RVI’s New Model 9 Months in: 2x members, more investments, more diversification

For 14 years I’ve led the River Valley Investors angel investor network. A year ago the group was on death’s door. Membership was down to the lowest levels since I’d taken over leadership from our founder and my mentor, Joseph Steig. And none of us knew that COVID was just around the corner. If RVI failed then our region would have lots its only active angel group – a huge potential blow to local startups.

It was time to pivot. I spent the last 3 months of 2019 conducting intensive customer discovery, interviewing RVI’s top members, past and present. They taught me a lot.

In January RVI leveraged that learning and pivoted to focus on speed, convenience, and syndicated deals. In March we switched to meeting online permanently.

The results:

  • Membership has nearly doubled in 9 months, pulling in people from a much larger geography than conceivable before.
  • Membership is continuing to grow at the fastest rate in seventeen years.
  • We’re investing in more deals than we’ve ever invested in before.
  • We’re helping our members get more diversification than they’ve ever had before.

I’m proud as hell of what we’ve done in less than a year, and excited to see where the next year takes us. We’ve accomplished all of these results because of the incredible feedback our members, past and present, generously gave in Q4 of 2019. I can’t thank them enough for helping ensure our region continues to have a source of high-risk capital for startups!

If you aren’t familiar with the River Valley Investors (RVI), we are a network of successful business executives and entrepreneurs who invest in exciting startups. No one investor has all of the time and expertise needed to fully vet all deals. That is why we only look at startups that have already passed the hurdle of securing another angel group or venture fund as their lead investor. RVI members then leverage each other’s expertise and networks to vet the opportunities and come to a decision in just a few short hours of work, then co-invest to secure optimal terms.

If that sounds like your cup of tea, learn what is required to be an RVI member.

The Quick and Easy Way to Find the Best Applicant From Among Hundreds

One of my favorite jokes goes something like this:

Whenever a new position opens up, and I have to sort through a stack of resumes, the first thing I do is take half of them at random and throw them away.

I don’t want unlucky people working in this department.

As with many good jokes, it’s funny because it has a nugget of truth to it.

Anyone who’s run an accelerator, a grant program, reviewed book/screenplay manuscripts, or been in charge of hiring has an impossible challenge: how do you find the proverbial needle in the haystack?

The answer is usually some variation on, “start sifting.”

Sorting through a massive pile of potential applicants is time consuming, boring, and feels pointless.

But we know that the results are undesirable. Being unable to fully and objectively review applicants perpetuates the existing weaknesses of the selecting culture, misses out on diamonds in the rough, and it is costly.

And it’s not like it’s a malicious problem – it’s just an effect of the system.

We just don’t have a better way to do it.

Or do we?

Option 1: Automate or outsourcing the task to less costly labor. Perhaps we give the young, inexperienced pre-screener a set of very simple rules of thumb like “Graduated from Harvard/MIT/Stanford” or “ready to work 40-hours-a-week on their venture.”

There are lots of problems with this. The first is that it inadvertently bakes in the flaws of our current systems as it prefers people who tend to graduate from top-tier schools or who can afford to work full time on their venture without going hungry or neglecting their family. You end up with a very young, white, and male demographic.

It also leaves out the ‘x-factor’. There are always factors beyond the obvious and quantitative that can signal a great applicant.

Option 2: Use Experienced Judges.

People who can spot that x-factor are rare, busy, and expensive. So we don’t use them until late in the process. When we do, we often use them in ways proven to be ineffective – for instance putting 3 judges in a room for 8 hours and sending applicant after applicant to them all day long. Studies show the applicants coming in at 5pm have a much lower chance of being accepted vs applicants coming in at 9am.

Another issue with these high-cost judges is that you often can’t get enough of them to achieve the diversity of perspective you need to spot the best applicants.

Why?

Because these people cost a lot of money, and moreover, are hard to find!

Oh, and on top of that, because of the cost of processing applications, there is NO practical way to provide feedback to the vast majority of people you reject. So, you can’t maintain a relationship with potential future applicants, nor give them a clear path to improvement.

How much of that applies to your system? What if you could do something better, more convenient, and at lower cost? Usually that requires a technological miracle. But in our case we just need to take advantage of a very old miracle – peer selection.

The Peer Selection Solution:

At Valley Venture Mentors (VVM) we created a selection process that improved on all of these issues – reduced cost, saved time, AND increased the quality of applications we accepted.

In short, it’s something of a miracle solution. And, like many miracles, we stumbled upon it largely by accident.

Let me show you how it works.

