How To Fund Product Development Without Using Your Own Money
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Summary
In this episode, Ronster chats with the founders of Rise, the first fintech startup to offer a credit card for B2B businesses in Canada, Sam and Ryan. They talk about how they got the idea for the product, how they plan to launch it, and what it takes to get funding.
Transcript
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ask for money, get advice, ask for advice, get money twice.
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Go ahead. I'll start here. Thank you very much. So we're building Rise is the first fintech for B2B in Canada. We're providing the corporate cards that provide services in terms of a credit limit for credit cards specifically. So you're a startup, you just, you know, raise funds.
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Eventually, you need to apply for credit cards, right?
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If you go to the traditional way of getting credit card,
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there's a traditional way of getting it, right?
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Two years history, person guaranteed for the founders.
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Exactly. So actually, we thought about like a better solution for this.
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So why not providing a credit card based on the balance of the business as of today?
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Got it. So use the cash in the bank account as security
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a lot of features in terms of accounting integration,
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which should save a lot of time for their founders
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And eventually we have a deadline of launching the product
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All right, so the first question that we have here is,
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so in order to get the licenses and everything else,
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we had like the chicken and the egg problem, right?
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need to have some traction before and in order to have some traction we need to have the licenses
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already in place so if you have this problem how would you solve it i find a partner that already
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has the licenses and then they become the credibility for me to bootstrap on them
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until i can build enough volume to be able to go direct okay thank you very much yeah i've used
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that quite a bit perfect thank you okay uh the second question i have here uh what is the best
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way to pre-sell fintech services because our business model is interchange fees at the
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beginning later on we gotta launch our premium account right so we can charge monthly sas fees
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so how would you uh pre-sell fintech services if yeah so um a few things ryan i would i would
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suggest that you don't call it fintech services to a business owner because they don't know what
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that is um so the one of my rules in in marketing is um you know we got to use what's called echo
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marketing meaning what our customers would call it is what we call it right so if i if i presented
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your solution to a startup and i say what do you call that i just described what it does what do
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you call that they're gonna say so you're telling me it's a way for me to get credit card approval
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when i can yeah okay now i know that you have all these other things that it could do right and this
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is where i get a lot of founders they talk about their blockchain their ai their you know whatever
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and tokens and and the reality of it is at the end of the day you solve a problem for a customer
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they describe that problem and that solution how you do it is up to you right we don't even get
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the chance to describe or talk about that if they don't buy so sometimes we need to just it's called
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chocolate broccoli we need to sell the chocolate and once they come into our world we can give them
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the broccoli which is all the stuff they don't even know they need because they've never had
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the chocolate in the first place so they don't realize they need the broccoli
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so what i do is um the way i pre-sell anything is first define what are the three features that
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you think is important to the market right so credit card approval um easily manage multiple
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accounts and you know use it as a line of credit potentially your your decision i don't know but
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that's an idea that i would be like okay these three things are interesting then i would go and
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i'd talk to the ideal customer right in your case it sounds like uh funded startups so what i would
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do is i'd call up all the funded startups in canada or like the accelerators that would know
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who the funded startups are i would explain to them what i'm doing and ask them for advice i go
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in for the advice angle because when you ask people for advice they then give you the answer
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that they would do which gets them bought into the solution which then gets them committed to
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seeing you succeed which then gets them asking hey do you want me to make some introductions for you
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whereas if you go in asking for the introductions they're going to tell you all the things that need
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to be true for you to get a good introduction but they're not going to offer to make it sounds
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hilarious it's how the world works you know um pitbull has this great song uh i don't know the
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song i should get the song name but he has this lyric where it's like ask for money get advice
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ask for advice get money twice he says that in in his lyric because he's been there before right
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and and to me that's kind of the same premise is ask for advice get anything then you get in front
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of these companies and you do the same thing you do a customer discovery call a customer discovery
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call is completely different than a sales call the beauty though is a customer discovery call
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can turn into a sales call meaning that you go in trying to learn the most valuable asset
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that a startup can get is learning so it's not about revenue it's not about raising money it's
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not about hiring team members the most important thing that i can learn as a startup if i've got
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an idea is about the market so i tell a lot of um early stage founders is find an agency that's
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currently doing this for your target market because they would have so much rich knowledge
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around the problem set and the solution set and the intricacies of what you're trying to build
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because as a consultant they're in there right they know when i presented x solution to the
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customer they said this they know that we've tried to do this that way and it didn't work or this
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worked or this is the way we figured it out here it can only work in this scenario etc so there's
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just a lot of learning there i'm giving you a lot but i thought that this would be valuable
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but once i talk to those companies uh i do the customer discovery call which is a series of
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questions you can google i have a whole list of questions on on the internet um and at the end
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of that once you've learned so that's why i say you can end on the sales call you can't start on
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the sales call because if you go in the sales call you're essentially selling you're not learning
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nothing okay but if you start with the discovery at the end you can transition into a sales process
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which typically they're gonna you know you go in for advice ask you know questions questions
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questions understand their problems understand the potential solution blah blah then you go well i'd
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love to tell you about how we're thinking of solving that would you be interested they go of
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course that's your open then you go well here's the things i heard you say and here's the way
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we're looking at solving it and you mind if i do a demo you pull up your clickable prototype okay
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even if it's not real product a clickable prototype is way better than words
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right share your screen show your phone here's how it works they go that's amazing then you make
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your offer what we're doing now is we're we've got a thing called the early adopter program
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or the inner circle or the founders group or whatever you want to call it you can give it a
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cool name pick one of those three if i gave you but every different clients call it different
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things for whatever reason but early adopter program the eap is a good one especially for
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enterprise and the way it works is we're looking for 25 early customers to come on board to help
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co-create this and because they're supporting that co-creation here are the things that they
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get as benefits they get 12 months no fees they get you know access to the customer advisory board
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they get um mentioned on our website as part of the launch as an innovator etc etc etc we do a
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monthly call with other people in the financial industry not fintech because they don't know
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what that is financial industry that focus specifically with startups so figure out
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what's valuable to the startup maybe they want to get access to series a investors and you can grab
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six of those series a investors and have a monthly call so that they can understand like there's a
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bunch of stuff you could do to make the offer and they got to pay for it though and then you
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pre-sell right the key is don't make the offer not about your software so much so that people will
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buy it just for the other stuff and it doesn't give you true customer validation on the product
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makes sense yeah i've seen a lot of people make that mistake and then you have a a signal issue
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where you thought you had something but you didn't you're just really good at selling and creating
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offers people bought it because of the thing you know uh yeah for 500 bucks you get a one hour call
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it mark cuban 100 100 people buy and you're like yeah the winner it's like no they bought because
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of this unrealistic offer that is worth the 500 bucks not because they want your software
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usually the discount the discount it's 12 months for 50 so if you're charging 100 bucks a month
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for your sas it's 1200 bucks for the year you know if you you're part of the early
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adopted program it's only 600 but they got to pay for the whole year up front
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if you take 20 25 sales and you go to a partner that can issue the cards and you can show them
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that that's going to open the door right and that's that's that's where a lot of people always
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argue with me you can't pre-sell social social um you know you can't pre-sell uh social networks you
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can't pre-sell enterprise software blah blah it's just not true okay there's crowdfunding happens
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every day it's like a i don't know 18 billion dollar a year market i don't know i'm making
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that number up but it's big okay people crowdfund stuff that ain't real every day
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the harder it is this is the fun part ryan i just want to share this the harder the process is for
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you the more excited you should be because when you figure it out you'll know that everybody else
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gave up along that journey awesome i like that yeah most people don't realize that when i'm
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working on something like really trying to crack the nut around some kind of distribution channel
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or monetization strategy or whatever it is go to market anything and it's hard and a thing i thought
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was going to work was going to be a layup ends up not being a layup i'm like yes because i'm
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going to figure it out i have i have confidence in my ability to problem solve and when i figure
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it out i know that my competitors would have gave up because this is ridiculous that it doesn't work
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because it should work so just know that because it's you're going to be littered with that and
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it's just that's the perspective that allows you to go from problem to problem or failure to failure
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without losing enthusiasm people say that it's a quote right i think it's einstein or whoever
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thomas edison it's like success is going from failure to failure without losing enthusiasm
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they don't give you the mindset reframe that's required and it's just truth it's literally the
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harder it is the less competitors are going to be at the top thank you very much thanks as we
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mentioned we are building the mvp we're launching hopefully uh end of july vacation of august so
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eventually we gotta uh you know raise some funds eventually for this because that's a huge expenses
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even for us so we are building the the tool that would like to use pretty much so based on your
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videos because i'm a big fan of you you know youtube and all the stuff uh there's pre-seed
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there's seed uh there's seed after that there's seriously abc so we are the pre-seed right now we
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self-funded our our our company our startup so do you think it's a good idea to go right away to
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seed once we launch the mvp which is we're talking about between two million to eight million right
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we got to use for product marketing and sales so do you think it's a good idea to have that
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there's two optimal times to raise money okay there's before you figure it out and there's
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after you figure it out and the worst time is when you're in the middle of that curve okay
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because what happens is in the early stages of the mvp the eap program the coming soon launch page
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essentially in many ways you can kind of manufacture traction let's be honest like i'm a
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founder and i'm also an investor so i understand that hey a certain activity shows a certain type
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of activity volume like google analytics so if i do x i get a little bit of traffic well if i do
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x in a certain sequence over a certain period of time i can manufacture a growth curve does
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that make sense if i have a uh beta list of people that opt in to be notified when i subscribe and or
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i launch and i systematically uh every day allow two people three people four people into my system
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and then somebody asked me to look at my numbers i can create that traction right so what i always
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tell people is there is the point where there's enough there for you to tell a compelling story
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of how you're going to create a hundred million a year company over the next um seven years that's
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kind of the ballpark right and it doesn't it doesn't mean that you have high revenue it doesn't
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mean that um that you've figured it all out if anything you don't want to figure too much stuff
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out you just want to show there's a there there right because think of it this way what an
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investor is investing in and i have a bunch of videos online about this around like the team
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and the product and the size of the market all these things but like if we even took a step back
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and said what is it it's 100 the people right do i believe they're willing to put their head
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through a wall to make this work and if and i don't even care if it's this thing that works
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do i want to make a bet on the people at the pre-seed level it's a hundred percent on the people
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and is there enough of a data point to show me that my assumptions if i believe that there's
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this vision right of a multi-billion dollar market and you can you can paint that story
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clearly crisply okay in language i understand not language you want to communicate but my language
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and i believe you have the right team and then the kicker and if you see me talk about
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fundraising which i have a bunch of trainings on is um can you create enough demand for your round
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to create a competitive process because if i'm only talking to one investor probability of closing
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hashtag money in the bank low but if i've got 15 investors and i'm making a commitment to close my
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my round in August, I know I'm gonna get the right people.
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but not too much so that they can run the spreadsheets?
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That's the other, people, sometimes people launch
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It's like, yeah, but you've only added two a week
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for the last six months or nine months or a year, right?
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So you're not showing growth, you're just showing sideways.
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right so like just know that there's before you figure it out and you can control it and then
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afterwards where you go through this journey in this valley of just struggling to finally it pops
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and now you can go and tell a compelling story because it's easy to paint the picture of the
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future right but they're going to look at the present to confirm their assumptions about that
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potential future got it thank you i want to i want to ask you guys um real quick what did you take
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away what did what resonated the most for you around our conversation today i'll say language
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like use the right language and the right audience i think we we definitely should not assume that
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the other side understand what we're talking about eco marketing was great the learning process i
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think it's a good it's a good call and um more practically the customer discovery call is
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is something we should definitely do a bit more i know you don't like the mvp process that where
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we should probably focus on clickable profit prototype.
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I also know that sometimes you have to go through the pain
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My brother one time, he started a home building company
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And then one day I introduced him to a bookkeeper
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and he asked me, why didn't you tell me this a year ago?
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you wouldn't appreciate it how important it was.
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You would have fought with me on why you should pay people
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That's really important, especially for the perceived.
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We have to get traction by contacting the customers.
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That's learning will bring the sales definitely.
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We can ask some questions and based on the questions,
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actually we can, you know, we filter, I would say,
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And definitely after that, we can scale, we can pre-seed,