A Product Market Fit Show | Startup Podcast for Founders
00:13:54 · Pablo Srugo, Lee Silverstone
[00:13:54] S0: This is the difference between you and I, right? I remember you and I was like that's just a piece of plastic dude. It's literally a 3D printed of plastic that has no value, no function at all. You're like, dude, trust me. [00:14:08] S1: Yeah, and I think the point of that was to show people something tangible. Everyone constantly hears stories from people, but that's hard to do, storytelling in a quick little pitch. If you can visualize things for people and put something in people's hands, they can get tangible with something that's different. It's memorable. I remember showing this guy – I didn't know it was Dave McClure – this smart pin that we had. It was just this piece of plastic I'd printed and put in my pocket. He was like, wow, that's really interesting. How far along are you guys? I was like, yeah, we're raising money. He was like, hey, take my card. You guys should move to San Francisco and come do 500 Startups. I was like, oh yeah. I think I've heard of that before. I had no idea what 500 Startups was. I didn't know who Dave was. Then we walked away, whatever. Everyone was like, what just happened? There was a group. They were like, what just happened? I was like, I don't know. This guy said we should go do 500 Startups. And they were like, what? That's crazy. I was like, I don't. I called Pablo. I was like, do you know what this is? He was googling it. [00:15:12] S0: That’s right, had no idea, no idea.
00:15:12 · Pablo Srugo, Lee Silverstone
[00:15:12] S0: That’s right, had no idea, no idea. [00:15:13] S1: We had no idea. Then, yeah, and anyhow, Dave had his cellphone number on the card. I texted him. I was like, hey man, yeah, I'll take you up on your offer, meet up for a drink later tonight. We ended up having a drink. I think he was smoking a cigar. I thought it was pretty cool. I was like, okay, let's go. Let's go to this fire start. [00:15:28] S0: This guy's legit. [00:15:28] S1: Yeah, he's legit. He's smoking a cigar. And that was it. The next day, we sat down in this little investor area. We hammered out some of the terms. We talked to Shane McLean from LaBarge Weinstein on the phone. He was like, hey guys, go and sign the documents. You guys are going to San Francisco and you're in find a new startup. You're like, cool. And that was it. [00:15:49] S0: Do you remember, and I don't know if this played into that or not, but there was a startup competition at Startup Fest that you won. Do you remember turning down? [00:16:00] S1: Oh, and we turned it down. Yeah, we turned it down, yeah. Yeah, we won the startup competition. We turned it down because we thought the terms were bad or something because we were so full of ourselves. [00:16:12] S0: Just by the way, I just – I'm in Ottawa not doing nothing but taking zero risk. You’re out there pitching this company trying to win competitions, and you win it. I have the audacity to be like, dude, those terms are terrible. [00:16:25] S1: You're like, those terms stink. You're like, those terms are terrible. [00:16:28] S0: We're not taking it.
00:16:28 · Pablo Srugo, Lee Silverstone
[00:16:28] S0: We're not taking it. [00:16:29] S1: It's so funny. I remember being so mad at you. I was like, dude, what are you talking about? Someone wants to give us money, and you're saying no. I was like, how am I going to work with this guy? [00:16:38] S0: It was like 10%, like 2 million cap. And then Harley from Shopify took your side. Do you remember that? He's like, you're right. These terms are too aggressive. [00:16:45] S1: Yeah, he was like, these terms suck. And then there's another story I remember of that too. We went to this private investor area because you're a psychopath. And on the call with Shane, you were like, these terms suck on the safe, or the convertible note with 500 Startups. You wanted to negotiate with 500 Startups and you made me do it. You made me do it. You weren't even there. You just were on the phone and you were like, Lee, these terms are unacceptable, go negotiate. I'm 21 years old, idiot. I'm sitting in this investor area and all of the team of Real Ventures is sitting there. All of the managing partners of Real Ventures are sitting there. It's me and Dave, and they're sitting right next to us. I'm this kid. I don't even understand the terms I'm negotiating, but I memorized what you and Shane told me on the phone. Me and Dave McClure are negotiating these terms on the convertible note and he finally gives in or whatever. I don't remember what happens. I think he gets up and walks away. [00:17:42] S0: I think he did.
00:17:42 · Pablo Srugo, Lee Silverstone
[00:17:42] S0: I think he did. [00:17:42] S1: He did give in. He was like, okay, we can accept those changes. He gets up and he walks away. We're walking away. Then the Real Ventures team stops me. They're like, don't go to 500 Startups. We'll make you a competitive offer to come do Family. We're like, no. We're negotiating that, whatever. Why would you go to San Francisco? And you know I forgot that.
00:18:04 · Pablo Srugo
[00:18:04] S0: I'll tell you. Like, you know, so I think there are two things I noticed from there. One is, and I've seen this so many times, the early rounds. The reality is you read a Series B or a Series C, or whatever, you're doing it methodically. You have certain numbers. You're going to go after certain investors. You're going to run a process and people are going to look at real things. When you're raising a pre-seed angel round there's probably nothing there. There's very little true signal. That's just the reality of it. Serendipity plays a huge role because you can't go out and be like, hey, here's a list of 50 angels. I'm going to talk to them. I'm going to run this process. You have no momentum, you have no FOMO, nothing. This idea that you basically let – yeah, you’ve got to do some stuff purposefully. Then serendipity has to play a role. That's why I think ultimately looking back – these networking events or other situations like this can create catalysts. Nobody could have predicted Dave McClure. We already had done Big Let Work getting a bunch of angel investors close to the line where they were like, yeah, it's really interesting. I like you guys. I could do something. There was nothing we could say to be like, okay, now or never, nothing until this catalyst event happened. We had that. Then we got into 500 Startups. I think we'd raised half a million dollars before getting in. Back then, that was a lot of money. Today it's nothing. We were one of the most funded startups in 500 because of that mix of doing the work but then also generating situations where serendipity can help you create this kind of catalyst event.
00:19:30 · Rob Woodbridge
[00:19:30] S2: One of the questions that always comes up, especially at that stage, right, because it's the awkward stage. It is like you're 15, you've never asked a girl out, you've never kissed a girl, whatever it might be. Then you're thrust into the – you are right there trying to do this for the first time without looking like an idiot. You really only have one chance to not look like an idiot in front of an investor at that early stage and really hit on every note that you have to hit for them to be interested or at least show that that they want to work with you. That's ultimately they have the confidence in you. It's that first step. You're right, serendipity. There's old VC in Ottawa from the nineties, Pat DiPietro who invested billions of dollars in in the Ottawa economy in a bunch of startups in that time period. He would always tell me, always, he would say, listen, what you're doing here relies on serendipity, as you said, but it's just called shit luck. It's shit luck, yeah. What happened with Dave McClure is shit luck, but you took advantage of it. You see a lot of startups.