Step 1: Peer Selection

  1. The applicants submitted their applications, as normal. VVM’s applications, for example, had two sections:
    1. Pitch – Section describing the venture
    2. Rest – Everything else, notably: Entrepreneurs’ names, contact info, demographic data, etc.
  2. Drawing inspiration from research on blind auditions, we created packets containing 20 randomly selected Pitches without information about the founders. If you don’t know that the founder is female, of color, LGBTQ, etc. then that cannot influence your decision. (It isn’t perfect because if someone had a startup called “Black Girls Code” that information will be in the Pitch and the reviewer might make some educated guesses. However, we solve this later on in the process…)
  3. Give each applicant a packet and a limited amount of time to read, score, and provide feedback to every Pitch in their packet.
    1. Why 20? We wanted to have each company score as many of their peers as possible to get a more accurate score, but we had to balance that with the amount of time that would take the applicants to complete. Our goal was to have the whole process take < 4 hours so that the applicants wouldn’t get tired and start scoring people too harshly.
  4. This was all done with Google Forms and Google Sheets, so no costly or confusing software was required!
  5. We had a few simple checks to see if someone was gaming the system. We kept an eye out for things like:
    1. If you scored teams low that everyone else scored high (or vice versa).
    2. If you seemed to give random scores or score everyone the same.
    3. If you gave little or no feedback.
  6. Then we used some spiffy math to adjust for the fact that some people grade generously, some harshly, some with a tight spread, some use the whole scale, etc.
  7. We disqualified anyone who we felt was trying to game the system. In theory, this could be tricky. In practice, of the very few people who tried to game the system, 100% of them ended up with low scores from their peers anyway. I assume that would not always be the case, but it was the 3 years I managed the process.

Simultaneously we had a Control Group – a group of the usual kinds of people who are used as judges – the expensive people. We had them review a random packet and compared their scores to the crowd’s. The scores were 80% the same.

Benefits of Our Peer Selection System

  • Faster – Processed hundreds of applications in 1 week
  • Cheaper
    • Almost no “expensive” talent (just the 5 control group judges)
    • A small portion of time from two staff people
    • No expensive software!
  • Better
    • Dramatically reduced unconscious bias.
    • Every applicant received feedback from more than a dozen peers.
    • Tests the applicants’ commitment and willingness to work for the position (if they submit no peer review scores, you can safely disqualify them).
    • The activity, one of the first any entrepreneur would experience working with us, showed applicants how serious we were about being a community and living by our values. It helped us find our kind of entrepreneurs and let them know we were right for them. In short, it made them like us. A lot.

That’s how it worked. Knowing this, you can build one for your program. If you’d like help I can put you in touch with someone you could contract to help you. Reach out to me on LinkedIn

A Taxonomy of Customer Pains and Benefits

I’m sure you’ve seen this before.

A triangle with the three vertices labeled as follows: Premium, Convenient, Cheap
positioning triangle

This triangle is a super-simplified way of discerning what pains your product or service is solving. In short, it helps you discern your value proposition.

Your company’s value proposition must provide benefits that perfectly match your customers’ pains. If the customer has no cash, you’ve got to be cheap. If they have no time, you’ve got to be fast, and so on.

First-time entrepreneurs asked to document their hypotheses about Pains and Benefits often experience “blank canvas” paralysis, the inability to get going because of a lack of a clear starting point.

That’s where this handy triangle comes in. It gives you a brief list of options, from which you can choose what fits best with your company and your customers.

This is very imprecise though.

It’s never as simple as, “I don’t have any cash,” or, “I’m short on time.”

If you want to solve the customer’s pains, you’ve got to understand them on a deeper level.

Of course, this requires interviewing your customers at length to get a full picture of the problem they are facing.

But, there is an intermediary step you can take.

This blog post aims to provide a set of categories and examples to guide an entrepreneur to find the relevant pain hypotheses, which can then be tested in interviews.

Each heading lists a category of Pain/Benefit. This is not an exhaustive list. Deep knowledge of your stakeholders will provide far more specific pain points and benefits. However, this list can kickstart the exploration process by giving you a running start.

So, find the pains that you think your customers may be feeling, then go out and talk to them about it!

Existential Risk / Survival

PainsBenefits
Losing their jobSaving their position
Ruining their careerMaintaining their career
BankruptcyFinancial stability
Physical painFree of discomfort
DyingLive long & prosper

Money (too little / more)

PainsBenefits
Expenses too highA growing savings account
Revenue too lowMore customers
More revenue from existing customers

Time / Convenience

Pains:Benefits:
Too many tasks to do every dayA simpler schedule
No personal timeMore personal time
Deadline missedHit the deadline with confidence

Shame / Status

Pains:Benefits:
Fear Of Missing Out (FOMO)Pride in being in the “in” group
Failure leads to public shame
Fear of being mediocre
Status increased
Impact recognized

Lonely / Connected

Pains:Benefits:
Depressed by lonelinessJoy from belonging
Socially isolated
Can’t find their “tribe”
Can’t breakin to social network
Connected to a community of like-minded people.

Bored / Fun

Pains:Benefits:
Ignorant of a topic of interestMastery of their craft
Seen it all beforeNovelty, something new to experience

The KISS Scorecard Helps Founders, Investors, and Mentors Focus on What Matters

Why

Entrepreneurs and investors used to rely on strictly qualitative/gut methods of assessing progress and deciding what their next steps should be.

In 2014 the great Steve Blank gave the startup world its first widely-respected quantitative assessment system: the Investment Readiness Level (IRL). A few years later Village Capital took the IRL to the next level, creating the Venture Investment and ReAdiness Level (VIRAL). It took Steve’s IRL and essentially added a second dimension, a set of 8 milestones for each IRL level. It is a fantastic tool to help highly scalable startups understand where they are at in terms of being ready to raise venture capital funding.

VIRAL is an excellent tool used by many. However, it didn’t work for my students. It puts nearly equal weight to all components of a business at every level of its development, whereas I find that in the early days almost all your attention should be on customer discovery, and later on it should be about product development, then on marketing, and so on. Also, while my students are building scalable businesses, few are building venture capital scale businesses, and many of the milestones in VIRAL weren’t quite right for us.

