Flavors of Capital Video Series

Access to capital is critical for startups. Below are all of the lecture videos from my course on the flavors of capital.

  1. Flavors of Capital Series
    1. Introduction to the Flavors of Capital

    2. Bootstrapping
    3. Crowdfunding
    4. Friends & Family

    5. Small grants & competitions
    6. Large Grants
    7. Debt

    8. Equity

Customer Archetypes, some rules & samples

We all know that, most of the time when communicating, storytelling is better than dry facts & figures.   And, stories backed up by facts and figures are better still!   Steve Blank‘s Lean Launchpad popularized the idea of using “customer archetypes” to convert dry demographic descriptions of customers into living, breathing people the audience can understand.

Archetypes should follow a few simple rules:

  • Customers are always humans and never entities.  Entities (companies, nonprofits, government agencies, etc) do not make decisions, specific human(s) who work/volunteer there make decisions.  That means you have to care about what will get that person promoted or fired.
  • Archetypes are 1-person samples (real or fictitious) of the “typical” customer.   If your typical customer is a 60 year-old Japanese grandmother, make sure your archetype is a 60-year-old Japanese Grandma!
  • Archetypes are narratives, not recitations of demographic/photographic data.
  • Only describe details that are relevant for your venture’s value proposition.  If your solution doesn’t address their need for beer, don’t talk about how they love to drink :).

Example 1:

Boring demographic version:  English-speaking visually impaired people with internet access at home.


Jane Rook is a retired army nurse who was blinded during her service in the Vietnam war.  She lives on a small, fixed income provided by her government disability payments.  She uses her home computer to email, Facebook, and Skype her children, grandchildren, and friends.  She loves to play cards with her friends from church.  However, as her blindness prevents her from driving transportation is very difficult to arrange.  Add the social embarrassment she often feels when playing with brailled cards or when accidentally knocking over things at a new person’s home and she often stays home, alone and isolated.

Example 2

Boring demographic version:  18-24 year-old college students with annual incomes of $20-40,000 per year from middle & upper class families.


Blair Smith is a senior psychology major at UMass with a full course load working to maintain her B average while working 20 hours a week as a waitress, and frantically looking for a “real” job for when she graduates in a few months.  She has what feels like a mountain of student debt to worry about, as well as a dorm room overflowing with four years of acquired junk.  She has no storage space close by and couldn’t afford to pay for it even if it were available.

Example 3

Boring demographic version:  25-45 year old married women, with children, with average annual household incomes of >$50,000.


Liu Whan is pregnant with her and her husband Juan’s first child and has realized that their one bedroom apartment isn’t going to cut it.  They would like to find a home in which to raise their family.  Liu is a tenure-track junior professor of psychology at the local woman’s college and Juan is a firefighter.  They have just relocated to the area and have little knowledge of it and no family or friends nearby to lean on for advice.

If you have any archetypes you would enjoy sharing, please post a comment.  Thanks!

I want to see a dead seagull on every slide

Years ago I read Seth Godin’s Really Bad Powerpoint, which is short but powerfully helpful.  One suggestion that particularly stood out for me:

Make slides that reinforce your words, not repeat them. Create slides that demonstrate, with emotional proof, that what you’re saying is true not just accurate.


Talking about pollution in Houston? Instead of giving me four bullet points of EPA data, why not show them this instead:


Read me the stats but show me a photo of a bunch of dead birds, some smog and even a diseased lung? This is cheating! It’s unfair! It works.

To help my students remember this powerful lesson I tell them “I want to see a ‘dead seagull’ on every slide.”  They don’t forget.  They reduce number of words, replace with images that powerfully communicate the emotion behind their speech…

Read the whole thing: Seth Godin’s Really Bad Powerpoint.

Donuts vs Fruit: asking for actions, not intentions, during customer development

Donuts    vs    fruit plate

A woman from a pastry startup walks into an office full of potential customers to conduct customer development interviews.  She asks everyone “You told me you often need snacks in the middle of the day.  What would be better, if I brought a plate of donuts or a plate of fruit?” Most people tell her they would prefer fruit because it is healthier.  On her way out she leaves a plate of each behind as a thank-you gift.  She comes back the next day and discovers there are no donuts left, but lots of rotting fruit! What did she learn?

A novice would think they learned that customers lie so there is no point in asking them.  A pro realizes the importance of how you ask the question.  It is very hard for people to know what they might/would do with any accuracy.  If instead you ask what people have done, or give them a situation to make a real choice, then you get much more usable information.

Note that you have two ways to apply this great lesson:

  1. Before you have a prototype you can ask people what they have done in similar situations in the past.
  2. Once you have a Minimum Viable Product (MVP), give people a choice between your option and the alternative.

