A software entrepreneur who has spent over twenty years starting up Open Source and Web businesses, Sifry has built, managed, got funding and enjoyed huge success. He’s also experienced the lessons failure can bring. He spoke to Memeburn.com from San Francisco.
No ad to show here.
What’s the secret to raising VC funding?
Step 1: Build something fantastically great.
Step 2: Know how to explain it really easily. Practice. Practice. Practice.
Step 3: Build a great team, or have a great team ready to go.
Step 4: Get introduced to investors through trusted intermediaries if possible. If you don’t know any investors, try to get someone who does, get them excited and then let them introduce you.
How do you speak to potential investors?
This is counter-intuitive. When you are talking to a VC, if you are looking for money ask for advice, and if you are looking for advice ask for money. VCs are risk players. You are going for the big win, but you need to present a pretty clear understanding that the money part of it is secondary to the goal, and that you are teachable and are ready to listen to what the market has to say. I don’t think I have seen a successful business that hasn’t pivoted in the products they build, or the customers they have.
What do you ascribe success to? Luck? Competence? Skill?
Yes to all three. I think you have to start out by having a reasonable head on your shoulders. I’m living proof that you don’t have to be the smartest person in the world to be successful. But you do have to have an enormous amount of dedication and gumption. I love the word gumption, because it’s the get up and go that you need every day even when you don’t want to get up.
Success is the ability as well to successfully hold two contradictory ideas without going crazy. This first is that you are going to build something great that people will really love. The second is that you hold the idea your product is terrible, it never works the way it should, and that you have to listen to your customers and users how to fix it. This can drive an ordinary person crazy very quickly.
Then you need a humungous dollop of luck. This helps you get that big deal when you don’t have enough money to make payroll. If you have the gumption to face good and bad, and have a good head on your shoulders, you’ll be prepared when luck arrives.
Lastly, make integrity your golden rule. The core of this is to do what you say and say what you do.
Have you ever failed and what did you learn?
I fail at far more things than I succeed at. I have a litany of mistakes where I have banged my head against things. Mostly these are my own stupid mistakes. However I see failure as nature’s way of teaching you that you must move in a different direction.
What’s your advice to South African start-ups?
Ask your friends, colleagues and family for their advice before you start. This will help you to explain effectively what you do. If they tell you not to go for it, still go for it. Don’t let them hold you back. Take the risk. But listen to what they say, because they could give you valuable feedback on how you can improve things.
If you’re building an online business there are so many free tools and ways to effectively measure what you are going to do. If you don’t build effective measurements into your business you are really holding yourself back. From Google analytics to customer analytics that can continually test and iterate your ideas, there are a host of free or reasonably priced applications that could radically improve your business.
Start with yourself as the product manager and product user – it will give you a clear north star as to what you want to build the business around if you are the customer. If you are not building it with you as a customer make sure you know that business really, really well.
From the outside looking in, you may think the business or industry looks easy, but you may not know enough about the business, ecosystem or economics to build a successful business out of it. If you build a product and you are the customer, at least you’ve built something you really like and can use in the event that it is not successful.