In a Nutshell

And so was born the KISS (Keep It Super Simple) Scorecard. At its most basic, it is a way to let a startup CEO/investor/mentor know what they should be focusing on, and it does so by helping them tell a story…

  • Level 1: Idea – A founding team with passion and an idea to solve a large, important problem.
  • Level 2: Market – Identified a viable market of customers who’s “hair is on fire.
  • Level 3: Value Proposition – Initial product that customers are thrilled with and is superior to the competition.
  • Level 4: Relationship – Cost-effective methods to Find, Get & Keep customers.
  • Level 5: Financials – Revenue model, cost structure, and unit economics are proven and profitable.
  • Levels 6+: Scale 10x – Grown 10x, fixed what broke along the way, and remain profitable.

The Milestones

Like VIRAL, the KISS Scorecard has milestones for each level but more than half are on the specific aspect of the business it should most be focusing on. So for companies in Level 2: Market, most of the milestones have to do with understanding your market/customer discovery. For companies in Level 4: Relationship, most of the milestones are on finding cost effective marketing, sales, and retention strategies. Each level also has dedicated milestones for the few things startups always need to pay close attention to: Team and Fundraising

Also like VIRAL, KISS Scorecard’s right-hand side depicts what flavors of capital tend to be the best fit for companies given their level. Let’s take a look (click to enlarge).

KISS Scorecard

How to Use the KISS Scorecard

  1. Get your own (free!) digital copy of the KISS Scorecard. If you like paper, go to the “print” tab and you can cross off milestones as you go. From here on out though we’ll assume you are using the “Digital” tab.
  2. Mark your current status. Go through the Scorecard and mark off each milestone you have completed. To do so just put an “a” in the tall, skinny cell to the left of each completed milestone. When you do so, you’ll notice the milestone will get a black background and the text will turn white. Your score (in the upper left corner of the document) will increase. Your score goes up by 1/9 for each completed milestone. Note that all the milestones are in columns D onwards, columns A-C should not be edited as they are labels, not milestones. Next go to the Log tab and in the row associated with the “a” assessment, put today’s date.
  3. Find your gaps & set your priorities. As the leader of a company one of your top jobs is to determine what few tasks of the infinite pile are the priority. The lowest-level uncompleted milestones on your Scorecard should generally be your top priority. If they aren’t, you should make sure you have a good reason.
  4. Repeat. Periodically (probably every 1-3 months) you should update your Scorecard and use it to guide your medium-term goal setting. Use a new letter for each assessment (“b” for the second, “c” for the third, and so on), leaving your old letters in place. Doing so gives you a grayscale bar graph showing the evolution of your startup over time. Be sure to update the “Log” tab each time so you have the dates of each assessment recorded. This is a great activity to do with your board of advisors. Asking them to “bless” you marking milestones as complete (even in a non-binding way) can create accountability most of us need.

Example

Let’s walk through a fictitious example (picture of it below as well)

Example KISS Scorecard

We can see the evolution of Magic Mops’ progress over time on this scorecard. The black cells with white text show them as they entered an accelerator with little more than idea (the “a” assessment). The progressively lighter gray “b” and “c” assessments followed each month thereafter as they applied what they learned in the accelerator. We can see they didn’t think much about fundraising until the end of the accelerator and otherwise were mostly adding one layer of knowledge at a time. Then, after graduation, they go to autopilot.

Fast forward a year. Magic Mops’s product was in the market and generating a few hundred thousand dollars in revenue. Wahoo! The CEO was spending most of her time on ramping up sales & marketing efforts. She runs into her old KISS Scorecard from the accelerator and realizes she hasn’t updated it in all this time. At her next board meeting she asks everyone to help update the scorecard. The conversation is illuminating.

First of all, her score is listed as 3.0, not the level 5 or 6 she expected given the her recent sales successes. This gives her and the board pause. So she looks more closely…

Yes, she has 1 milestone in level 6 and one in level 5 crossed off. A few bigger customers took a chance on her, so she felt pretty confident. But, there is a huge problem. She’s spending time on high level milestones when the very foundation that work is built upon is unsound. Critically, she is missing:

  • Milestone [2.4] “Our initial target customers love the product, pay for it, and keep using it” – People have ordered, but there have not yet been any reorders.
  • Milestone [2.5] “Customers validated our solution is superior to competition” – While the janitorial staff using the mops love them, there is zero evidence from the paying customers that the product is superior for them.
  • And all the Level 4 milestones are incomplete. Many things have been tried, some successes came in, but nothing that is scalable or repeatable or even consistently measureable.

Scaling up right now would be begging for the #1 cause of startup death, premature scaling. Instead, she needs to put almost all of her attention into milestones 2.4 and 2.5. Only after she has proof that those milestones are completed can she start working on sales & marketing with confidence. Her board helped her reorganize her strategy and ToDo lists to focus obsessively on these milestones.

She just dodged a company-killing mistake.

Hopefully, so can you.

Get your KISS scorecard (for free!) now.

A Canvas That Tells a Story: KISS Canvas (v3.1)

[This is part of a series on the KISS Canvas]

Why

30-page business plans are great for established businesses and terrible for startups that need to iterate quickly. 15 years ago the Business Model Canvas (BMC) changed everything by giving us a 1-pager (or 4×3 foot poster) to help you quickly document and test the key hypothesis behind your business model. The BMC was a quantum leap forward.

