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8 tips for founders trying to raise their first round of venture capital
If you’re an avid TechCrunch reader, someone who loves to absorb endless startup profiles and pore through fundraising stories, you might think raising venture capital is easy. In reality, it’s very, very difficult and not the best source of capital for most businesses.
For startups hoping to scale far and wide as fast as possible, VC may be the right fit. To shed light on the process of raising equity capital from venture capital firms and provide some exclusive tips and tricks for Extra Crunch subscribers, we sat down with three experts on the subject. Below are the top pieces of advice from Charles Hudson, founder and managing partner of Precursor Ventures, Redpoint Ventures general partner Annie Kadavy, and DocSend founder Russ Heddleston. The following has been lightly edited for length and clarity.
1. First, make sure your company is fit to raise venture capital.
Charles Hudson: I think venture capital, it’s really a specialty type of capital. It’s really for companies that have the aspiration to grow really quickly, to build really large businesses … If you’re not a company that needs to grow quickly, venture capital might not be the right source of capital for you. There has to be a really big prize at the end of the journey.
2. Raise capital early if you’re stressing about small costs or fretting competition
Russ Heddleston: If you’re thinking about whether or not to raise, there are a couple of reasons that I will often advise people to raise early. One is if they’re really stressing about buying a whiteboard for their office, or like some something of relatively small cost. If you think it could be a big company, and you’re stressing about small things, raise money and buy the whiteboard, hire the additional person and get back to what you should be doing, which is running your business and growing it quickly.
The other thing is if you ask the question, ‘is there a competitor I don’t know about?’ If you heard tomorrow, that competitor just raised $2 million, or $5 million or $10 million, how nervous would that make you? For some businesses, you’re like, I don’t really care, it’s a services industry, it’s not a winner take all market. And other times, you’re like, oh, I’d be really nervous. So if either those apply, that’s a good reason to make a compelling case to someone like Charles.
The number one thing you can do to get a VC’s attention is make [your pitch] really simple. Precursor Ventures’ Charles Hudson
3. It’s OK to take a salary
Annie Kadavy: I’d be hard-pressed to think of an example where a founder is not paying themselves, the question, though, is how much? You’re paying yourself enough so that the basic costs of life and running your business are not giving you anxiety, because as an early stage investor one of our primary roles is to try and keep the baseline stress as low as it can be, because it’s really hard to go build a company.
If a founder is coming in at the Series A and they say I’m going to go pay myself $300,000, we might be like, well, that doesn’t really feel right, shouldn’t you want to put some of that money into the company? The ranges I’ve seen are anything from $60,000 up to probably $120,000 at the Series A, or maybe $150,000. Then, as the company grows and as the balance sheet grows and it’s de-risked, your salary as an executive at the company will scale with that.
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Get your pitchdeck analyzed by top investors and experts at Disrupt SF next week
…And see other pitchdecks get the teardown treatment from top early-stage investors Charles Hudson (Precursor Ventures), Anu Duggal (Female Founders Fund) and Russ Heddleston (CEO of DocSend). If you’re attending Disrupt, you’ll get an email with instructions on how you can submit your deck and if you are selected, you can get feedback directly from them in a workshop setting.
If we use your deck, we’ll also provide you a free ticket to any TechCrunch event of your choosing next year.
This is part of a new project to make Disrupt even more focused on founders. We’re already offering the Extra Crunch stage, where you’ll get lots of time to ask questions yourselves in addition to hearing their interviews. For this additional project, we’re setting up workshops with experts on our Q&A stage where they’ll be going over the actual founder problems.
These folks have seen everything, so they will have a gut sense for how generalized advice can be applied to your specific team and market — the nuance that can compellingly explain your strengths and weaknesses. Hudson and Duggal have written some of the first checks for some of the most interesting startups today. The Athletic, Clearbanc, Incredible Health, Sudo and Pico are names you may recognize from the Precursor portfolio; Tala, BentoBox, Thrive Global and WayUp are a few of the many on Female Founder Fund’s list.
Heddleston, meanwhile, is a repeat founder who now has some of the best insight into trends in funding through his current company, DocSend . As you may have read on TechCrunch already, the company provides document management for a large portion of startup founders out there, allowing them to share anonymized data with DocSend about how investors are reading their pitch decks. He’ll provide a data-driven founder perspective.
