How 500 Startups picks investments

How do you evaluate a potential startup investment?

This is inevitably one of the first questions I’m asked when talking to aspiring VCs at industry events and programs like VC Unlocked: Deal Camp, and rightfully so.

Ask around and you’ll hear about the hours clocked and the expensive mistakes a VC has to make in order to develop the muscle memory and pattern recognition to succeed in this industry. Throw in the influx of capital chasing fewer high-potential startups, and it becomes increasingly clear that early stage investors need to arm themselves with something stronger than gut instinct.

For investors looking to break into the industry, that means honing in on their opportunity assessment framework and filters that allow them to mitigate risk and maximize returns.

Opportunity Assessment

Let’s start by defining opportunity assessment: simply put, it’s a set of criteria or questions that will make you say yes or no to an investment.

Opportunity assessment is a foundational discipline for any VC, and often one that takes the longest to hone. It’s particularly hard for early stage investments when you don’t have financials to project. By approaching your evaluation of new investments in a more systematic way, you’ll save yourself some war stories down the road.

With over 1,800 investments under our belt, we like to think we’ve learned a thing or two about opportunity assessment. Here’s how we evaluate early stage investment opportunities:

At 500, we’re pretty transparent about our investment thesis. Compared to more traditional VC firms on Sand Hill Road, we prefer a large, diversified portfolio of early-stage investments that reduces risk and maximizes potential return. In other words, we advocate lots of little bets.

lots of little bets

 

 

 

 

Now once you have that thesis, how do you put it into practice? That’s where your frameworks and filters come in. Every firm’s framework is different, depending on their area of focus, and each is crucial to their success (or lack thereof).

Over the course of seven years, we’ve built a data-driven process based on a selection of pre-defined metrics.

Kickass Team

Ideally, we’re looking for a cross-functional team with design, engineering and marketing expertise. In our experience, bringing together technical team members and talented product and distribution pros is a winning combination.

Solving a problem

The product or service you’re investing in should solve a problem for a specific target customer. In many cases, that goes hand in hand with a market shift and means solving a problem that wasn’t obvious before.

Capital-efficient business

We’re looking for companies that are operational at less than $1M in external financing. Their CAPEX needs to be low, or we need to see revenue ticking upwards. Watch that burn rate!

Path to Series A

If you’re running out of money and trying to raise again, chances are you’re already too late. As early-stage investors, we need to know whether you can raise the next round. Startups die for one reason…

Functional prototype

We need to see a functional prototype before investing, or previous product success at the very least. Early customer usage is another bonus.

Measurable traction

Beware of vanity metrics. We’re looking for engaged users, some revenue, and attractive unit economics that are trending upwards.

Scalability

One a company has product market fit, they should have either scalable internet-based distribution (search, social, mobile) or a proven ability to scale sales. 500 has an in-house distro team of growth marketing experts that specializes in advising post-seed companies preparing to raise their Series A round.

When 500 Startups likes to invest:

sweet spot for 500

So there you have it, a high-level overview of how we evaluate new venture opportunities. Once you’ve decided on your framework on whether to invest in a company or not, it’s time to move on and focus on pricing and terms.

If you’d like to learn more and deep dive into specific case studies, hear first-hand from founders, and more, check out our upcoming Venture Capital Unlocked: Deal Camp at Berkeley from October 23-36.

VC Unlocked: Deal Camp @ Berkeley

Deal Camp is a four-day intensive program focused on the nuts and bolts of deal making for investors who want to improve their ability to define, negotiate, and execute early-stage investments. Participants will work with leading UC Berkeley faculty and 500 Partners to develop strategies to structure deals in order to maximize investment return.

VC Unlocked: Deal Camp at Berkeley

Submit your application today!

Edith Yeung’s 2017 China internet report

Our very own 500 China partner Edith Yeung just released her China internet report. This 67-page report includes everything you need to know about China internet landscape including China vs. US internet by the numbers, China internet market size, top China startup cities, venture capital, smartphone landscape, major Chinese internet trends including messaging, mobile payment, Cryptocurrency, shopping, bike sharing, live streaming. gaming, eSport, artificial intelligence, and education.

Here are some of our takeaways:

  1. China internet future is really bright…
  2. China is the leader of messaging, mobile payment, bike-sharing, gaming, eSport, live streaming and online education industries.
  3. China’s domestic market for mobile payment, bike-sharing, gaming, eSport, live streaming and online education is big enough that many players are not looking outside of China.
  4. Government support is instrumental China wants to dominate artificial intelligence and the government is pushing hard to make this happen.
  5. To experience China, you need to spend time in Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou
  6. China is the world’s largest education market with 144 Million online users.
  7. China is the world’s largest cryptocurrency market and is developing its own digital currency.
  8. WeChat is Facebook, WhatsApp, Tinder, Paypal and Slack combined.