However, my students and I often struggled with the structure of the canvas. While it was superior to a business plan it was relatively hard to read & use. You literally needed a map to show you how to read it – start here, jump to there, then jump down to here…

In a Nutshell

And so was born the the KISS (Keep It Super Simple) Canvas. Each key stakeholder (payers, users, channel partners, etc.) gets their own row. Read the columns in each row from left to right and you’ll find the facts of the business model layed out in a logical narrative structure. In fact, it tells the story of your business, as you would in a good pitch. The bottom of the canvas holds the “beard of learning” where you store your invalidated hypothesis, so you can easily remember and tell the story of what you’ve learned in your startup journey. No map required.

At the highest level, this KISS canvas tells the following story just by reading from left to right: We help [key Stakeholders] by providing [value proposition]. We find, earn, and retain their trust by [relationships]. This is economically sustainable because of [financials].

Example:

We help the blind and visually impaired by empowering them to connect with their fully sighted friends and family as equals. We find, earn, and retain their trust through word-of-mouth and strategic partnerships with nonprofits that serve the blind. Customers pay us an $8 monthly subscription.

And today, after 3 years of field testing, I’m proud to roll out version 3! It has two variants. The first is…

KISS Canvas (Lite)

This variant is for people at the “I have an idea” stage.

KISS Canvas (Lite)
  • Key Stakeholders – Who do you serve?
    • Segments – Name each of the groups of people you will deliver value to: payers, users, channel partners, etc. Each gets their own row.
    • Deciders – Describe the actual people (COO, front-line employee, Head of New Products, etc.) who make the decisions for each segment.
    • Pains – What problems do they have?
  • Value Proposition – What do you offer?
    • FeaturesHow will you solve their problems?
    • Benefits – What promises are you making to your customers?
    • Competitors – Who else is solving the problem?
    • Competitive Advantages – How are you superior at solving the problem?
  • Relationships – What kind of relationships will you have with each segment?
    • Marketing – How will you make people aware of your solution?
    • Sales – Once aware of you, what process will they go through to use/pay for your solution?
    • Retention – Once someone is using your solution, how will you retain their loyalty?
  • Financials – How does the money (and value) flow?
    • Value Model – What value does each segment provide you in return for your product (money, attention, referrals, etc.)?
    • Pricing – How much do you charge?
    • Cost Structure –  What are the costs associated with running your venture?
  • Waterfall of Wisdom – When you disprove a hypothesis, have it “fall” vertically down into the Waterfall of Wisdom. Each hypothesis in the waterfall represents something you thought was true… and found out it was not! That’s the beginning of wisdom :).

KISS Canvas (Full)

If you are past the I-have-an-idea stage and ready to really develop your business model, then you’ll need to start answering much more detailed questions in each section. If that is you, then check out the full version of the KISS Canvas, where just about all the top-priority questions for a startup have been laid out in step-by-step, fill-in-the-blank fashion…

KISS Canvas (Full)

Examples (inspired by real startups):

Get Your Own (free!)

If you would like to use the KISS Canvas, you may do so completely for free as they are licensed under creative commons :).

Check out more KISS Canvas Content.

RVI’s Guide To Running a Virtual Angel Group Meeting

This post contains our up-to-date set of best practices on how the River Valley Investors angel group runs our meetings online. Last updated on: 8/27/2020