Attendees will be notified via email on how to submit their pitch deck. If you want to submit your deck for review, get your pass to the event here and we’ll send out an email with instructions on how to submit your deck.
Please note: The workshop is open to conference attendees and is officially on the record. Other investors and members of the media may be in the workshop and see what you have in your deck, so plan accordingly.
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At TechCrunch Disrupt, insights into key trends in venture capital
At TechCrunch Disrupt, the original tech startup conference, venture capitalists remain amongst the premier guests.
VCs are responsible for helping startups — the focus of the three-day event — get off the ground, and, as such, they are often the most familiar with trends in the startup ecosystem, ready to deliver insights, anecdotes and advice to our audience of entrepreneurs, investors, operators, managers and more.
In the first half of 2019, VCs spent $66 billion purchasing equity in promising upstarts, according to the latest data from PitchBook. At that pace, VC spending could surpass $100 billion for the second year in a row. We plan to welcome a slew of investors to TechCrunch Disrupt to discuss this major feat and the investing trends that have paved the way for recording funding.
Mega-funds and the promise of unicorn initial public offerings continue to drive investment. SoftBank, of course, began raising its second Vision Fund this year, a vehicle expected to exceed $100 billion. Meanwhile, more traditional VC outfits revisited limited partners to stay competitive with the Japanese telecom giant. Andreessen Horowitz, for example, collected $2.75 billion for two new funds earlier this year. We’ll have a16z general partners Chris Dixon, Angela Strange and Andrew Chen at Disrupt for insight into the firm’s latest activity.
At the early-stage, the fight for seed deals continued, with larger funds moving downstream to muscle their way into seed and Series A financings. Pre-seed has risen to prominence, with new funds from Afore Capital and Bee Partners helping to legitimize the stage. Bolstering the early-stage further, Y Combinator admitted more than 400 companies across its two most recent batches,
We’ll welcome pre-seed and seed investor Charles Hudson of Precursor Ventures and Redpoint Ventures general partner Annie Kadavy to give founders tips on how to raise VC. Plus, Y Combinator CEO Michael Seibel and Ali Rowghani, the CEO of YC’s Continuity Fund, which invests in and advises growth-stage startups, will join us on the Disrupt Extra Crunch stage ready with tips on how to get accepted to the respected accelerator.
Moreover, activity in high-growth sectors, particularly enterprise SaaS, has permitted a series of outsized rounds across all stages of financing. Speaking on this trend, we’ll have AppDynamics founder and Unusual Ventures co-founder Jyoti Bansal and Battery Ventures general partner Neeraj Agrawal in conversation with TechCrunch’s enterprise reporter Ron Miller.
We would be remiss not to analyze activity on Wall Street in 2019, too. As top venture funds refueled with new capital, Silicon Valley’s favorite unicorns completed highly anticipated IPOs, a critical step toward bringing a much needed bout of liquidity to their investors. Uber, Lyft, Pinterest, Zoom, PagerDuty, Slack and several others went public this year, and other well-financed companies, including Peloton, Postmates and WeWork, have completed paperwork for upcoming public listings. To detail this year’s venture activity and IPO extravaganza, David Krane, CEO and managing partner of Uber and Slack investor GV, will be on deck, as will Sequoia general partner Jess Lee, Floodgate’s Ann Miura-Ko and Aspect Ventures’ Theresia Gouw.
There’s more where that came from. In addition to the VCs already named, Disrupt attendees can expect to hear from Bessemer Venture Partners’ Tess Hatch, who will provide her expertise on the growing “space economy.” Forerunner Ventures’ Eurie Kim will give the Extra Crunch Stage audience tips on building a subscription product, Mithril Capital’s Ajay Royan will explore opportunities in the medical robotics field and SOSV’s Arvind Gupta will dive deep into the cutting-edge world of health tech and more.
Disrupt SF runs October 2-4 at the Moscone Center in the heart of San Francisco. Passes are available here.
