About Hany

As we begin a new year filled with the promise of more adventure, I'm reflecting on the top 3 highlights that I had last year:

1. Raising capital for my startup from angel investors

I count raising capital as the biggest highlight because as a first-time founder, this is where I experienced the deepest personal learning and growth. I hadn't really been exposed to the tech-startup world, as prior to BreezedocsI was running traditional, service-based, lifestyle businesses. Raising capital for me was therefore a whole new experience. One day, I'll write the entire story of the first 2 years of our start-up (hopefully it's not a post-mortem), but in short, Adrian, Nicholas and Abe bought us a ticket to the game after more than 6 months of running around meeting investors.

It is true what they say though, the first $50,000 is the hardest, and I'm just thankful that we never gave up. (We had another funding event right at the end of the year, which will become public soon so I'll write about it then).

2. Establishing Investors' Organisation and hosting star Silicon Valley VC investor, Jonathan Teo in Melbourne

This was one of the most exciting events to happen to the entire Australian start-up scene in 2013.

Along with my lead investor, Adrian Stone, as well as my IP advisor, Brian Goldberg, I established Investors' Organisation, a private network of high net worth individuals. The goal was to mix experienced technology investors with the more traditional investors to hopefully bring more capital into the early stage investing scene. We are the first and only organisation of our kind in Australia. Adrian became Chairman, Brian became President, and I just felt lucky to be involved.

We held 3 very successful events with the highlight being the week long visit by the now former managing director of General Catalyst Partners, Jonathan Teo, who personally led investments in Twitter, Instagram and Snapchat, along with many others.

I had the honour of interviewing Jonathan in front of a full house of investors at PriceWaterhouseCoopers which you can watch below, and was his entourage for a week.

3. My trips to the Valley in April & October

These trips were a real eye opener for me in terms of the pace of activity and the way folks network and do business. I've mentioned before that you could get 5 introductions just from one person, and there seems to be a mentality that we're all in the same game together. Never before have I been in an environment where someone who could rightly be called your competitor actually facilitates introductions for you as well!

I built lots of new relationships, both personal and professional, and the biggest lesson I learned here was that most companies are not going as well as the press makes them out to be. One guy I met in particular had just raised a multi-million dollar investment from VCs and, according to the press, had just launched his company barely 2 months before that. The reality was that he had been hacking away on his startup for years in his dorm-room, he had simply only incorporated 2 months ago. He wasn't arrogant about it though, which is a good thing, he was just "playing the start-up game".

I'm hoping 2014 will be filled with just as much excitement as we start to gear up with Breezedocs. I'm the first to admit that I've still got a long way to go, but at least I'm giving it a bloody red hot crack!

(image source: about.me/billtai)

As I board my flight to LA and San Francisco/Silicon Valley, I thought it would be both timely and appropriate to summarise the very entertaining and insightful presentation provided by legendary investor Bill Tai of Charles River Ventures at Melbourne’s York Butter Factory last Friday.

"Reducing Friction"

Bill began his presentation by stating that some of the most successful companies of recent times were all about “reducing friction”, For example:

Google reduced the friction to accessing information

Amazon reduced the friction to commerce

Facebook reduced the friction to connecting with friends

Twitter reduced the friction to broadcasting

Bill also saw the inverse of this playing out when his career took him to China. The Chinese Government applied an additional step in the mobile messaging process and as a result of this one additional step or friction point in the process, Bill saw usage drop by 70% in 2 consecutive months such that after two months usage was only at 9% (100 - 70% = 30; 30 - 70% = 9%)

In applying this to the audience, Bill highlighted how the OzAPP Awards are reducing friction for startups by

An opportunity to receive a $100,000 convertible note from Qualcomm

Free hosting for the winning app

Mentoring and connections from Bill’s extensive network

The Origins of Silicon Valley

To understand where “the next big wave” was coming from, it was equally important to understand the history of how Silicon Valley was formed. Bill summarized that innovation was borne as a result of two key elements: technology + user interface.

It began in 1957 with the folks who compressed technology down to the microchip at Fairchild Semiconductor. The success of Fairchild gave birth to a number of other Silicon Valley heavyweights, known as the “Fairchildren”, such as Intel, AMD, and leading VCs such as Kleiner Perkins Caulfield Byers and Sequoia Capital. This was followed by Steve Jobs and Steve Wozniak in 1976 who developed the user interface for these transistors and organised them to create the personal computer.

(For a great documentary on the Silicon Valley story, see the PBS documentary: American Experience).

Bill said that the explosion in personal computers and the internet created the following 4 phases:

Technology would be packaged into “legos”

These “legos” would be integrated into systems/boxes

The internet allowed these boxes to be connected (cloud computing)

This allowed entrepreneurs to put “user interfaces to data coming off the cloud”

Big Data: The Next Big Wave

In the next generation, Bill predicts that the companies that will succeed and win will be those that are able to put a user interface and advanced analytics to “big data” in order to understand it. Big data, and more particularly, “unstructured data” was everywhere and startups could create value by analysing this data to gain rapid insights that provide a true business impact.