Technology of choice:  Zoom

  1. Prep
    1. Updated 5/18: We send all likely attendees these online meeting etiquette guidelines (kindly shared by the Keiretsu forum).
    2. Before the event, we ask everyone to log in with a device with a camera so we can see each other. They all have been invited to a google calendar event with the link embedded in it.
    3. Created Breakout Rooms from the get-go. I’ve used Zoom for over a year and hadn’t even realized it was built into the pro plan I was already paying for! If you haven’t used breakout rooms before check them outUpdated 4/15: we name the breakout rooms after spots in our area where people like to meet in person. Updated 5/22: We assign some of our trusted regulars to facilitate breakout rooms and help make our new attendees feel and home and meet new people.
    4. Updated 4/15: We also enabled the waiting room feature. This gives us a very easy place to park entrepreneurs and proved to be better than using a dedicated breakout room.
    5. The group Manager and assistant manager make sure to have the Participants & Chat subwindows open (do this by clicking on the respective buttons).
  2. Troubleshooting & networking
    1. Updated 8/27: As our members log in, once we are sure we can see & hear them and vice versa, our Manager will invite them to head into one of the  Networking breakout rooms to socialize. We aim to put 3-6 people in each breakout so the interactions remain personal. This way people who are ready to go don’t have to listen to others getting tech support :). We always ask one of those people to serve as the “host” of the breakout, taking responsibility for ensuring everyone gets to meet each other. We often ask newer members to play this role as it helps them get to know their peers faster.
    2. As the entrepreneurs login, we have them hop into one of the breakout rooms where our assistant manager makes sure the entrepreneurs are ready to share their screen and has their questions answered.
  3. Setup to best re-create in-person meeting
    1. Updated 4/15: Our Manager messages everyone via zoom’s integrated chat when networking time is about up. He then closes all the breakout rooms. This causes all members to be automatically dumped back into the main area in one minute, with a handy countdown. This helps people wrap up their conversations.
    2. With everyone present, we ask people to switch to Gallery mode, this shows a grid of as many people as can fit on one’s screen. It helps recreate (as close as we can) the feeling of all of us being around the same table.
  4. Meeting start & entrepreneur presentation
    1. Updated 4/9: Remind members…
      1. There are bio breaks systematically placed in the meeting, so please stay until the breaks if at all possible.
      2. “Pass a note” to the Manager via Zoom’s Private Chat feature. We discourage people from sending messages to the whole group.
      3. Use the “raise hand feature (click the “Participants” button to find the “Raise Hand” button) to signal you’d like to ask the entrepreneur a question.
    2. Go through our introductory agenda (quick intros, explain the process, etc).
      1. Updated 5/22: Intros in a large meeting can take a while. Instead, we have attendees change their name on the zoom call to reflect their organization or expertise.
    3. Manager mutes everyone (except the presenter) to minimize background noise.
    4. Presenter shares their screen (where they already have their presentation in full-screen mode, ready-to-go). This puts their slides in full-screen mode for everyone.
    5. Updated 4/15: We have presenters confirm that they have a 10-minute timer, that makes noise when complete, ready to start. We set one up as well and if the company runs over time the Manager discreetly private-messages the entrepreneur. Once the entrepreneur has confirmed they are ready to start their timer, we tell them to begin.
  5. Q&A
    1. With the presentation complete we ask the entrepreneur to stop screen-share so we can all see the grid of faces.
    2. Updated 4/9: The Manager uses the list of raised hand symbols visible in their Participants” subscreen to identify who is next in line to ask a question.
    3. Updated 4/9: Manager unmutes the person who’s turn it is (saves a lot of time of people forgetting to unmute themselves), announces something to the effect of “Mary has our first question, and Jim is next in line.”
    4. Updated 4/9: The manager mutes themselves.
    5. Repeat until Q&A time runs out (for us it is usually 15 minutes).
  6. Closed-Door Session
    1. Updated 4/15: When Q&A is complete the Manager politely moves all presenters to the Waiting Room.
    2. The closed-door session continues as normal. At RVI we follow a particular format with the discussion going in three parts…
      1. “Why might this be a great investment opportunity?”
      2. “If you were on the due diligence team, what questions would you recommend they think through carefully?”
      3. “Who wants to be on the due diligence team?”
      4. Updated 4/15:
        1. If there is a due diligence team then the manager asks the team to stay present and releases everyone else to go on break for 10 minutes. The entrepreneurs are brought in from the Waiting Room. The Assistant Manager then coordinates the date & time of the next due diligence meeting.
        2. If there is no due diligence team, the entrepreneurs are sent to a breakout room where the Manager joins them and gives the bad news and a very brief summary of why we did not have the critical mass to proceed. We believe a fast, respectful no with an explanation is the only appropriate and fair thing to do for an entrepreneur. We also offer to have a conversation after the meeting if they want more info. If they are a local company we sometimes invite them to rejoin the meeting at the end to get some targeted advice from the group.
  7. The rest of the meeting
    1. Rinse-repeat for other presenters.
    2. Do end-of-meeting wrap-up (portfolio company updates, upcoming ACA meetings, etc).
    3. At the end of the meeting, invite people to use the breakout rooms if they would like to continue any conversations or otherwise take advantage of the fact a bunch of us are in one (virtual) place at the same time.

How to Come up With Great Ideas

Hand holding light bulb and cog inside. Idea and imagination. Creative and inspiration. Innovation gears icon with network connection on metal texture background. Innovative technology in science and industrial conceptIf your startup/organization/team struggles with ideation (the process of coming up with ideas), you fall into one of two camps:

  1. Those who struggle to come up with any ideas.
  2. Those who come up with plenty of ideas but struggle to identify which ones are worth pursuing.

What follows is a step-by-step guide for solving both problems.

The Short Version

  • Step 1: Get MAD – Remember your Mission, assess your Assets, document the Demand.
  • Step 2: Ideate – Use your MAD to inspire ideas.
  • Step 3: Select Criteria – Determine what is important to your decision-making process.
  • Step 4: Score – Score each of your ideas based on the criteria.
  • Step 5: Decide –  Review the results, make sure your scores are correct, and determine which idea(s) are the highest priority to pursue.

The Details

At the heart of the solution is a simple canvas-style tool: The MAD Ideation Canvas. Like other “canvases” (such as the KISS Canvas or Business Model Canvas), this canvas replaces big, complex ideation systems with a fast, fun, and easy-to-iterate tool. Nothing fancier than a pen, open-mind and sticky notes required!

Here is what the 4×3 foot poster looks like:

MAD Ideation Canvas Template - Poster_ 4 x 3 feet

Download & print the 4×3 ft poster, grab some sticky notes, and follow along. If you prefer to do things on a computer then use our digital version. If you don’t the canvas format then try our worksheet version.

Let’s get started, and as we do, we’ll fill in the canvas with an example from the fictitious Montessori School of MyTown.

Step 1: Get MAD

The best ideas resonate with your personal/corporate/organizational Mission, leverage your Assets, and meet Demand from customers/clients/stakeholders. MAD for short.