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Afore Capital raises second pre-seed venture capital fund
As expectations from seed investors intensify, a new stage of investment has established itself earlier in the venture-backed company life cycle.
Known as “pre-seed” investing, one of the first legitimate outfits to double down on the stage has refueled, closing its second fund on $77 million.
Afore Capital’s sophomore fund is likely the largest pool of venture capital yet to focus exclusively on pre-seed companies, or pre-product businesses seeking their first bout of institutional capital. In many cases, a pre-seed startup may even be “pre-idea,” yet to fully incorporate. While some funds are happy to invest that early, Afore seeks slightly more mature companies.
Afore invests between $500,000 and $1 million in nascent startups. As it kicks off its second fund, founding partners Anamitra Banerji and Gaurav Jain tell TechCrunch they plan to lead all of their investments.
We have the opportunity to build a firm that defines a category. – Afore founding partner Anamitra Banerji
Standouts in Afore’s existing portfolio include the no-fee credit card company Petal — which has raised roughly $50 million to date — mobile executive coaching business BetterUp, childcare information platform Winnie and Modern Health, a B2B mental wellness platform.
Afore portfolio companies have raised more than $360 million in follow-on funding, with an aggregate market cap of $1.5 billion, Jain, the founding product manager at Android Nexus and former principal at Founder Collective, tells TechCrunch. “These are high-quality teams with high-quality projects and ideas.”
Jain and Banerji — a founding product manager at Twitter and former partner at Foundation Capital — began raising capital for Afore’s $47 million debut fund in 2016. Since then, the landscape for seed investing has shifted. Early-stage investors have begun funneling larger sums of capital to standout teams at the seed, while billion-dollar venture capital funds set aside capital for serial entrepreneurs working on their next big idea. As a result, deal sizes have swelled and deal count has shrunk simultaneously.
“Pre-seed has replaced seed in the venture ecosystem,” Banerji tells TechCrunch. “We saw this early as a result of both of us having been at funds. We knew that this was going to be a massive category just like seed was before it. Now we think it’s clearly here to stay and we have the opportunity to build a firm that defines a category.”
Since launching the firm, the pair explain they’ve noticed more and more founders explicitly stating that they are in the market for a pre-seed round, a statement you wouldn’t have heard as recently as two years ago.
This is a result of Afore’s efforts to legitimize the stage through investments and programming, including its annual Pre-Seed Summit. Though Afore is certainly not the only VC fund focused on the earliest stage of startup investing — other firms deploying capital at the stage include Hustle Fund, which closed an $11.8 million debut fund last year, plus the $20 million immigrant-focused pre-seed fund Unshackled Ventures and the predominant seed and pre-seed stage firm Precursor Ventures, which announced a $31 million second fund earlier this year.
In the past year alone, more than $200 million has been dedicated to the pre-seed stage, with at least nine new funds launching to nurture early-stage startups.
More and more firms are setting up shop at the pre-seed stage as competition at the seed stage reaches new heights. As we’ve previously reported, monster funds are becoming increasingly active at the seed stage, muscling seed funds out of top deals with less dilutive offers. While the pre-seed stage, for the most part, remains protected from competition at the later stage, these firms still have to compete.
“Nobody wants to lose sight of a deal, so they are willing to toss small amounts of capital very early behind interesting founders,” Jain said. “But frankly, we aren’t sure if it’s good for a company to raise that much capital that early in their life cycle.”
Working with a fund that isn’t passionate about what you are building or familiar with the plights of the stage of your business is terrible for founders, adds Jain. Pairing with a focused fund like Afore, on the other hand, allows for “incentive alignment.”
Afore invests across all industries, preferring to back startups in categories “before they are categories.”
“What we are looking for is deep authenticity and passion around the product they are building,” says Banerji. “Ideas on their own aren’t enough. Founder resumes on their own aren’t enough. While we do care about all of those aspects, we get crazy about their clarity of thought in the short term.”
“We don’t take the point of view of ‘here is some money, it’s OK to lose it,’ ” he adds. “For us to invest, the founder must be all in. And we generally don’t invest in celebrity founders; we are going after the underdog founder.”