 


Edith Yeung is the head of 500 Startups Greater China and partner of 500 Mobile Collective Fund. Edith invested in over 40 mobile, VR, AR, AI and machine learning startups, including Hooked,, DayDayCook, Fleksy (acquired by Pinterest), Human (acquired by Mapbox), AISense, and many more. Before 500, Edith worked with companies like Dolphin Browser, Siebel, AMS, AT&T Wireless and Autodesk. For more from Edith, you can follow her on Twitter and Linkedin and newsletter

You have been accepted into 500 Startups. Now what?

Guest Author – Eugene Vyborov, CTO, YayPay (A 500 Startups Batch 20 Company)

Among the 180+ independent accelerators around the world, American programs hold sway and considerable appeal. Getting into a US-based accelerator is a dream for many startups, especially ones that are based outside the United States. It’s easy to see the attraction: accelerators offer access to the American ecosystem of innovation, collective wisdom of successful entrepreneurs, visibility to prominent VCs, and a trip to the US, all in one package.

From reading cover stories in magazines, one might buy into the idea that once a company is accepted into a prestigious accelerator program, its path to success is clear. The reality is far from it. As I have previously mentioned in “5 Things International Startups Should Know Before Joining a U.S. Accelerator,” acceptance into a top program is just the beginning. My earlier article was based on my experience at Techstars Boston. Now that I have completed Batch 20 at 500 Startups, I am ready to share my thoughts on what it takes to maximize the opportunities and deal with the challenges that come with joining the 500 Startups family.

Let me begin by saying that accelerator programs like 500 Startups are highly competitive. Thousands apply, 30-50 get in. In fact, you have a better chance of getting into Harvard than joining a new 500 Startups batch. If you have been accepted, you definitely have a reason to celebrate. Now, the real work begins.

Here is the thing. Accelerator “freshmen” tend to overlook the need to build a solid foundation in terms of logistics, mental shifts, and financial reserves. By accepting the invitation to join 500 Startups they have signed up for a marathon – and the sooner they begin training the better. Participants must trust the process that is built by experienced investors and entrepreneurs, but they must also come prepared. From having been a part of both Techstars and 500 Startups, I can tell you that the accelerator process is powerful, but it has no magic. All any accelerator can do is accelerate the path the company is on, for better or worse. There are things founders can to make sure they are on the right path – before they pick up the speed.

What does that look like? I have interviewed 3 fellow founders and Marvin Liao himself as they prepared to wrap up their journey with 500 Startups’ Batch 20. Here is their advice:

1. Focus on bringing a great product.

An idea, no matter how brilliant, does not cut it. Some programs (like the Y Combinator) will consider applicants in early stages of development, but both Techstars and 500 Startups require that you have a functional product that’s ready for the market. There are some exceptions (a highly innovative idea, or a proven team with strong credentials and a solid track record) but they only confirm the basic rule.

The “functional product” requirement means that you must have a product and it must be good. The accelerator process will fuel evolution and improvements, but your starting point must be sufficiently strong to allow the product to morph without crumbling. Invest your pre-accelerator time and money into making a product that people love. Resist falling in love with the technical aspects of your product, and get the market to fall in love with the way it solves their problem – before you go any further.

2. Come prepared for the expense.

The cost of participating in the program is covered by the portion of the accelerator’s investment in your company that is held back to cover office space, event facilitation, and other expenses. That is convenient, but it is only a part of the story. Alexey Zenivoch, the co-founder of Belarus-based Friendly Data that builds natural language interfaces for databases, spoke for many of his batchmates when he reflected that San Francisco is expensive. Travel and living expenses can really add up, especially if multiple team members choose to travel to the US and stay for the duration of the program. The investment is well-worth it for the right company, but alumni recommend you consider the whole cost to avoid any surprises.

3. Have a plan for integrating what you learn with the team at home.

The three international startup founders we spoke with all brought several co-workers with them. In the words of Ragnar Sass, the founder of Clanbeat out of Estonia, the ability to include teammates was a “deal breaker” that helped him choose 500 Startups above other accelerators. If your company hopes to break into the US market, it is critical that everyone on the team understands the Silicon Valley, he said.

“I believe that this area is the best environment for developing your business. 500 Startups is also friendly for the non-founders. It is very important that everyone on the team actually understands the Silicon Valley.”

-Ragnar Sass, Clanbeat (Estonia)

That brings us to an important point: few startups can afford to re-locate their entire team to the US for the duration of the accelerator program. You will need a plan for sharing what you learn with your home-base team to bring them along. “Translating” the Silicon Valley culture and conveying the less technical ideas and changes can be difficult. You must have a way of “converting” the knowledge and bringing everyone together, even while you are separated by geography.

4. Get comfortable with networking.

Participants repeatedly state that networking opportunities are some of the key benefits of participating in 500 Startups. And yet, that networking won’t happen by osmosis. You must have a plan for reaching your mentors, building relationships, and establishing connections that will be strong enough to persevere after graduation.

“It’s all about the people. You can meet your new friends and a lot of very smart people. 500 gives you access to strong mentors who help you understand your real market, give you feedback and advice on how to work with your clients.”

