Chris Sacca invested in Twitter, Kickstarter, Uber, Twilio, and Instagram back when no one knew any of these companies that well. Yet, a couple of years later, they are companies with hundreds of millions of users raking in millions of dollars a year. Chris Sacca is probably one of the most renowned angel investors in Silicon Valley and the greater world of startups. Investors who are getting into the game want to be like him; to have that much foresight to make the right investments.
Chris Sacca on the importance of saying “no”
Startups that get passed on by Chris Sacca leave in worry wondering whether that is a sign of a big storm. This is because Chris has grown from investing in hundreds of startups when he got started, to investing in a few every other time after learning from some bad investments. He advocates for the importance of saying “No” most of the time. This is a good lesson for anyone getting into the startup investment field. Saying no to deals most of the time gives you time to go and think about it. If you change your mind, you could come back and say “yes” to the startup founders. However, if you say yes first it is very hard to go back on that and say no, because it affects your trustworthiness and credibility.
He has always wanted to be making deals. Before going to college, he knew he wanted to be at the table where deals are signed; so he conveniently got himself a Georgetown Law degree. Later after working as an associate for a few years, he was hired at Google to help with mergers and acquisitions. This helped him build up the capital he would need to start his own venture capital fund now known as Lowercase Capital. For several years since 2010, he has served as the founder and sole proprietor of his venture fund until 2017 when he retired from investing in startups and hired Matt Mazzeo to help direct the fund.
From starting to invest in startups using his own money in the early 2000s to appearing on Shark Tank for a number of episodes, there is a lot of information and pieces of advice that Chris Sacca throws out there for startups. He has appeared on several podcasts including one by Tim Ferris, author of the 4-hour workweek and Tribe of Mentors.
One of Chris Sacca’s most interesting philosophies involves figuring out how to get in the room.
Getting into the room
When he started studying law, he wanted to be in the rooms where deals are made. Even as he began his angel investing career, his biggest worry was “how do I get in the room with 5 people who are the best in this?”
Henceforth, he committed his time, money, and sweat to ensure that he would become as good an investor as he could be so that he could get into rooms with angel investors who were as good as him.
If you can get into a room with the best in the business, what you do in the room will be important. However, getting into the room is more crucial because most of the time things work out for good after that.
This concept can be applied in almost every area of life for startups. As a founder, if you are looking to get into a room where Chris is sitting together with Mark Cuban and other billionaires, you can get funding or advice that propels you to the next spot. If you are looking to get featured in the press as a startup so that you can make your story or groundbreaking idea known, you have to look at the 5 best media outlets in the field and figure out how to get in.
Chris’ Guide to PR and Marketing for Founders and Entrepreneurs
In this day and age people are so intent on changing themselves so that they can fit in. Likewise, businesses are continually losing their voices in favor of what is trendy, Chris advises startups to stay authentic. Even if they were weird, it’s important to stay weird. Authenticity means that you stand for something, and you have chosen this vision or goal for as long as you are in the business. It shows that you trust in your core beliefs and are deeply rooted in them. It also helps you build a brand identity that is known and easy for your customers to recall.
Investor vs Startup definition of success
It is highly likely that as a startup you will get to the point when you are looking for funding to boost your company in various ways. When you get to this point, do not take investor money without ensuring that your startup’s definition of success is similar to the investor’s definition of success.
Some startups have had to suck up to investors and begin to take direction from these investors on how the company should run, and what goals or objectives should be achieved. Oftentimes, these directions absolutely contradict the beliefs of the founders and in most cases the entire team. Such disagreements lead to negative work environments and feelings of defeat. They also cause the team to lose motivation.
How to avoid losing sight of the vision you built your startup with
To avoid instances like these, Chris says that your goals and the goals of the investors should be the same. It’s true that there may still be disagreements in the methods used to reach those goals. Nevertheless, it is better to disagree on the ways to reach there than to disagree on the goals.
Lifestyle businesses, as Chris advises, usually have bad luck with angel investors. These businesses are usually not easily scalable. They rely on particular demographics and a set of people. For instance, fitness centers or gyms are not very scalable as say, an app or SaaS product. They are not very attractive to angel investors because it is hard to predict what the exit would be if you opened many in several locations. Such founders should stick to their goal, and expand organically if investments are not forthcoming. While they are not as scalable as web applications or software, these businesses usually make more than enough to run themselves and earn a profit.
Chris hates distractions. When he is working, he has earphones on most of the time even when there is no music playing because it prevents people from distracting him incessantly. Additionally, his desk is always clear of papers, printers, devices, or anything at all except his laptop.
“Put your phone on “do not disturb” mode. You will not miss anything,” he says.
The point is to ensure that you are putting your focus where it needs to be. You can get back to incoming calls, emails, or notifications later- after you are done with your work for the day, or after the 3 hours you needed to get something done.
We live in a world that is more full of distractions today than ever before. Previously, you would need to wait for a particular time to get your letters, or maybe have the fax machine distracting you every once in a while. Today, computers, emails, social media, mobile apps, and portable devices have become the nemesis of the office environment.