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Holloway launches in-depth startup guides, aims to rewrite publishing with $4.6M from NYT, tech VCs
Founders need to get smart quickly about the many nuanced aspects of building a company, from understanding weird language in a big term sheet to hiring a key software developer.
But the best practical advice is scattered across blog posts, podcasts and books, and it gets outdated quickly as industry norms evolve. Even experienced founders spend a lot of time searching and still end up with the wrong information.
Holloway has an ambitious solution: Today, it’s launching a library of book-length online guides about work, written and regularly updated by teams of industry experts.
The flagship title is called Raising Venture Capital, which features 340 thoughtfully organized pages in 15 sections and three appendices on all aspects of the funding process. Designed for easy reading and easy searching in spite of the information density and length (it has a 14-hour total read-time), the guide could become a go-to resource for the startup world.
Some sections will be most appealing to newer founders, like the part on whether to raise VC in the first place. Other portions are relevant to even the most experienced serial entrepreneurs — like how to think through potential drag-along and pay-to-play provisions, full-ratchet anti-dilution clauses and other tricky terms one might find. Did you know that investors can include more than 20 types of conditions in a term sheet? Do you know how to handle each one?
With $4.6 million in seed funding from a combination of top tech investors and The New York Times that it is also announcing now, Holloway intends to expand to cover the wide variety of work-related topics about startups and technology, and beyond. The next guide, currently in progress, will be on technical hiring and recruiting. A relatively shorter sample guide on equity compensation is already available for free.
The goal is to democratize access to how the best are doing business today (and take on traditional publishing).
“We didn’t just do this for Silicon Valley and New York,” and other startup-heavy cities, co-founder and chief executive Andy Sparks tells me, “we did this for people in cities like Columbus and Atlanta where startup communities are growing, but knowledge is harder to come by.”
The lawyers and other experts who author and edit the guides could otherwise cost more than $800 an hour, he explains, and won’t have time for many clients in the first place. (The company estimates there are $40,000 worth of legal fees in the VC guide.)
Sparks, previously the co-founder of analytics platform Mattermark, is also the lead author on “Raising Venture Capital” — along with another 20 or so contributors, like Brad Feld of the Foundry Group, and Darby Wong, co-founder of the popular legal document startup Clerky . The lead author of the technical recruiting guide is Ozzie Osman, former head of product engineering at Quora, and a main contributor to it is Aditya Agarwal, the former CTO of Dropbox.
The current pricing is $100 per guide forever (including future updates), with a discount available if you pre-order. Sparks says this may change to ensure the guides stay affordable, as well as cover the very real costs of producing this quality of content.
The big-picture bet is that the startup market is large enough to create strong demand for the initial guides, in the same way that many successful tech startups of this decade have started out serving companies like themselves. Some of the topics that Holloway is working on, like tech recruiting, naturally blend in with the rest of the business world and those wider audiences. Eventually, through expansion into broader work-related topics, Holloway’s online-first approach could compete against the existing book publishing industry at a bigger scale.
This is why the company is investing heavily in its software, in addition to its content. The interface was inspired by the experiences of co-founder Joshua Levy, a veteran technologist who found himself writing popular third-party guides on GitHub about how to use common services like AWS. Features in the software include search results that break out sections and sources, a detailed left-hand index view, a hyperlinked in-house glossary of hundreds of key terms, notes of warning and importance from experts and numerous links to third-party sources.
“We decided to invest in a digital reading experience that makes reading book-length content in a browser a great experience,” Sparks said, “which also means you will land on the right guide when you go hunting for answers on search engines like Google .”
Holloway co-founders Joshua Levy (left) and Andy Sparks (right)
You’ll even see a number of links to TechCrunch and Extra Crunch articles in the guides. Sparks tells me that the company plans to continue to link to a wide variety of sources in the future — so when guest columnists write something great and practical on Extra Crunch, we will help them to get this work featured in Holloway as well. The company is also accepting a variety of contributor types for its guides going forward, which you can find more details about here.
(On that note, we’ve published an excerpt from Holloway’s “Raising Venture Capital” guide, about pro rata terms and issues, on Extra Crunch. Subscribers can go check it out here, and find a special discount to Holloway inside.)