IdeaJam-MAD Venn Diagram

  1. M: Remember your Mission – This what drives, motivates, and guides you.
    1. Your first sticky note should contain the essence of your mission boiled down to 8 or fewer words.
      1. Empower children to be great global citizens
    2. Fill the remaining space with stickies that further illuminate your mission and/or values.
      1. Follow the child
      2. Peace
      3. Parent partnership
      4. Joyful environmentMAD - M
  2. A: Assess your Assets – Assets are resources you could put to work right away.
    1. Superpower – Your first post-it should be your superpower. Is there something you are one of the best in your part of the country at (or the whole country, or the world)?
      1. Anti-racism and inclusion curriculum this school’s curriculum is the subject of talks at national conferences.
    2. Physical assets that are not used 100% of the time such as: classrooms, labs, dorms, special equipment.
      1. Classrooms
      2. Playground
      3. Reusable classroom materials
    3. People who are awesome but only working part-time or who are not being used to their full potential.
      1. Teachers
      2. Staff
      3. Board members
    4. Relationships with people such as: customers, volunteers, alumni, other organizations/companies, government agencies, your community.
      1. Other independent school leaders
      2. Alumni
      3. Families of students/alumni
    5. Gravitas earned from places such as: media coverage, awards, reputation for great work.
      1. Multiple awards
      2. Speaker at national conferences
    6. Know-How your team has developed to solve your own problems such as: processes, curriculum, understanding of complex systems.
      1. Anti-racism and inclusion curriculum
      2. Nature curriculum
      3. Financial aid system
      4. Comfort w/ technologyMAD - A
  3. D: Document the Demand – List out any loud signals the market or your customers have given you of things they want.
    1. What have they been asking you for and you’ve said NO to? A subset of this can be something you offer and there is a waiting list to get in, or a long line, you are turning people away because there isn’t enough room, etc.
      1. Montessori for families to use at home
      2. More extensive after-school programming
      3. Year-round programming
      4. Keep asking us to speak at conferences
      5. Teachers elsewhere asking for our techniques
    2. What are similar orgs offering that you are not?
      1. Renting out their space to people who run classes in the evenings
      2. Running child-friendly co-working spaces
      3. Selling curriculum to other schoolsMAD - D

Step 2: Ideate – Use your MAD to inspire ideas

So the whole MAD part of the canvas looks like…

MAD only

  1. Generate – Take five minutes to have each person on your ideation team privately & silently write down a list of ideas inspired by your MAD.
  2. Share – Have each team member read off their list. Create sticky-notes for each idea and add them to the Idea row on the canvas (the row that goes Idea 1, Idea 2, Idea 3…). Make sure to ask each other questions to be sure you understand each idea. Add any new ideas that are generated by the dialog.
  3. Simplify
    1. Combine ideas that are similar.
    2. Split up compound ideas.
    3. Some ideas were unclear. Rewrite their names/descriptions so everyone “gets” what the idea is about.
    4. If there are more than 14 ideas, the team leader should select which ideas go on the canvas today.
      1. Montessori @ home – Montessori kids cook for themselves, clean up their messes, and are kind & courteous. Not so much at home. Parents could hire the school to teach them how to have the Montessori behaviors come home :).
      2. Premium after-school – Current offerings are thrown together at the last minute and are basically glorified babysitting. What if we offered ultra high-quality programming parents would be willing to pay extra for and that might attract people from other schools?
      3. Year-round programming – Make it possible for kids to continue their standard Montessori education over the summer (vs going to summer camps). 
      4. Renting out space – Rent our classroom space (after hours) to consultants, yoga instructors, etc.
      5. Child-friendly co-working – Dedicate one of the empty rooms in our new building to be dedicated co-working space. Good for parents of current students and might attract new parents to the school.
      6. Teach teachers anti-racism curriculum (online) – Teachers/schools pay to become trained and certified in our curriculum. All done online so we can access people anywhere in the country.
      7. Nature curriculum teaching retreat – Similar to the previous idea, although as it would be nature-based the training would have to be in-person.
      8. Financial aid webinars for other schools – They pay to attend webinars run by our CFO.

Step 3: Select Criteria – Determine what is important to your decision-making process

Most people’s process for debating ideas ends up being “whoever makes the best argument.” This sounds meritocratic, but it really isn’t.

  • Sometimes people with bad ideas win the argument because they are great at arguing.
  • Sometimes people with great ideas lose the argument because they lack sufficient rhetorical skills.

That’s not how to make a decision. You want to make decisions based on good data. One way to get good data is to agree on the criteria by which the ideas will be evaluated. Then score the ideas and look at the how the numbers fall out.

  1. Generate – Take five minutes to have each person on your ideation team privately & silently write down a list of criteria important to them.
  2. Share – Have each team member read off their list. Create sticky-notes for each idea and add them to the Criteria column on the canvas (the column that goes Mission alignment, …, Criteria 5, Criteria 6, Criteria 7). Make sure to ask each other questions to be sure you understand each criteria.
  3. Simplify
    1. Combine duplicate criteria.
    2. Clarify criteria so everyone “gets” them.
    3. Each criteria should be worded so that high scores are Good Things for your organization. Example: if you want to make sure that ideas are not expensive, your criteria should be “Inexpensive.” If you are afraid of ideas that could hurt your reputation, the criteria should be “Good for Reputation.” For our fictitious Montessori school the list starts with the standard four and then adds some (bolded):
      1. Mission Alignment
      2. Have the assets
      3. Proof of demand
      4. Revenue potential
      5. Fast & Cheap to try
      6. Help us recruit more students
      7. <No 7th criteria selected>
  4. Weight – Some criteria are more important than others. Let’s select some criteria to be weighted twice as heavily in the final calculations.
    1. Generate – Each team member should privately & silently take 60 seconds to write down the 2 criteria they think are the most important.
    2. Share – Everyone shares.
    3. Decide – The team leader decides which criteria (no more than half the criteria, please) are the most important and puts a star to the left of the criteria title. For those doing this on the digital canvas, put an * in column A just to the left of the selected criteria.
      1. The Montessori School puts stars on criteria 4, 5, and 6