Take away:

When conducting customer development interviews ask what people have done, not what they would/might do.

Hat Tip to the man who taught me this concept and the entertaining way to remember it: the great Eddie Binder.

Tag Lines Should Emphasize Benefits, not Features

Tag lines – they should follow the same rules as elsewhere in your presentation.  “Don’t tell me about your lawn fertilizer, tell me about my lawn.

Bad tagline: “All inPlay – Multiplayer online video games for the visually impaired and their friends & family.” – This emphasizes FEATURES.  Why do we care that these are multiplayer online games?

Good one: “All inPlay – Allowing the visually impaired to play and interact with their friends and family unhandicapped and as equals.” – This emphasizes the benefits making it clear to anyone why this company is valuable.

Customer Pains ≠Features ≠ Benefits

Almost every startup I work with has a hard time keeping Pains, Benefits, and Features separated in their heads.  This is a natural challenge, but overcoming it is critical!

Pains tend to be one of these:
* Impact your customer’s ability to Get/Keep/Grow their own customers
* Impact your customer’s cost structure negatively (may hurt their profit margins, may create inconvenient cash flow situations, etc).
* For consumer facing startups pains can also impact a core emotion.

But don’t confuse that with HOW you solve the problem.

Example 1: Let’s imagine a consultant offering supply chain management solutions.  But Supply chain management isn’t the PAIN, it is a set of FEATURES.  His customers don’t have an amorphous “supply chain management issue.”  They have issues like…

* Cost structure >> paying too much for supplies
* Cust. Relationships: GET >> time it takes to get supplies makes our turn-around time slow, meaning we are losing market share to faster competitors
* Cust. Relationships: KEEP >> supplies that showed up from china are WRONG, so we’re going to miss our promised deadline to our customer… possibly costing us the customer

Example 2:  A consultant to retirement centers helping their staffs better communicate with hard of hearing clients.  Training on how to communicate with hard of hearing people is a FEATURE.  Her customers don’t wake up thinking they have a core business problem with that.  But they do worry about…
* Cost structure >> High employee turnover due to frustration w/ communicating with our clients means we spend a lot of time & money training new people, lowering the productivity and profitability of our company.
*  Cust. Relationships: GET >> Word is getting out that we yell at our patients, which is turning of the high-end families we really want to attract…
*  Cust. Relationships: GROW >> Because we can’t communicate clearly to our hard of hearing patrons, we can’t up sell them any of the great offerings we have available for them and they are less likely to refer friends to us.

The Why and How Of Updating Your Mentors

The great Ty Danco and Dharmesh Shah put out a fantastic post on The Why and How Of Updating Your Angel Investors. I highly recommend you read it.

I have modified the original text to adapt it for how to update your mentors / board-of-advisors. So that it is clear that the bad writing is not Ty and Dharmesh’s, my changes appear in red.

Before startups have investors, they have mentors and/or an informal board of advisors. From an enlightened self interest perspective, they can’t help you if they have no clue what you are doing or what help you need – so tell them. From a Do The Right Thing perspective, the only compensation mentors get is the warm and fuzzy feeling of helping you out… which they can only get a feel for if you communicate clearly and often with them.

…You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your mentors updated, excited and engaged.good news bad news smallThe reason is: The CEO is the mentors‘ user interface into the business. It’s how mentors see what’s going on, and in some minimal ways, interact with the business.

1) Write your mentors consistently. You probably have a “lead” mentor or two who is committed to helping you out a lot, you should communicate with them every 1-2 weeks. You likely also have a list of other people who like you and want to keep informed, but are not up for intense email. Hit them once-a-month… If you have a regular advisory board or board of directors meetings, that’s a good time to send out an update. This is preferable to phone calls, both for you and for them. If you’re smart, you’ll send this letter out, in more or less similar form, not only to your investors but also to mentors, advisors and staff. And if you do ever follow up with calls, they’ll be up to speed and more productive.

2) Keep it short. 1 page, max. Your mentors want to know what’s going on, but they don’t need to hear every detail.

3) Use a template. We like the TechStars one. Katie Rae and Reed Sturtevant of TechStars Boston teach their companies to communicate with mentors in a way such that each letter builds on the previous one. Typically, the letter gives both highlights and low-lights since the previous communication, sets some short term goals, and then reviews the progress—or lack thereof—on the goals set earlier. Just knowing that you will be producing a report card helps focus you on the important stuff and ensures that things don’t get forgotten. Check out the investor update template for a sample.