Sparks is careful to say that the current guides are not literally finished, despite all the effort put into them so far. And indeed, they will never be. Holloway is named after the “hollow ways” seen in the European countryside, where well-used roads have gradually sunk through hundreds of years of regular use. The company intends for its guides to be the paths that people who build companies tread year after year, where the knowledge that accumulates from the usage of many forms the clear direction that those in the future take.
The company’s investors include NEA, South Park Commons, The New York Times Co., Precursor Ventures and Comcast Ventures as well as Day One Ventures, Social Capital, Abstract Ventures, 415, Royal Bank of Canada, Lightspeed Ventures, & Full Tilt Capital. Angels include Leo Polovets, Lee Linden, Raj De Datta, Neil Parikh, Mikhail Larionov, Danielle & Kevin Morrill, Srinath Sridhar, Dennis Phelps and Kevin Lee.
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Annie Kadavy, Russ Heddleston and Charles Hudson will tell us how to raise seed money at Disrupt SF
Just about anyone can come up with a good idea. Fewer people can execute on that idea and turn it into a prototype or MVP. But there is still one final challenge for most entrepreneurs that can prove challenging.
How do you secure that initial seed capital and take your idea to the next level?
At Disrupt SF in October, Redpoint’s Annie Kadavy, DocSend’s Russ Heddleston and Precursor’s Charles Hudson will sit down together and chat it out on the Extra Crunch stage.
Kadavy, Heddleston and Hudson can offer a unique perspective on the process of early-stage fundraising.
Kadavy joined Redpoint in 2018 after a four-year stint at Charles River Ventures, where she sourced or led deals with ClassPass, Cratejoy, DoorDash, Lauren & Wolf and Patreon. She’s also spent time within firms like Bain & Company, Warby Parker and Uber Freight. She understands the importance of operational experience, and knows better than most how to take a company from point A to point B.
Heddleston, co-founder and CEO of DocSend, has a completely different perspective. DocSend is used to securely send and track documents, and one of the most prevalent documents on the platform happens to be pitch decks. Heddleston can tell us about what characteristics get (and keep) the attention of investors, as well as what turns them off.
Hudson, managing partner at Precursor Ventures, has been on both sides of the conference room table. He founded Bionic Panda Games, which was acquired by Zynga in 2010. He moved on to SoftTech VC (now Uncork Capital), where he spent eight years working on seed-stage investments in the consumer internet space. At Precursor Ventures, he’s continuing to invest in early-stage companies that are tackling problems in new markets.
These three each have their own perspective on how to get the attention of investors and how to turn a conversation into a cap table.
“How to Raise Your First Dollars” is but one of many panels that will take place on the Extra Crunch stage at Disrupt SF. The Extra Crunch stage, much like Extra Crunch on the web, is meant to serve as a resource for aspiring entrepreneurs and VCs, offering practical, step-by-step advice on how to get to where you’re going.
We’re thrilled to have Kadavy, Heddleston and Hudson join us at the show.
Disrupt SF runs October 2 – October 4 at the Moscone Center in SF. Tickets to Disrupt SF are available here.
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Where top VCs are investing in media, entertainment & gaming
Most of the strategy discussions and news coverage in the media and entertainment industry is concerned with the unfolding corporate mega-mergers and the political implications of social media platforms.
These are important conversations, but they’re largely a story of twentieth-century media (and broader society) finally responding to the dominance Web 2.0 companies have achieved.
To entrepreneurs and VCs, the more pressing focus is on what the next generation of companies to transform entertainment will look like. Like other sectors, the underlying force is advances in artificial intelligence and computing power.
In this context, that results in a merging of gaming and linear storytelling into new interactive media. To highlight the opportunities here, I asked nine top VCs to share where they are putting their money.
Here are the media investment theses of: Cyan Banister (Founders Fund), Alex Taussig (Lightspeed), Matt Hartman (betaworks), Stephanie Zhan (Sequoia), Jordan Fudge (Sinai), Christian Dorffer (Sweet Capital), Charles Hudson (Precursor), MG Siegler (GV), and Eric Hippeau (Lerer Hippeau).