Startup teams need to embrace the new digital world, but also find ways to ensure their teams focus on what needs to be done.
Build a product with heart
We are all looking to build successful businesses. Anyone in the world would want to have a business that brings in money and makes them rich.
When Sacca started investing, sometimes he would put his money into such businesses. While they turned out to make profits and returns on the investment most of the time, they were not very satisfying. As a result, he went looking for companies that were building products with strong problem-solving drives. He began to look for products that were making a difference in how people live their lives.
That is how he got to invest in Uber, Instagram, Twitter, Twilio, and Kickstarter. All these products have become pioneers in their fields. All of them have changed how people run their lives.
Build a product to make a difference in the world; not just for the sake of profits. Build a business that has a soul and deep-seated beliefs and goals.
Face bad times with relaxation
Startups have the roughest of days. Chris Sacca knows this too well. He has invested in a few failed startups especially when he was new in the business. He felt really bad when they failed. Needless to say, the startup founders felt even worse.
Knowing this, he advises founders and entrepreneurs to always remember that even on the toughest of days, at the end of the day will come and they will be in the comfort of their beds. That might not sound very soothing, but it should be. After all, there is no person who doesn’t look forward to a night in their bed after a rough day.
This is all to say that no days are entirely rough. Even bad endings or exits in businesses are not the end of everything. Something bright shines from somewhere even though it might just be your bed.
If you are not all in, you are out
In the few episodes we have seen of Shark Tank where Chris was featured, he would occasionally say no to deals because he wasn’t going to be fully committed to them.
At some points in his investing, he has actually shown up for work in the startups he has invested in a couple of hundred times. Even with his already busy schedule, he finds plenty of time to commit and dedicate to the ventures he is part of.
According to Chris, either you are all in or you are out. There is no balance, no two ways, no one foot in one foot out, and no part-time commitments. Full-time dedication is what a company requires for it to be successful. Startups sometimes even need more than that.
Commit to your idea if you want to turn it into a reality. Speaking of ideas, he also has something to say about that.
Ideas are cheap
“Ideas are cheap. Execution is everything,” he usually says.
I would also add to that and say “Ideas are cheap. Everyone gets them.”
If you want to turn your idea into a business, you have to wake up and do something about it. There is no shortcut. You have to execute with a plan. Otherwise, the idea just remains an idea, no matter how life-changing it sounded.
The person who wakes up and gets something done about their idea every day is better off than 99% of the people around him who do nothing about their ideas.
Hire a technical co-founder
There are many platforms that have made it easy to meet the co-founder of your choice. However, Chris advises that the best strategy of all is to go and hang out where the software engineers hang out.
Attend hackathons and go to software or programming events. The best way is to go out and network with people. Only when you do that will you get the best fit.
Therefore, if you want to build a business and do not have the technical skills, go out there and network. You might meet a great co-founder to work with.
Craft a great pitch
If you want to market yourself well, your pitch has to be the best in the game. If you were given two minutes to pitch your product, would you be able to win over your listener, or that angel investor?
Crafting a proper pitch goes a long way in getting attention from investors and the press. Journalists send many emails to their trash because they just didn’t get what these companies did. Don’t let your outreach emails be part of someone’s trash folder.
For the best pitch, Sacca advises entrepreneurs to be confident with their numbers. Most of all, they need to be confident about their goals for the company. Highlight the problem and show how your company is solving that problem. After that, show how you intend to scale and take pride in the numbers no matter how big or small. Finally, be very specific about your ask. Don’t request an ambiguous figure or a range of a sum of money. Go straight to the point and ask for the $100k or $ 1 million with conviction.
Except for the money part, these tips also apply to the outreach email pitches sent to the press when looking for media features.
Customers look for proof before buying a product. Investors look for proof of business before writing the cheques. Journalists look for proof of impact before featuring your story in media outlets.
The whole world needs proof. And essentially, the point of your startup in its early days is to garner as much proof as it can.
Gather social proof in form of reviews, testimonials, comments, and customer feedback. Get as much of this as you can get, and sell as many products as you can. Ensure you have proof of business for that investor, proof of workability for that journalist, and testimonials for that prospective client.
Choose which problems to solve
The world has so many challenges and problems. These include food, water, global warming, floods, earthquakes, and diseases like cancer. There are countless problems you could solve in a tiny segment of the market or in a bigger one.
However, it is important to solve problems where people are already paying to get solutions. Do not be the entrepreneur who is trying to solve a problem where everyone is getting an alternative solution for free.
If people are already paying for another solution, there are high chances that they might want to pay for yours. On the other hand, if they’re getting a similar solution for free, you can’t reasonably expect them to pay for yours.
Do not aim to be average
To qualify as a startup to get into Chris’ investment portfolio, you have to be an entrepreneur who is not aiming to be average. You cannot afford to be mediocre either.
It is a go big or go home kind of scenario. Go big on solving people’s problems, go big on the income, go big on getting rich, and go big on your story. There is no room to be average.
Startups have to learn to push the limits. If you want to work together with Sacca, you have to be prepared to go all out.
Would you like to add anything more to this story? Let us know in the comments section.
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