4) Remind them what you’re doing (now). I know this is going to sound strange, but often your mentors are not doing as good a job as they could keeping up with all your activities, news, tweets and pivots. Always include a one sentence description of what you’re doing (now) just as a friendly reminder. A side benefit to this is that it forces you to write (and read) your one sentence description. This is one of the hardest tasks in startup-land.

5) Tell them the one or two strategic problems you are wrestling with. Got a few hard decisions? You’d be surprised how quickly an mentors will respond. And odds are pretty good that they’ve seen this movie before and can help you come to a better decision. If it’s personnel-related, though, you may wish to be more circumspect.

6) Keep it honest, but don’t tell your secrets. Would you be comfortable if this email ended up in public, or in the hands of your competitors? If not, consider editing it down.

7) Always have 1-3 direct asks (but not more). Looking for some specific introductions? Ask. Need to source some key personnel? Ask. Want them to share some important news on their social media networks? Don’t be proud, don’t be shy, just ask. 90% of the time, the investor will probably not be able to help, but in the 10% of the time they can help, it’s often pure gold.

8) Cast a wide net, but bcc. The more people you can keep up on your company, the more likely it is someone will be able to help you out, and the more you can leverage your network. But respect your mentors‘ privacy, and make sure you are not revealing any confidences in the letter. Use mailing list software (free one built into GoogleApps) to make sure you don’t leave someone out or include someone who wants out.

9) ARCHIVE all correspondence in a shared folder. Your mentors will be grateful that they don’t have to be organized. This tip is so simple, yet almost no one does this. Your mentors have more on their plate than just you. Make it easy on them by putting everything they need to see into one folder which they can reference. Send each letter by email (don’t make them have to hit links or print out attachments,) but include a link to the shared folder with the full archive. Inside, have all of your historic correspondence, and perhaps even your latest pitch deck, any financials you want them to see, etc. You might consider having two separate folders—one complete one, for the inner circle, and one that’s been redacted down for the broader crowd…

Remember, this exercise is as much for you as it is for them.
This entire process should take you less than an hour or two a month and it’s worth it. Besides, if you do it right, you’ll actually find that it helps you to write these updates — and it’s not a complete waste of time.

Need & Solution, a matched set

In most templates you find for executive summaries, business plans, and pitch decks, you’ll find these two sections: Need (sometimes called Pain or Opportunity) and Solution (sometimes called Product).

Classic mistake: List benefits in the Solution section that are not obviously and explicitly called for by the Need section. Why? Because if you haven’t shown us there is a Need for a benefit in your Solution, why are you building it? Good entrepreneurs live and breathe the venture, so they don’t even realize that they forgot to list the relevant pain OR they feel it is so blindingly obvious that ANYONE will see the connection.

Don’t be that guy. Assume nothing. Walk us through it. Make your Need and Solution sections be a matched set, with every Benefit matched to a pain point.

Show, don’t tell

In creative writing it is well known to “show, don’t tell.” In other words, don’t TELL us she is a brilliant scientist, SHOW her doing something brilliant.

The same holds true for startups and entrepreneurs. We all tend to TELL the potential investor or customer what we will do for them. Talk is cheap. Anyone can say anything. SHOW us what you have DONE and it will mean so much more. What is amazing is one entrepreneur can TELL me they will take over the world (let’s assume they do it with a wonderful slide deck, charisma, and are darn believable), but if another entrepreneur comes in and SHOWS me they have taken over Rhode Island… I know who I’ll be more excited about.

Here is a great post with step-by-step tips for how to incorporate storytelling into your pitch.

Describe pain of the target market, not the world…

A mistake many entrepreneur make (I know I certainly did) when describing the need/pain/opportunity is to describe big-picture problems that relate to a group of people who are NOT THE TARGET MARKET :(.


  • "Carbon emissions are damaging the environment…" – Unless the UN is hiring you to save the world…
  • "Obesity is an epidemic shortening lives, increasing healthcare costs…" – Unless you are about to become the head of a new government agency that cares about this…

It isn’t that those pains aren’t real, it is just that they aren’t RELEVANT to your venture unless there is a TARGET MARKET willing to pay you to address those issues. So instead we should all focus more on the SPECIFIC pains that matter to our target market. Here is a possible re-telling of the above two pains…

  • "Many brides-to-be are seeking to have wedding gowns that reflect their environmental values…" Now we have a specific target market and a very specific WAY we want to decrease carbon footprint.
  • "Fortune 500 companies watching their health insurance costs skyrocket due to increases in obesity and diabetes in their workforce…" Again we have a target market hinted at and a clear pain they would likely be willing to PAY to get rid of.