Cyan Banister, Partner at Founders Fund
“In 2018 I was obsessed with the idea of how you can bring AI and entertainment together. Having made early investments in Brud, A.I. Foundation, Artie and Fable, it became clear that the missing piece behind most AR experiences was a lack of memory.
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Morphin instantly Deepfakes your face into GIFs
Want to star in your favorite memes and movie scenes? Upload a selfie to Morphin, choose your favorite GIF and your face is grafted in to create a personalized copy you can share anywhere. Become Tony Stark as he suits up like Iron Man. Drop the mic like Obama, dance like Drake or slap your mug on Fortnite characters.
Now after three years in stealth developing image-mapping technology, Morphin is ready to launch its put-you-in-a-GIF maker. While it might look like just a toy, investors see real business potential. Morphin raised $1 million last summer from Betaworks, the incubator that spawned Giphy, plus Founders Fund, Precursor, Shrug Capital and Boost.vc’s accelerator.
Elon Musk as Iron Man
“We believe in the future you’ll be able to be the main character in your own film. Imagine a super hero movie where you’re the main protagonist?,” co-founder Loic Ledoux asks. “That sounded like science fiction a few years ago and now with AI and computer vision we definitely see our tech going there.”
Ledoux also wants to reclaim faceswaps as something fun rather than a weapon for misinformation. “Deepfakes brought something pretty negative to computer vision. But it’s not all bad. It’s about how you use the tech to give people a new tool for self expressions and storytelling.” And since Morphin re-generates the whole clip from scratch with CGI animation, they look right at a glance, but clearly aren’t manipulated copies of the original video designed to fool anyone.
Kanye performs magic
Morphin started three years ago with the intention to build personalized avatars for games and VR so you could be a FIFA soccer player or Skyrim knight. Ledoux had started a 3D printing company to explore opportunities in scanning and modeling when he saw a chance to connect your real and virtual faces. He teamed up with his co-founder Nicholas Heriveaux, who’d spent 13 years working on 3D tech while modding games like Grand Theft Auto to insert his avatar and assets.
What they quickly recognized was that “People were just reacting to themselves on the screen,” ignoring the gameplay, Ledoux recalls. “Being able to see yourself as a hero was the underlying sentiment, so we focused on video completely.” Recognizable GIFs became its preferred medium, as they combine familiarity and the ability to convey complex emotions with a template that’s easy to personalize so they stand out.
Morphin’s tech no longer requires 3D scanning hardware and it works with just a regular selfie. You just snap a headshot, select a GIF from its iOS or Android app’s library and a few seconds later you have a CGI version of yourself in the scene (with no watermark) that you can export and post. “We wanted it to be super straightforward because we wanted people to relate to the content,” Ledoux notes. Over 1 million scenes have been created by 50,000 beta users, and each time a celebrity shares one of the GIFs Morphin has been sending them for marketing, scores of their followers demand to know which app they were using.
Morphin’s nine-person French team will have to keep innovating to stay ahead of avatar-making competitors like the ubiquitous Snapchat Bitmoji, Genies, Moji Edit and Mirror AI. Facebook, Microsoft and Google all have launched or are building their own avatar creators. But these typically live as 2D stickers or 3D AR animations you overlay on the real world. By using GIFs as a canvas, Morphin takes the pressure off your visage looking perfect and instead emphasizes the message you’re trying to get across.
The challenge will be for Morphin to become a consistent part of people’s communication stack. It’s easy to imagine playing with it and posting a few GIFs. But iconic new GIFs don’t emerge each day and without a social network to stay for, Morphin is at risk of becoming merely a forgotten tool. The app might need TikTok-style challenges like submitting the best personalized GIF to match a prompt or a GIF browsing feed to keep people coming back.
Turning Donald Glover into Jay Gatsby
Morphin isn’t racing to monetize yet, but sees a chance to sell longer premium video scenes à la carte or as an unlimited subscription. Ledoux eventually hopes to unlock new forms of storytelling beyond existing GIFs. There’s also a chance for Morphin to highlight sponsored clips from upcoming movies or TV shows. “In the long-term we’re more interested in the analogy of Lil Miquela and how people are interacting with digital characters,” Ledoux explains, citing a virtual pop star whose developer Brud recently raised at a $125 million valuation.
