important part of what I’m trying to convey today.

1. Create a Tracking Plan

This is an essential component of your team docs.  Everyone on the team should understand the growth objectives for the organization and be onboard with what to measure in the tracking plan.

Here is an example of a tracking plan that we use with our 500 Startups Portfolio companies.

tracking plan example

As you can see the core business objects are outlined PLUS the actual developer code is here.

It really important everyone on the team is on the same page and this is a great exercise that includes both the businesses and your technical team.

It’s also helpful in the following cases:

  • New hires can understand the explanation behind these events
  • You can plan the analytics implementation schedule with your developers

A great question to ask in this meeting is:

“What would make the biggest impact on our growth curve in the next 30 to 90 days?”

2. Carefully Select Events

Q: What is an event?

A: An event is a description of the action that is taking place.

A common mistake is that people want to track everything.

But, how do you know what is important?

The problem with this is that you don’t know what is important when you go in to do your analysis.  There will be too much noise versus signal.

Always ask “why?” you are tracking each event that you choose to track.

Events should directly reflect your business objectives over the next 90 days.

Choose 3 events. YES, just 3 events.

Here are a few examples from e-commerce, SaaS, and a marketplace business.

E-Commerce

ecommerce

SaaS

 

saas

Marketplace

 

marketplace - uber rider

marketplace uber driver

 

Put the detail in the properties

What is a property?

properties

Properties are traits that make up the event.

Here’s an example:

Ask yourself, “How many new sign ups did we have today?”

The event in this case is event = signedUp.

The properties related to this event would be userId, userName, email, type (organic, referral, paid).

Remember, Data First! Always be sure to prioritize theintegrity of your business data.

4. Define a naming convention

We recommend our portfolio companies name properties in camelcase (lowercaseCapital form) for easy reading.

This an example of a poor naming convention.  I’m not sure what is what here.

poor naming convention

We recommend the naming convention “Object” + “Action” (in past tense).

Here is an example of a correct naming convention:

good naming convention

As you can see it’s much easier to read and understand from the one that was done incorrectly.

Conclusion

As you consider putting your crystal ball to work for you, imagine how lean your company will become after you trim the fat of unnecessary spending and how much more attractive your company will look to potential investors.  
It’s time to make your growth story an exceptional one by taking action with the 4 “crystal ball” analytics tricks I shared with you today.

PS — if you want more Crystal Ball Analytics, see the slides (lots more images) here.

Special thanks to Diana Smith at Segment, for her contributions to this idea and post.