-Alex Zenovich, Friendly Data (Belarus)

The good news is that the 500 Startups program is custom-built to encourage collaboration. Because participants share a co-working space, they get to see each other’s victories and defeats. Don’t under-estimate the power of random conversations over lunch!

5. Remember that “sales” is not a dirty word.

500 Startups is strongly focused on customer acquisition. Whether or not you’re a technical founder, you must understand that just building a great product is not enough.

“Openness to learning sales and marketing is really important. You need to have a mindset for it.”

-Marvin Liao, Founder, 500 Startups

Distribution is the name of the game, and organizers structure the content around helping each batch of companies get to their customers fast. Every startup gets a distribution mentor, but you won’t experience traction until you absorb the idea that “selling” is key to your company’s success.

Bonus advice: beef up your English skills!

If you don’t have a high degree of comfort with the English language, there is a limit to how much you will get out of the program. Marvin Liao shared that he would love to see more foreign companies go through the 500 Startups, but the language barrier prevents many great companies from applying. When international teams are present, their conversational facility with English makes an enormous difference on their ability to build the network and maximize their progress.

“Two-thirds of this batch are from the US and a third are from overseas. I do not have a quota. We like international companies, some of our best teams are from overseas. The biggest part is whether they speak English. If you don’t speak English, you won’t do well here.”

-Marvin Liao, Founder, 500 Startups

500 Startups: Lessons learned

Don’t think of joining a US-based accelerator as a binary “yes/no” proposition. The answer may well be “not right now”. Timing matters, as does the degree to which your product is ready for the market. Your team must be open and ready to absorb the volume of sales and distribution learning that has been described as drinking out of a firehose. The application process is highly competitive, and if your team and product have known gaps you may be at a disadvantage compared to companies that are further along in their development. Consider your financial situation as well – your total investment will be greater than just the cost to join the class.

Lastly, think about what happens after the program. Many participants aim to maintain at least some presence in the US after graduation. Mark Masongson, the CEO and Co-Founder of Canadian-based UrbanLogiq, said it best:

“Now that we have access to this network, we cannot close the door on that.”

-Mark Masongson, UrbanLogiq

Marvin Liao has seen companies have success with maintaining an overseas development team and a US-based sales and marketing team.

“The best companies are the ones that keep the engineering team home, but double down on the sales and marketing front in the US.”

Marvin Liao, Founder, 500 Startups

“I won’t say that it’s easy, but we have seen enough examples,” Marvin said, citing the success story of TalkDesk that has a development team in Portugal and a sales and marketing team in San Francisco. The badge of “500 Startups portfolio company” does not come without sacrifice, but it is well worth it!

Eugene Vyborov is technology entrepreneur, geek, Co-founder and CTO of YayPay – Batch 20 company that uses AI and machine learning to accelerate cash flow and automate accounts receivables.


About the Guest Author: Eugene Vyborov is technology entrepreneur, geek, Co-founder and CTO of YayPay, a 500 Startups Batch 20 company that uses AI and machine learning to accelerate cash flow and automate accounts receivables. Follow YayPay on CrunchbaseTwitter, or Linkedin.

Looking back at VC Unlocked 2017

After two weeks of intense coursework, six guest lectures, 32 investment thesis presentations, and a mind-boggling amount of coffee, another successful VC Unlocked Program with the Stanford Center for Professional Development is officially a wrap.

With over 200 applicants, this was our most competitive application process yet. We’ve covered the amazing diversity and background of the class in a previous post, but suffice to say that we had several contenders for The Most Interesting Woman (and Man) in the World.

Now that we’ve had some time to catch up on some sleep (and email), we’ll recap a few of the many highlights from the latest installment of our flagship educational program.

Setting the framework

“Whether they’re new to angel investing or an experienced practitioner, we want participants to come away from VC Unlocked with an insider’s perspective on Silicon Valley investing. It’s about empowering participants with better resources and insights that they can apply to their investing back home,” said Bedy Yang, managing partner at 500 and the mastermind behind VC Unlocked.

That thinking is reflected in the structure of the curriculum. The first week was grounded in academic theory and VC fundamentals. Stanford University faculty and 500 partners covered topics including building an investment thesis, VC structure and returns, attracting deal flow, opportunity assessment, and how to raise a fund.

“The beginning of the course provides a theoretical foundation for the practice of venture capital investing,” said Michael Lepech, Associate Professor at Stanford University.

Prominent VCs joined our afternoon sessions throughout the week for candid discussions. Marlon Nichols discussed his investment approach at Cross Culture Ventures and experience as a Kauffman fellow. SoftTech’s Andy McCoughlin shared 12 lessons from 12 years of investing, including “beware the quick pass.”

Renata Quintini at VC Unlocked

Renata Quintini of Lux, a member of Forbes’ Midas Brink list, talked about her path across the table from the Stanford Endowment fund to frontier investing, and how her experience as a karate champ shaped her approach to business.

Finally, Capria’s Will Poole wrapped up the first week with a prediction that “impact investing will become a strategy employed by all investors.”

VC Unlocked Potluck

Credit: Paula Barrientos

Applying Concepts

During week two, participants applied those concepts with more practical, action-based exercises and in-depth lectures.

As always, one of the highlights of the program was our visit to 500’s DemoDay in Mountain View, where participants got a front-row look at our Batch 22 accelerator companies. During an investment committee simulation with 500 partners, participants also got the chance to meet a few of those startups and drill down on their businesses.

500 Startups DemoDay

In-class case studies on valuations and M&A, where participants split into groups and simulated both sides of an acquisition offer, were two of the most fun and interactive sessions.

Interactive Sessions at VC Unlocked

This year also included a trip down Sand Hill Road to visit the Andreesen-Horowitz office and learn more about their investment approach from investment partner, Li Jin.

Angel investor and one-man Shark Tank, Jason Calacanis, joined for his infamous “founder interviews” session.

Jason Calacanis at VC Unlocked

Rick Marini of Dragonfly Partners talked about war stories from angel investing and the importance of finding a path to Series A. Lightspeed’s Jeremy Liew spoke about consumer tech trends and rubbing elbows with Will.i.am and Gwyneth Paltrow on the set of Planet of the Apps.

Rick Marini of Dragonfly Partners

The course culminated in participants’ investment thesis presentations, honed after two weeks of coursework. It was a great opportunity for participants to incorporate feedback from faculty and fellow peers and stress-test their latest thinking. 78% of the class said their investment thesis had changed over the course of the program.

Last day of the program!

Testimonials

“VC Unlocked is an insider’s guide to an asset class filled with mystery and risk. I feel more confident and informed about my decision making process after this rigorous two weeks. Thank you 500 Startups & Stanford!”

  • Vivek Shah, Equanimity Ventures LLP

“The most important thing in venture capital is your network. The people I met in the program – classmates, instructors, 500 team – are amazing. They’ll be professional contacts and personal friends forever, which is truly invaluable.”

  • Jules Miller, LunaCap

Applications for Next Year

Interested in attending the next VC Unlocked program?

Join our email list to stay updated on the latest news. We’re finalizing exact dates for next year and will let you know as soon as it’s official.

Announcing: The First Batch in 500 Startups Data Track

Two weeks ago, the first batch of 500 Startups’ new Data Track kicked off in San Francisco, alongside the twenty-second incarnation of our flagship Seed Program. We selected some of the most innovative startups in big data, machine learning and AI to participate in the intensive 3-month program.

Today, we’re excited to share the inaugural cohort, which consists of 7 companies from 7 different countries around the world:

Botsociety (Italy)
Botsociety is a design tool for previewing, prototyping and testing conversational interfaces.

Curio.io (United Kingdom)
Curio.io delivers professionally narrated audio of curated articles from leading news publications like The Financial Times and The Guardian.

Mobile Forms (Nigeria)
Mobile Forms is a platform for local and international businesses to crowdsource reliable market data in Nigeria.

OpenUp (USA)
OpenUp measures the impact on purchase behavior across online and offline ads.

reDock (Canada)
reDock is a proposal automation solution that mines and tailors corporate information on-demand to help professional services companies win complex RFPs.

Texel (Israel)
Texel enables efficient streaming of VR/AR content over existing networks by using viewing data and behavioral analytics to reduce the bandwidth by more than 50%.

VCV (Russia)
VCV is an AI-powered recruiter that identifies candidates, automatically screens them using voice recognition and submits a video interview of qualified candidates directly to hiring managers.

Also, check out Venture Beat’s coverage of our first data track. 


Chris Neumann is a big data veteran who co-founded DataHero (acquired by Cloudability), and was the first employee at Aster Data (acquired by Teradata). Travel lover and sports nut. Unapologetically Canadian. For more from Chris, connect with him on Linkedin or Twitter.

500 Batch 21 Demo Day Recap

On August 1, 2017, at the Computer History Museum in Mountain View, 500 Startups’ latest batch, Batch 21, celebrated their graduation from our 4-month accelerator program with Demo Day. The 28 Batch companies hailing from 9 different countries successfully pitched their companies to a room full of 500 active and accredited investors + 2,000 more tuning in via livestream. Below is a recap of the event.

Emcee and 500 team member, Matt Ellsworth, kicks off Demo Day (Photo Credit: Sumit@sreel.com).

WHAT IS DEMO DAY? An invite-only event for 500+ active & accredited investors, Demo Day is a private viewing of our most recent accelerator startups before they ‘graduate’. Attendees will get a first look at the startups, meet the founders, and network with other top-tier investors, corporate strategists, & press.

VIEW THE B21 PITCHES HERE

VIEW PHOTOS FROM B21 DEMO DAY HERE

Taran Ghatrora, CEO & Co-Founder of Ellebox, a startup that changes the way women experience their periods. 500 Startups B21 (Photo Credit: Sumit@sreel.com).

B21 DEMO DAY PRESS COVERAGE >>
Our favorite startups from 500 Startups’ 21st class – TechCrunch
AA Audience, Folia Water, Improvado.io and Pluma are Bay Area companies that pitched at 500 Startups Demo Day – Silicon Valley Business Journal

Batch 21 company, VR Motion, runs a test drive of their virtual reality automotive experience (Photo Credit: Sumit@sreel.com).

MORE ABOUT THE BATCH 21 COMPANIES >>
As usual, B21 represented a wide array of technologies ranging between Conversational Commerce, Big Data, drones, VR, transportation, digital health and FinTech. There were also two tracks – B2B Sales and automotive hosted with General Motors.

  • 43% of this batch is international, coming from countries like Israel, Taiwan, Hong Kong, Russia, Ukraine, Spain, Italy, Turkey, and Canada. Plus, 7 of the companies were Canadian!
  • 30% of the batch has at least one female founder.
  • 25% of the batch has a founder of color.
Batch 21 and the Mountain View accelerator team on demo day (Photo Credit: Sumit@sreel.com).

LEARN MORE ABOUT THE B21 COMPANIES AND/OR GET INTRODUCED

WANT MORE 500? IF YOU’RE AN ACTIVE OR ACCREDITED INVESTOR, REGISTER HERE FOR BATCH 22 DEMO DAY OCTOBER 24 IN SAN FRANCISCO, AND DON’T MISS OUR OTHER UPCOMING EVENTS.

 

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Making Changes at 500

“Be the change you wish to see in the world.”

This is the advice I give to people whenever they ask for it. It’s aspirational, which means it is a lot easier said than done. As I write this post, I’m reminded even more of it.

In recent months, we found out that my co-founder Dave McClure had inappropriate interactions with women in the tech community. His behavior was unacceptable and not reflective of 500’s culture and values. I sincerely apologize for the choices he made and the pain and stress they’ve caused people. But apologies aren’t enough without meaningful actions and change.

Because of this, we made the decision a few months ago to change the leadership structure at 500. I took on the role of CEO, which involves directing the Management Team and overall day-to-day operations of 500.

Dave’s role has been limited to fulfilling his obligations to our investors as a General Partner. In addition, he’s been attending counseling to work on changing his perspectives and preventing his previous unacceptable behavior.

The actions we took weren’t easy, but it was critical to us that we uphold our culture and values – even if it meant asking my co-founder to step aside in order for 500 to grow stronger.

That said, I’ll echo what many are already saying. As much as we want to be part of the solution, we clearly have also been part of the problem. Undoubtedly there are ways I could have done more or acted sooner.

The change I want to see is a startup environment where everyone, regardless of gender and background feels welcome and safe. Where sexual harassment or discrimination will not impede great talent from producing great impact.

How do we make this change happen? How can we be that change we want to see?

It starts with me, and the work 500 started on and will continue to do. I am far from perfect, and 500 is far from perfect. But 500 is much more than one person, and we will continue building on our momentum of change. We have a lot of work to do.

Part 2: 27 Interview Questions to Find the GREAT Growth Hackers (& Weed Out the Big Talkers)

In my last article, I gave the 7 Focus Areas Every GREAT Growth Marketing Hire Should Know, but there’s still some tools you need to have in your toolkit to find a GREAT growth hacker. Why? Because big talking growth hackers will blow smoke that may blind founders who are not trained in interviewing GREAT growth hackers.

For example, you may ask one of my focus area questions, like:

“Do you have experience with Mixpanel?”
A Big Talking Growth Hacker will answer: Absolutely I used it all the time in my past role.
But what they really mean: The engineer sitting next to me was always talking about the difference between events and properties, but I don’t understand it.

Or you might ask:

“How about Google Analytics?”
A Big Talking Growth Hacker will answer: It’s my favorite app. I know it inside out.
But what they really mean:  I’m used to going in, finding a graph that looks up and to the right, and then sticking it into a presentation to show it to my boss.

It’s one thing to know the term, it’s a totally different thing to have done used it at the scale and proficiency your startup needs.

Below are 27 Interview Questions to Find the GREAT Growth Hackers (& Weed Out the Big Talkers):

1. They know how to get traffic

  • Question 1: Without using Dropbox, Facebook, and Hotmail, what are your favorite viral loops in the market? How would you design a viral loop for our business? Are there any tools you’d use that don’t require coding? Desired Answer: if they don’t have one, that means they aren’t looking for one. If you’re a curious growth hacker, you probably encountered one in the last couple of days.
  • Question 2: If we were to hire you, what would you do the first week to improve our SEO rankings? What tools would you use? What websites, access, and passwords will you need? Desired Answer: Do they ask for Webmaster Tools? Google Analytics? Do they know some SEO Tools?
  • Question 3: In previous jobs, what was your paid advertising budget and goals?
  • Question 4: In Adwords, do you prefer single keyword ad groups or grouping? Up to how many keywords in each one? Desired Answer: It doesn’t matter their answer. There are good reasons for both. That being said, be aware if they seem to think, “I can’t believe this guy goes into that much detail…” If so, they probably are not proficient.
  • Question 5: Ask them about a particular pay-per-click metric (cost per install, per signup, per free trial). Ask them about CTRs from past ads to see if they remember them.
  • Question 6: We run Adwords Campaigns for Countries/Cities/Regions to Achieve {X} business objective… What campaigns would you run, and how would you structure them? Further Prompts: What will be the break up of the campaigns or ad groups? What are the settings they’d pick?
  • Question 7: We run Facebook Ads on Multiple Countries/Cities/Regions to Achieve {X} business objective. What campaigns would you run, and how would you structure them? Further Prompts: What will be the break up of the campaigns or AdSet? What will be their settings on Facebook? What will be the audiences they’d target? What will be the conversion pixel they’d optimize for?Also, look for them to tell you how they’d do a remarketing campaign for retention.