One of the most exciting things about Morphin is that it will allow people to take the spotlight no matter how they look. Often times certain races, genders and looks are unfairly excluded from starring in today’s most popular media. But Morphin could let the underrepresented take their rightful place as stars of the screen.
Your faithful author Josh Constine dropping the mic like Obama
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At Sounding Board, an executive coaching startup, the coaches get coaching, too
Everyone could use an executive coach — even executive coaches.
Such is the thinking of Christine Tao and Lori Mazan, co-founders of Sounding Board, a two-year-old, San Francisco-based marketplace focused on leadership coaching that has so far raised $1 million in seed funding led by Bloomberg Beta, with participation from Precursor Ventures and numerous angel investors.
Some of these investors are people Tao met while an SVP at the mobile advertising startup TapJoy. TapJoy is also where Tao met Mazan, who has been helping companies develop their talent for more than 20 years. “Lori started out coaching our CEO, then coached me when I got promoted into the executive management team,” says Tao.
In fact, Mazan is continuing to coach some of the roughly 30 executive coaches who work with Sounding Board as contractors, and she isn’t alone, says Tao, noting that many of the startup’s senior coaches work with more junior coaches. (Sounding Board’s eight full-time employees also receive coaching.) “We definitely walk the walk,” says Mazan.
They also talk the talk, as we discovered in chatting with Tao and Mazan earlier today about the importance of coaching — and why more employers would be silly not to take advantage of it to help a range of people within their organizations.
TC: There are so many coaching startups. How do you distinguish Sounding Board from everything else out there?
CT: We combine best-in-class coaches with a tech platform that’s scalable and affordable and outcome-oriented. It’s also a lot more cost-effective compared with other coaching platforms.
TC: How much more affordable?
CT: A weekend of traditional executive coaching in the Bay Area costs between $25,000 and $30,000. We’re about a tenth of that price, and instead of sending someone to a workshop for a couple of days, you pay the same for six months of training with us.
LM: We’re modeled after traditional coaching engagements, including at Chevron, Genentech and a lot of other big oil and manufacturing and biotech companies where I’ve worked over the years. What we’ve done is take what worked at the top of the house and just bring it down to lower managers and senior leaders.
TC: You work with both big and small companies — from the Japanese giant Rakuten to venture-backed Quantcast. Which is the easier sale?
CT: Hah. Both venture-backed companies and bigger enterprises go through huge periods of growth and they elevate folks into leadership roles in which they don’t have experience. High-growth startups innately feel the pain of having talented folks in roles for which they have no skills. On the other hand, public companies often are easier, given that they have a budget and they’re used to investing in training and developing employees.
TC: Do you tend to coach one person at a time or do you do your coaching in batches?
CT: We typically teach a cohort over a six-month period, where the employees are meeting with a coach who has been chosen based on their particular needs and learning styles and [with whom they interact] via video or phone and who they engage any time through Slack or email. When a company on-boards with us, we collect a lot of data around key leadership values and goals, including from managers — they let us know what goals they have in mind for a person’s leadership development. And that person [who will be coached] provides us insights into their personal goals as well.
TC: For people who haven’t had coaching, it all sounds awfully squishy. What are some concrete ways in which the coaching will change based on the individual?
LM: We have 12 developmental areas, and each is personalized for an individual. One of the most popular has to do with managing up and across an organization, meaning we work with people wanting to have influence with their manager and their peers and maybe even their manager’s peers across the organization.
Every approach will be different, including based on whether the person is working in a very high-pressure, fast-paced environment or a more slow-paced and amiable one. It’s also very different if you’re in engineering versus sales, for example. Let’s say you’re in sales and you want to influence your boss. You might need to paint a bigger picture and give examples around how your vision will improve the quota you need to make. On the engineering side, it’s likely that you’ll have to be very detailed.
CT: When Lori coached me, we worked on language I used when talking with one of my CEOs, down to incredibly minute details around the order in which I presented ideas. It made a huge difference. Whereas the feedback was that this person felt like I would dump my problems on him, by instead providing recommendations up front to him and offering many fewer details, he thought I was being more “solutions oriented.” The reality was that I was mostly sharing the same things.
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