So what does Bill Tai look for in an investment?

"It’s kind of like surfing, you’re either on the wave, before it, or behind it."

This was definitely my favourite segment of the night. Bill talked about some of his invesments including Tweetdeck, Voxer, Tango and Australia’s own Canva, which all proved to be fascinating anecdotes.

The timing of Twitter was so perfect such that notwithstanding the “mis-execution” by its founders on multiple occasions, it still became a runaway success (Twitter’s first investor, George Zachary’s $250,000 investment is now worth a reported $150 million).

With Tweetdeck, Bill explained how he usually does not back startups that contain the “startup on startup risk”. At the time Bill invested in Tweetdeck, Twitter had not yet become the ubiquitous force it is today, and his partner at CRV, George Zachary had already invested in Twitter earlier. Thus, as startups only have a success rate of 1%, to invest in another startup that is dependent on the platform reduces the chances of success down to 1% of that 1%. Of course, it all ended well for Bill with Tweetdeck being bought by Twitter itself for $40 million.

He then told the audience of the Canva story; of how he met Melanie Perkins at a MaiTai event, and demonstrated the amazing power that an introduction can have as highlighted by this image:

(image source: http://pandodaily.com/2013/04/22/how-an-australian-startup-raised-3m-in-seed-funding-from-silicon-valley/)

Finally, Bill emphasised the importance of backing teams. With Voxer and Tango, he told of how when he met the founders, “a gut instinct told me that they were going to be winners.” Voxer and Tango were the 13th and 30th most downloaded apps in 2012…

I do hope that I have done sufficient justice to the presentation, which had a lot of relevant themes for me, not least due to the fact that OneTouch is reducing friction for businesses by organising free-form unstructured data from documents, but also as we edge ever closer to formally opening our Series A round. There was so much more to the presentation, including the stories and videos of the MaiTai kitesurfing events which sound absolutely phenomenal.

We're thrilled to announce that our investor group Investors' Organisation (IO)  will be bringing Jonathan Teo, managing director of top Silicon Valley VC firm General Catalyst Partners down to Melbourne for a visit in October.

This is very exciting news to have a venture capitalist of Jonathan's calibre down to Melbourne, which is home to many amazing start-up success stories including 99designs, RetailMeNot (NASDAQ: SALE), Kaggle, and CatchoftheDay. Of course, my own start-up OneTouch is also from Melbourne, although we still have a lot to do before we are able to be placed alongside such illustrious company!

Jonathan will be in town in late October where we will be holding a major IO lunch at the offices of PricewaterhouseCoopers to share his investing insights to an audience of local investors. He will also be running a mentoring session for a handful of selected promising startups, and as our gift to the start-up community, we will also be jointly holding a public event in conjuction with Lean Startup Melbourne at inspire9 so stay tuned for details. The news was recently featured by leading start-up publication, Startupsmart.

This comes off the back of another notable investor, Bill Tai, of Charles River Ventures who was recently in Melbourne as part of the oZapp roadshow. To read some of the insights that were shared by Bill, click here.

It's fantastic that such high-profile investors are taking an interest in Melbourne's burgeoning start-up scene, and for our IO members to learn how to hit homeruns when investing in startups. 

Below is a profile of General Catalyst and Jonathan Teo, with links to their Crunchbase profiles embedded.

General Catalyst Partners are recognised globally as one of the most prestigious venture capital firms with $2.2 billion of capital under management. Some of its notable investments include Kayak (exited for $1.8 billion in 2012), AirBnB (recently valued at over $2.5 billion) and Australia's own BigCommerce, which has raised a total of $75 million in venture capital.

As a managing director, Jonathan Teo invests in both new and existing technology businesses. His areas of special interest include: enterprise software / infrastructure and consumer internet / social media. Since joining General Catalyst, Jonathan has led an investment in SnapChat (valuation of $800 million in under 2 years).

Prior to joining General Catalyst, Jonathan was a Principal at Benchmark Capital, another top-tier venture capital firm in Silicon Valley, where he led early investments in Twitter (to IPO for an estimated $15 billion) and Instagram (sold to Facebook for $1 billion after only two years). Before he became a venture capitalist, Jonathan was an engineering manager at Google, where he played a key role in the company’s international expansion, including setting up Google’s R&D centre in Shanghai, as well as spearheading international team-building efforts in Israel, Brazil and South Korea.

Jonathan earned a Master of Science in Management Science and Electrical Engineering at Stanford University, and holds a Bachelor of Science in Electrical Engineering from Sydney University. Having personally led early-investments in the 3 hottest start-ups of the last 4 years, we are are thrilled to be able to bring Jonathan to Australia to share his experiences and provide insights into his start-up investing philosophies to our members.

