May 3, 2016
Summary:
In this episode, Dave interviews Zvi Band, the founder and CEO of Contactually, a CRM tool designed to actually help users manage client relationships. Contactually has already raised over $12 million in funding, and is aiming to grow into a billion-dollar business. Listen as Dave and Zvi talk about how investing in relationships secured Zvi’s funding - and break down the process of researching, pitching, and funding a incredibly successful startup, step by step.
Time Stamped Show Notes:
- 01:00 – Opening of podcast
- 02:20 – Developing a great company culture is a process
- 02:55 – Dave introduces Zvi
- 03:30 – Contactually is a platform for businesses that rely on relationships
- 04:50 – Differs from other CRMs in its focus on nurturing relationships
- 05:50 – How do we enable businesses to build personal and authentic relationships?
- 07:00 – We developed a mission to be thought leaders: people want to hear about it
- 08:20 – “Bottom-up adoption” - tools that users choose
- 09:00 – CRMs have largely become reporting tools - we wanted something else
- 09:50 – “How do we help the end user?”
- 10:50 – Relationships can only exist between people - not businesses
- 12:30 – Currently in a snap-back from the first generation of social media
- 13:40 – Zvi is a software developer by trade
- 14:30 – Very introverted through school - but saw the importance of relationships
- 15:00 – Worked as a consultant by knowing people
- 16:00 – Saw a gap for a product that helped build better relationships
- 18:00 – The first funding offer for Contactually led to a hard decision for Zvi and to close down his existing business
- 20:00 – A walkthrough of Zvi’s decisions around funding
- 21:00 – “I needed a ‘burn the boats’ moment”
- 21:40 – Knew he wanted to focus on Contactually - so applied for venture capital
- 22:20 – First round of funding was $50k from 500 Startups
- 24:10 – Most incubators take around 5% of the business
- 24:50 – Then raised $500k from angel investors
- 25:40 – “Investors are investing in either the track, the horse, or the jockey”
- 26:30 – Zvi’s reputation allowed him to attract investors
- 27:20 – There’s no personal risk with angel investors apart from reputation
- 28:30 – Get a good start-up lawyer!
- 30:30 – Two types of funding: equity or convertible debt
- 32:00 – Investors currently own 30-40% of the company
- 33:40 – After angel investment, moved on to seed financing to raise $3.5 million
- 35:30 – Series A investment raised $8 million in capital
- 37:00 – Not currently profitable: they’re investing in rapid growth
- 39:00 – “Ideas mean nothing: execution means something”
- 39:30 – How do you turn an idea into a product?
- 39:50 – “The moment you have a good idea - turn around to someone and pitch it”
- 40:50 – If there’s a market - set up a small landing page and see if people will sign up
- 41:30 – Talk to the people that sign up: see what they want
- 42:10 – You’ll now have enough specifications to start building a minimum viable product
- 43:10 – Start with a small, simple, high-quality product
- 44:30 – Create a visual representation: wire-frame tools like Mockingbird or Balsamiq
- 45:00 – Representations let you talk to developers and potential users
- 45:50 – Decide who you’ll learn from: users or designers.
- 47:10 – In-house or outsourced development? Zvi suggests finding a co-founder.
- 49:00 – How to connect with Zvi: Twitter and email
3 Key Points:
- The best way to grow your business and your life is to build and maintain relationships with other people. Your reputation and your networks are valuable resources.
- If you have an idea that seems promising: research your market. Your potential users are your best educational tool.
- Become a thought leader in your area. You’ll gain exposure not by trying to sell your product, but by having something interesting to say.
Resources Mentioned:
- Entrepreneur's Organization – The EO Network
- Contactually - A platform to manage client relationships effectively
- 500 Startups - A startup incubator
- Mockingbird and Balsamiq - tools to create wireframe mockups of your product
Credits:
Show Notes provided by Mallard Creatives