2. They are a tracking pro

  • Question 7: What were your Urchin Tracking Module (UTM) tagging practices on your last job? Further Prompts: How did you tag people coming from Facebook Ads vs. people coming from Facebook Social? How did you do email marketing vs. search?
  • Question 8: Given what you know about our business, what are the main events and properties you’ll send to our tracking software? What would be the code that you’d send to engineers? (Give them a computer to Google it). Desired Answer: When Googling, they should go right to the developer’s documentation of Mixpanel, Amplitude, or Kissmetrics and grab the javascript.
  • Question 9: What Split Testing Software do you recommend we use? Why? How is it different from the others?
  • Question 10: If we were to do a Split Test of our landing page/checkout/{insert section you want}, what would be the level of confidence you’d want? How would you know if the test is statistically valid?

3. They write persuasive copy

  • Question 11: Create a Facebook Ad for our business based on X landing page.
  • Question 12: How would you improve X landing page headline? What would be an alternative headline you’d test? Desired Answer: You’re looking for how quickly the candidate come up with persuasive wording, and if you like the wording. After all, the ads the candidate writes represent your company!
  • Question 13: If we were to do a content marketing effort (like write an article, webinar, ebook, or white paper), which one would you choose? What would be its title and the table of contents?

4. They convert using UI/UX design

  • Question 14: Aside from Slack, what’s your favorite onboarding funnel? Why?
  • Question 15: How would you improve our onboarding? (Show them your current onboarding)
  • Question 16: Tell them they can ask questions about what you do in other channels, cases. Desired Answer: See if they think multichannel.
  • Question 17: What are some of your favorite landing pages from real companies? Desired Answer: Will tell us if they are paying attention to landing pages.
  • Question 18: How do you get inspired? How do you save things you like? Desired Answer: They should have a folder or tool they use to store cool things.

5. They know how to handle data

  • Question 19: What dashboard would you build for our business? What are 5-10 key metrics you would monitor? In what timespan?
  • Question 20: Write SQL (Structured Query Language) to query the number of {“x” events} per week for this year.

6. They’re a great communicator

  • Question 21: How would you write an email to one of our engineers to implement the changes you suggested to our landing page/onboarding? What extra info you would add? Desired Answer: You want somebody that is clear and will support things with pictures, video, and links to API documentation/libraries.

7. They a stubborn learner

  • Question 22: Can you remember something that took several experiments to crack?
  • Question 23: Give an example of a time in your life when you persisted. Desired Answer: This can be a personal experience. Do they have a black belt in Brazilian jiu-jitsu? Have they finished an Ironman?
  • Question 24: What blogs do you read regularly?
  • Question 25: What book are you currently reading?
  • Question 26: What podcasts do you subscribe to?
  • Question 27: What are some conferences you want to attend? Courses your want to do? Desired Answer: You want to see that they are learning continuously. You also want to know how they keep themselves updated.

Depending on the candidate’s knowledge the interview can last more than an hour. Give them a heads up, and let them know you ask very detailed real world questions. You can also send some of your questions in advance via email (but send only some to ensure they don’t have a someone helping them answer).

These questions are VERY specific. If you’re not a trained growth hacker, you might not know the answers yourself. But these 27 questions will trigger good conversations, and you’ll see how much your candidate actually knows by how they explain it to you.

I honestly believe interviewing this way will save you A LOT of time, money, and headaches. You’ll avoid the Big Talkers or at least you’ll know if you decided to hire one or a half-baked Growth Hacker)! And most importantly, I guarantee, these questions will help you find a GREAT growth hacker.

FAQs

Do you have a Hiring Book/Interviewing Book to Recommend?

Who by Geoff Smart. It is a more digestible, less corporate version the book “Topgrading,” written by the author’s dad, Brad Smart (the guy who helped Jack Welch at GE). If you want a thick book to knock someone out, I do think Topgrading is a better choice. It’s boring and dry, but who says hiring should be fun!

Does he/she need to know how to code?

No. But it helps! A LOT. A least the minimum to be able to communicate effectively with engineers (depending on the engineer… this is not an easy task!)

Do they need to be proficient in all these areas?

This is about hiring a GREAT Growth Hacker, right? If you want GREAT, yeah they do.

But I understand sometimes you get what you can pay for. At least these areas / questions will help you understand their weaknesses, so they can improve or you can hire help or outsourcers to support weaker areas.

IMPORTANT: I’m talking about hiring A SINGLE person. Once you are showered with money in your Series A, B, C… Z, you’re probably better off creating a “Growth Team” where areas are covered by more than one person.

My Ask for You?

Was this article helpful? Yes?

Then PLEASE PLEASE PLEASE Share it Everywhere. Yes, EVERYWHERE.

Twitter, Facebook, GrowthHackers.com, email it to friends & CEOs.

It will help A LOT of founders conduct better interviews and avoid VERY COSTLY mistakes.

And of course… let me know on Twitter (@juanmartitegui) what you think!

If I get enough love… I’ll write next about How to Create & Train a Growth Hacker (with training resources included)… This is great if you can’t hire a growth hire with enough experience or expertise.

 


Made in Argentina, Juan Martitegui is the Founder of VirtualiaNet, The Biggest Teleworking School in the Hispanic Market. With more than 11,000 students (and growing rapidly), he and his team teach people how to find and perform in jobs they love without commuting or going into a traditional office. When Juan is not working on his businesses, he is probably finding great startups to invest on as a 500 Startups Venture Partner in the 500 startups fund, reading some strange book on evolutionary psychology and persuasion, trying to improve his Rubik’s cube solving times, or spending time as a father of Pedro and Felipe and husband to Marina. For more from Juan, follow him on Linkedin or Twitter.

Announcing the 500 Startups Uruguay Accelerator

Silicon Valley and Montevideo are uniting to fuel startups in Latin America

500 Startups in partnership with ANII, Uruguay’s ecosystem development agency, will host a new accelerator program. The 500 Montevideo Accelerator Program will prepare 20 Uruguayan and international startups through 6 weeks of mentorship, growth workshops, and connections with investors and corporate partners.  This program is also being made possible through collaborations with the Uruguayan Agency for Research and Innovation / LATU, Technological Laboratory of Uruguay / ANDE, Uruguayan Agency for Development, and the Investment and Export Promotion Institute of Uruguay. The 500 Montevideo Accelerator Program will focus on growth hacking, product design, fundraising, and will bring Silicon Valley expertise to seed-stage companies in Uruguay.

Space is limited to 15-20 startups – apply here (applications are being accepted until August 3rd).

The 500 Montevideo Accelerator is part of a series of international programs 500 Startups is launching to bridge Silicon Valley with burgeoning startup ecosystems around the world. The Montevideo program is the latest addition to 500’s portfolio of international programs, which includes programs in Kobe, Japan, Doha, Qatar, and Melbourne, Australia.

With one of 500’s LatAm HQ based in Mexico City, the goal of the ANII Accelerator is to further engage local startups and deepen 500’s relationship with Uruguay and Latin America based startups by creating another resource for founders in the form of an accelerator program.

500 Startups is also aiming to attract international startups to the program. This program will provide participating startups a chance to connect with Uruguayan founders and ecosystem players, as well as give Uruguay startups a network of relationships in Latin America and international markets to regionally and globally scale their companies.

The program will bring together early stage and growth stage startups to work side by side. With a focus on 1:1 mentorship sessions with 500 Startups’ Silicon Valley team, the program will add value to the startups regardless of their stage of funding or user traction.

Why should startups apply?

The 6-week intensive program will feature:

  • Knowledge session covering the latest tactics employed by the leading startups in Silicon Valley
  • Mentorship sessions led by 500 Startups Partners, Venture Partners, and EIRs
  • Fireside chats with local and international guest speakers
  • 500 Startups pitch training
  • Connections to 500 Startups network of regional and international investors
  • A Demo Day where the startups showcase achievements to investors

What is the selection criteria?

  • VC fundable startups (preferably having raised USD 10K or equivalent in funding)
  • Strong, full-time dedicated founders
  • Working product
  • Customers and Revenue are a plus

A full list of program dates:

Phase Description Date
Applications open Applications are open now, to apply please visit: 6/21/2017
Application deadline All applications should be submitted by EOD 8/3/2017
Startups notified application outcome Acceptance email sent to selected startups 9/15/2017
Remote sessions with 500 Startups 500 Startups EIRs will conduct an initial round of reviews with the selected startups to prep them for the program 10/02/2017
Program Starts Kickoff of the program 10/17/2017
Week 1 Business Modelling  and legal Sessions + 1:1 Mentorship Sessions 10/17/2017
Week 2 Growth Hacking and User Experience and Interface + 1:1 Mentorship Sessions 10/23/2017
Week 3 Sprint week: Focus on implementing week 1 and week 2 material 10/30/2017
Week 4 Sprint week: Focus on implementing week 1 and week 2 material 11/6/2017
Week 5 Fundraising Sessions + Mock investor interviews & 1:1 Mentorship Sessions 11/13/2017
Week 6 Pitch Prep and Demo Day rehearsals + 1:1 Mentorship Sessions 11/20/2017
Demo Day Presentation to Investors and Corporate Executives 11/24/2017

Do I get investment from 500 Startups or ANII?