How do you stand out from the crowd? Marketing guru Seth Godin famously describes it as being the “purple cow in a field of monochrome Holsteins.” Mark Suster also recently wrote a great blog post called “To Sell Anything You Need to Know What Makes You Unique” which covers in detail how to present what is truly unique about your company and how to sell your company’s strengths against your competition to win more campaigns.

It gave me the inspiration to write about how to develop a personal USP to sell yourself.

It would be a great achievement for many startups to get to the position where as Mark says, “the founder can’t be in every sales meeting.” However, what should you do if you’re at a much earlier stage, where all you’ve got is a couple of founders? You might be trying to win your first big account, or perhaps trying to raise some capital from investors.

The Model

When selling myself, what I try to do is relate everything that I’ve done in the past to everything that I’m doing now, which then tells a more credible and generally self-evident story of what I will be doing in the future. The proportion of time that I spend talking about these three aspects would roughly follow the nifty little pyramid that I busted out below.

The secret though is that your own personal USP should be something that is constantly evolving. What you say you will do has to become what you are currently doing, and likewise, what you are currently doing has to evolve into what you have done.

So if you’re trying to sell something that typically involves a long sales cycle (such as raising capital), make sure your story changes.

Why it’s good to focus on the past

I think that what makes Suster so successful as a VC is the fact that he has been there and done that. He has founded, built and exited two companies (BuildOnline in 1999, which later sold to SWORD group, and Koral in 2005, which eventually sold to Salesforce.com). He currently runs a high profile blog and most if not all of his blog posts that I have read relate a story from his past successes which in my view irrefutably establishes his credibility. Mark undoubtedly has a very strong understanding of his own USP - it is not surprising that his blog is appropriately titled Both Sides of the Table - and he has earned a huge following as a result due to his ability (and generosity) in engaging with entrepreneurs who visit his blog. Although he has "gone to the dark side," entrepreneurs like me feel that deep down, he's still "one of us." And whilst it isn’t that hard to find a few entrepreneur-turned-VCs out there, Mark knows this which is why he calls himself a “2x entrepreneur-turned-VC.” He can prove that his first exit wasn’t just a fluke.

That's pretty unique, as not all VCs can claim this. Even the great Dave McClure (whom I also have a tremendous amount of respect for) calls himself a “late-bloomer” after only being a “half-assed entrepreneur” (and I highly recommend reading McClure’s blog post where he shares this sentiment, as it’s one of the most raw and inspiring things I have ever read).

It annoys me when people say they just want to hear about the blue skies of the future and big picture and all. And this is despite the fact that one of my favourite quotes is “if you’re driving into the future whilst looking into the rear-view mirror, you’re gonna crash, I don’t care how smart you are.”

But let me ask you this: How would you respond if you walked into a car dealer and they said “You should buy the Toyota Corolla, because next year’s model is going to have all this amazing shit in it.”?

The reason I focus less on the future and spend more time talking about what I’ve done in my past is for the same reason why people say “ideas are meaningless and it’s all about execution.” The future hasn’t been created yet, but if you tell people what you’ve done, and that story is changing (improving) constantly, then they should be able to recognise that you’re able to keep pushing down that pyramid.

You need to combine the elements of your life to explain the causal connection to what you are doing today. In this sense, I don’t think there is ever such a thing as a dead-end job, because as the late Steve Jobs famously said in his must-watch 2005 Stanford commencement address:

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart even when it leads you off the well worn path; and that will make all the difference.”

Every job and experience we have adds to our own personal story, and ultimately, that is what contributes to everyone’s unique selling proposition. I had a business coach a number of years back who also gave me this advice:

Selling is about “telling the truth attractively.” I don’t care if you were a janitor who cleaned a bank for 1 year, 6 months and 1 day. You can say “I worked in a major bank for almost two years.”

Obviously he was joking. I think.

I’ve been meaning to write about this topic for a while, and my inspiration was finally pushed over the line after reading a recent blog post of one of our earliest investors in OneTouch and now good friend Nicholas Gruen (first published in the Sydney Morning Herald).

Anyone that knows me truly well knows that I can’t stand being alone.

There has been a lot of talk recently on how to fix the startup ecosystem in Australia. CEO and founder of Freelancer.com Matt Barrie recently declared the local venture capital industry 'dead' and we've seen many of Australia's most promising startups hightail it off to Silicon Valley in order to raise investment capital.

As others have no doubt said before me, raising capital in any country is hard. We were fortunate enough to recently raise a small seed round for OneTouch from local Aussie investors. I will say that the entire process, whilst being extremely difficult, was not impossible, and it probably took the best part of 6 months from beginning to end.

A few weeks ago, I was fortunate enough to spend a few weeks in San Francisco and Silicon Valley as part of the Advance Innovation Program.

The program was a tour of the centre of the startup universe for 25 of Australia's hottest early stage companies, of which OneTouch was a participant. The program was a pitch fest that lasted three days but I arrived two weeks earlier to check out the Californian tech scene.

Here's what I learned: