During this week’s roundtable, we had Al Lalani, Founder and Chief Strategist, Social Annex, as our guest. Al discussed why he has followed his capital-efficient entrepreneurship strategy, and how he has managed to win against competitors who have each raised tens of millions in funding. Al has raised a total of $3 million.
Of the two pitches, Sumee Chauhan from India pitched Hachi, a company that manufactures mobile phone covers and cases, and sells through e-commerce marketplaces. The company did about $100k in revenue in 2016, and has signed a few very interesting cobranded marketing deals with major brands. They project ~$850k for 2017 as these deals start to bear fruit.
Sramana Mitra: When you went to 500 Startups to raise money, what did you have in place? Of all these things that we talked about, how much of this is in place?
Zvi Band: We had a prototype and we had around 100 active users. 500 Startups saw that there is a big market here. We had the key aspects of the founding team. Then they saw that we’ve obviously been able to build something that, while it’s a prototype, was on to something. That was the origin of why 500 Startups invested in us.
Sramana Mitra: These 100 users were paying?
Zvi Band: They weren’t paying users. They had demonstrated a willingness to pay. >>>
Entrepreneurs are invited to the 335th FREE online 1M/1M roundtable mentoring session on Thursday, January 12, 2017, at 8 a.m. PST/11 a.m. EST/9:30 p.m. India IST.
If you are a serious entrepreneur, register to “pitch” and sell your business idea to Sramana Mitra. You’ll gain straightforward feedback, advice on next steps, and she’ll answer any of your questions. Others can register to “attend” to watch, learn, and interact through the online chat.
After raising an enormous amount of money over a decade, Mode Media, formerly Glam Media, finally gave up fighting the uphill battle of trying to run a vertical ad network and content platform that could be scaled while being profitable and relevant. >>>
In case you missed it, you can listen to the recording here:
Sramana Mitra: What was the financial engineering behind the acquisition?
Ryan Caldwell: We acquired their company for mostly stock in MX.
Sramana Mitra: You said you and a few others invested in the company and got things going. At subsequent financings, what were some of the milestones that you managed to knock off?
Ryan Caldwell: The big thing for us was just scaling the number of financial institutions that were signing onto the platform. For year one and year two, we rapidly scaled past 100 and then 200. We started with the smallest financial institutions first. In fact, we have this well-known policy that I was strict on >>>
Sramana Mitra: Artificial intelligence is something I know a lot about. Help me understand algorithmically or heuristically what the software is doing. How do you decide on what you are recommending a sales person to do?
Zvi Band: We have an exact picture of who you know, when was the last time you spoke to them, and all the context around that. Then you train our system. You say, “Over here are my hot leads. Over here are my past clients. These are my investors.” You can apply certain ruleset on top of that. You can say, “In general, I want to talk to all my sales leads once a week.” We make it very easy. We built game mechanics so you can easily categorize people, and we can do that automatically for you.
Then we can say, “We know that Sramana wants to stay in touch with her sales leads once a week, there’s a sales lead over here that she hasn’t actually talked to >>>
Sramana Mitra: Talk to me a bit about customers before October 2011 and the 500 Startups funding. It sounds like you managed to get some customers to resonate with your idea. Who were those first customers? How did you get to them and what specifically did they tell you about what they wanted to see in your general idea?
Zvi Band: Great question. A customer is someone who pays you money. We didn’t have any customers, but we did have people who said they would pay for it. We didn’t build any credit card systems but had a pricing page. People could actually see how much it cost. That helped us. They didn’t like what we built and that was okay, but they did like the idea that we were pursuing. They were able to come to us with their own pain points. For example, let’s say, we have a real estate agent using the product. >>>