The 500 Montevideo Accelerator program is not an investment program. We do not charge program fees, and we do not ask you for equity. 500 Startups will separately consider the applying and participating startups for an investment by our family of funds.

What’s 500 Startups role?

500 Startups will bring experts from our global team of partners, mentors and entrepreneurs to Montevideo to work closely with the startups in order to accelerate their development through sessions covering specific details of best operational practices, growth hacking through marketing and data-driven sales, and tailored advice from successful Silicon Valley and global entrepreneurs.

About Ecosystem Development at 500

500 partners with governments, corporates, and startup organizations around the world to invest in the critical components of emerging ecosystems. We run startup programs in Asia-Pacific, such as the 500 Kobe Acceleration Program in Japan, and our Series A Programs in Asia, Europe, the Middle East, and the US. We run investor education programs with Stanford and Berkeley in the San Francisco Bay Area, and we are now taking these programs abroad. We are also expanding our work with corporate innovators to help larger companies discover, partner, and invest in breakthrough startups. To get in touch with us about our ecosystem development programs, you can reach us here

More questions? Please visit our website’s FAQ section here.

We are now accepting applications to the Uruguay accelerator: apply here

For all other inquiries please connect with: Montevideo@500startups.com

 


Zafer Younis is a partner at 500 Startups, the world’s most active early stage tech investor. At 500 Startups Zafer works with entrepreneurs from all over the world, through 500’s acceleration programs in Silicon Valley and it’s Ecosystem Development Programs around the world. In 2016, Zafer launched 500 Startups’ pre-accelerator program in Japan. He also leads 500 Startups’ Corporate Startup Innovation (CSI) Program in San Francisco which aims at getting corporates and startups to innovate together. Previously, Zafer co-founded The Online Project where his team developed and executed digital strategies for Fortune 500 companies and high profile organizations. In 2004, Zafer co-founded his first company: Modern Media, LTD, a media house that owns and operates popular radio stations which received recognition from the US-based National Association for Broadcasters in 2007 (In 2014 Modern Media was acquired by D&C Electronics).

Part 1:  7 Focus Areas Every GREAT Growth Marketing Hire Should Know Inside & Out

Since I started working at 500 Startups the question I get asked most often (aside from, “What’s Dave’s email address?”) is, “Do you know a great Growth Hacker?”

And my always answer is, “No I don’t. If I did I’d hire him myself”

Why? Because since the term “Growth Hacker” (definition here, here and here) was coined, thousands of people have popped up claiming to be a GREAT growth hacker… But few people actually are a GREAT growth hacker.

To make sure you’re hiring someone who’s actually a GREAT, it’s important to make sure they’ve “been there, done that”. Do your due diligence by deep diving into these 7 Focus Areas Every GREAT Growth Marketing Hire Should Know:

  1. They know how to get traffic
    • What’s your experience with Facebook Ads?
    • What’s your experience with Adwords?
    • What’s your SEO experience?
    • What’s your experience designing and implementing viral loops?
  1. They are a tracking pro
    • What’s your experience with Google Analytics?
    • What’s your experience using Mixpanel, Amplitude, Kissmetrics, or another tracking tool?
    • What your experience with Google Tag Manager?
    • What’s your experience with Javascript?
    • What’s your experience split testing? Do you have a software preference for split testing?  
  1. They write persuasive copy
    • What’s your experience writing ads?
    • What’s your experience writing lifecycle emails?
    • What’s your experience writing landing page headlines?
    • What’s your experience launching and maintaining content marketing initiatives?
  1. They convert using UI/UX design
    • What’s your experience designing landing pages?
    • Have they ever designed a funnel?
    • What’s their favorite landing page software?
  1. They know how to handle data
    • How good are you with numbers?
    • Do you know how to use excel?
  1. They’re a great communicator
    • How clear of a communicator are you?
  1. They a stubborn learner
    • Do you love to learn?
    • Are you persistent?

Your candidate isn’t a great growth marketer if they don’t know these 7 focus areas inside and out. Make sure you deep dive into each of these buckets, so that you don’t make the painful and COSTLY mistake of hiring the wrong person.

Stay tuned for Part 2 next week when I help you weed out the “big talkers” who can BS the above focus area questions.

 


Made in Argentina, Juan Martitegui is the Founder of VirtualiaNet, The Biggest Teleworking School in the Hispanic Market. With more than 11,000 students (and growing rapidly), he and his team teach people how to find and perform in jobs they love without commuting or going into a traditional office. When Juan is not working on his businesses, he is probably finding great startups to invest on as a 500 Startups Venture Partner in the 500 startups fund, reading some strange book on evolutionary psychology and persuasion, trying to improve his Rubik’s cube solving times, or spending time as a father of Pedro and Felipe and husband to Marina. For more from Juan, follow him on Linkedin or Twitter.