Step 4: Score – Score each of your ideas based on the criteria

  1. Generate – Each team member should privately & silently score each idea on each criteria. We generally recommend a scale of 0-2 with 0=this idea does not (or basically does not) meet this criteria; 1=this idea meets the criteria so-so; 2=this idea totally meets this criteria. You can do this by giving each team member their own unique set of colored sticker-dots (so later everyone can easily see who gave each score). Everyone will see each others’ scores, but we recommend you instruct people to ignore what their peers are doing at this stage.
  2. Sum – Once everyone has placed their stickers someone needs to sum up how many dots are in each idea’s column, remembering to count starred criteria twice. The sum goes in the bottom row. Those using the digital canvas don’t need to do this manually as it calculates it all for you.
  3. Highlight – Circle the 2-4 highest-scoring ideas. If you are using the digital version of the canvas, it should automatically color code the scores. Red=lowest scores, Green=highest scores.

It should look something like this…

Montessori scoring example

If that is hard to read, check out the google sheet the image came from.

Step 5: Decide –  Review the results, make sure your scores are correct, and determine which idea(s) are the highest priority to pursue

  1. Double-check your math so you avoid making decisions based on bad data!
  2. Where there any surprises? Did any ideas people thought were great/bad end up scoring the opposite? If so, is that because the wrong criteria were selected, there was miscommunication about the idea, or because people’s initial gut feeling was wrong? All of those are valuable things to learn!
  3. Engage in a lively team discussion about the top-scoring ideas. Focus the conversation around criteria where there was a lot of disagreement in scores. This is a chance to learn from your teammates’ perspectives. People may volunteer (don’t ask them to do it) to change their scores.
  4. Review the finalized numbers.
  5. The team leader uses these numbers as a guide to determine which idea(s) they want to prioritize, and to do so with confidence. In our example Montessori school, the Head Of School decides to invest resources in further exploring the top 3 scoring ideas and one that her gut says to explore more:
    1. Premium after-school
    2. Teach teachers anti-racism curriculum (online)
    3. Year-round programming
    4. Child-friendly co-working space

 

 

Selecting the Top Angel Deals in the Northeast… on Google Sheets

I am told that the angel groups of the Northeast have one of the best systems for syndicating deals in the country. There are many parts to making that happen. I have the privilege of running the nomination, application, and selection processes.

The process is efficient and fair and might be helpful to other angel groups, or to other groups who see a lot of applications from people seeking money (accelerators, foundations, government agencies, etc). And… no coders or high-tech talent required, we do it all with free/cheap tools we can easily modify to meet our needs!

None of what I am sharing would be possible without the contributions of the staff of the Angel Capital Association (ACA) and the participation of so many angel investors.

Process Overview

  1. Set the timetable
    1. The ACA selects a date for the regional event.
    2. 7 days before the event we announce which teams are presenting.
    3. 14 days before the event applications from entrepreneurs are due.
  2. Call for nominations
    1. Keep a canonical list – If you don’t have a canonical list, you are going to miss people. The Angel Capital Association maintains a Google Groups mailing list containing the leaders of all angel groups in the region and anyone who has served as a deal lead for a previously-nominated deal.
    2. People forget, so remind them – We send out “call for nominations” emails (and reminders) to the mailing list and personalized versions to each member of that mailing list 1 day before the deadline, 7 days, 14 days, 21 days, and 30 days. To keep it from being annoying we use features of MixMax so that anyone that writes me back doesn’t get follow-on reminders.
    3. Make it easy – Most angel investors do this as a hobby, so you need to make it easy for them. We, therefore, pack all the info they really need into the “call for nominations” email. Furthermore, the only things they have to do are:
      1. Forward that same email to the CEO of the company they want to nominate.
      2. Email the CEO a short endorsement blurb.
    4. Put the work in the hands of the people motivated to get it done – You’ll note in the prior step almost all the work is done by the startup CEOs. They are very motivated to get things done, done right, and on time. Even the email is very short so the deal leads can read it quickly and pass it on. Then the entrepreneurs click the link embedded in the email to get a full page of detailed instructions.
    5. Here is what one of our “call for nomination” emails looks like
      1. Subject: Paul, nominate deals by 3/15 for next ACA NE Syndication Meeting

        Request:

        1. Nominate deals by 3/15 @ 11:59pm for the upcoming ACA NE Syndication Summit by
          1. Forwarding this link (http://goo.gl/d4wgm) to deal CEOs.
          2. Sending the CEO a < 5000 character summary of your investment thesis (CEOs include it when they fill in the application form).
        2. Help select presenters by reviewing the best companies in the region. Sign up via this form to join the selection committee.

         

        Background:

        1. Nomination Requirements:
          1. Your group will champion the deal and serve as the central coordinator for follow-on due diligence efforts.
          2. Deals in due diligence or in term-sheet negotiation are certainly welcome. That said, preference will be shown to deals that at least have a term sheet from the champion angel group.
        2. Deal leads are strongly encouraged to serve on the Selection Committee so we can learn more about the company you are nominating. Time commitment is about 2 hours to read deals and 45 minutes for a con call. Please note that we have a simple and effective ranking system that removes conflict-of-interest issues while allowing us access to the personal knowledge of the deal leads. Sign up to help select presenters via this form.

        If there are any questions, do not hesitate to contact me.

    6. Provide clear instructions for entrepreneurs – This is obvious, but most of us goof it up anyway. We certainly did for years and are always striving to be clearer and more respectful of the entrepreneurs’ time. The “call for nominations” email features a link for the CEOs to click where they find all of their instructions.
  3. Collect applications – We collect applications via a google form. We configure the setting so that applicants get a receipt and have permission to edit their entry after submission. This turns out to be a gigantic time-saver, stress reducer and increases quality. Otherwise, you have panicking CEOs and/or deal leads calling and emailing you at all hours!
  4. Create packet – We have our google form dump its data into a google sheet (see a sample with dummy data here). Then by applying filters, some spiffy conditional formatting, and hiding some columns, we can have it display only applications that are for the current period.
  5. Send packet – This packet is sent to the mailing list so that the startups have maximum exposure to the investor community and to set the stage for voting.
  6. Selection – This is done in two rounds.
    1. Round 1
      1. Ask everyone – You want to leverage the wisdom of crowds by getting lots of smart people to independently assess the startups. So we ask all members of the mailing list, as well as all angels who nominated a deal this time around, to cast votes. The requirements are that they review all applicants and vote on all of them.
      2. Collect the votes – Angels are not asked to rate companies by how much they “like” the company. Instead, we ask them to predict how successful the company will be at raising money thanks to the event. The difference is subtle, but it is important. See the 1st round voting form (w/ dummy data). Angels have a set deadline to cast their votes.
      3. Normalize the data – Some people score generously. Some people score harshly. We adjust everyone’s scores so that each angel’s scores add up to 100 points.
      4. Adjust for conflicts of interest – We want people who are invested in one of the nominees to vote. But obviously, they are biased in favor of their nominees. To mitigate this we…
        1. Don’t let angels score companies they have a conflict of interest with (equating to an initial score of zero). As this would hurt their nominee, we then…
        2. Replace the 0 scores with the average score the other angels gave the company. In this way, an angel does not help or hurt their nominee.
        3. As each angel’s scores added up to 100 before, because of step 2 we’ve just increased their total contribution. So…
        4. We decrease the angel’s other scores proportionally to bring their total score back down to 100.
        5. You can see all the gory math here.
      5. Schedule the video conference for the 2nd round.
      6. Publish results of 1st round – The mailing list and everyone who signed up to be on the 2nd round video conference get an email that looks something like this…
        1. Subject: ACA NE selection, 1st round voting results [confidential]

          CONFIDENTIAL – DO NOT REDISTRIBUTE

          Okay, legal stuff out of the way, happy day all! Here are the results of the first round of voting. We’ll use this to inform our conversation later today <date/time/link info>

          1st round voting results DEMO DATA

          * Z Score: # standard deviations above or below the mean score. AKA how much better or worse is this company than the average company in the packet. Note that scores have been adjusted for conflict of interest.
          * Drop: # of standard deviations this company is below the next highest ranked company. AKA, how much “worse” is this company than the previous company.

          My initial recommendation is:
          * Accept the top 7 ranked companies.
          * We debate who the remaining 3 slots go to, accepting arguments from the next 5 highest-ranked teams. If there is a champion for any of the other companies, they will get a spot to advocate for the company.
          * I shoot everyone a poll to cast a 2nd round vote for who should get the remaining slots.

          Details:
          You can see the gory details on this google sheet. Most relevant tabs are: “Summary”, “Chart of Scores”, and “Chart of Dropoff in Score”

    2. 2nd round – Goal is to allocate 8-12 presentation slots
      1. Save Time – The purpose of the first round is to save time for the 2nd round. We’ve all been in deal selection meetings that go on forever and aren’t even all that effective. When you see a chart like the one above, it makes the argument faster. The top-rated companies just get in, no debate needed. The bottom companies don’t get in for much the same reason. You can then focus the time on giving away the final 1-3 slots to the much smaller set of companies in the middle.
      2. Debate – advocates for the companies in the middle get to speak for 1-2 minutes. Allow a few minutes for Q&A. Move on to the next company.
      3. Final Vote – Using this free tool I create a ranked-choice voting poll while everyone is debating. When the debate is over I publish the voting link to the chat in the video conf and give everyone 5 minutes to cast their votes. As it is ranked-choice voting, the final selections are ones that have majority support, which is awfully helpful. I present my screen and show people the poll results, I also email them to the participants so everyone has an audit trail of the voting.
  7. Wrap up
    1. Startups (and their nominating angels) that did not get in receive a polite note letting them know. They also get copies of the feedback provided in the 1st round voting form so we can help them learn from failed bid to present.
    2. Startups (and their nominating angels) that got spots receive an email with a link to a google doc with detailed instructions on everything they need to maximize their odds of success.
    3. The list of nominating companies is announced to the Google Group mailing list.