"That's what sold me. One slide."

http://www.avc.com/a_vc/2011/10/sound.html

by cwan • 15 years ago

83 50 15 years ago

mcantor• 15 years ago

Perfect idea for a business-selling slide. It answers two powerful questions: 1.) What gap are you filling? and 2.) Is there a precedent for success when filling gaps of this type?

rauljara• 15 years ago

As this anecdote demonstrates, it is very powerful to be able to organize information in a way that reveals gaps and holes. Another famous example: the periodic table. What Ljung did was make a periodic table of social media. And I have a sneaking suspicion that the way he organized his table is not the only way one could do it, and that a different organization might reveal more opportunities.

MatthewPhillips• 15 years ago

To me that slide says that SoundCloud is simply following a trend. A "___ for ___" company isn't one that I would bet on long term.

simonw3• 15 years ago

Investors bet on that kind of pitch all the time. There's a reason it's such a common way of describing a company: it's really, really effective. If you can capture the essence of your startup in just three words you'll find it a lot easier to explain to people what it is that you do.

marquis• 15 years ago

For anyone who's curious John Cage would be considered the grandfather of 'sound'. Beautiful example here: http://www.youtube.com/watch?v=7KKE0f1FGiw

When I watched the Soundcloud video, I thought of the sheer influence Cage had on modern music.

JoshTriplett• 15 years ago

I wonder how well that one slide would have worked in the absence of the numerous previous conversations.

mikeleeorg• 15 years ago

I love the lines: "I met Alex Ljung, founder/CEO of SoundCloud a number of times and each time he pitched me on his business. Each time I said no."

I love them because they show how perseverance pays off.

Murkin• 15 years ago

Warning to visitors: The 3min video has no relation and DOES NOT show the slide in question.

fredwilson4• 15 years ago

Warning to visitors number 2: The title of the post is Sound Someone put a new title on it here and changed the point of the post

groovy2shoes• 15 years ago

Warning to visitors number 3: The video doesn't tell you anything about what Soundcloud does.

kwamenum862• 15 years ago

Is it me or is a social network just for sound obviously a bad idea?

recursive• 15 years ago

It might be just you.

kwamenum862• 15 years ago

Is this something that you find compelling? Does sharing sound intrinsically valuable to you? Do we need a social network just for sounds? I don't get it.

cmod• 15 years ago

Feels like a audio version of Dribbble[1] — a SNS allowing for sharing small snippets of design you're working on. It's gained massive traction in the design community.

[1] http://dribbble.com/

njharman• 15 years ago

pg• 15 years ago

I would not treat this story as a sign of how to convince VCs. It is almost never the case that VCs say yes because of one magically convincing point you make.

Fred is not a purely functional VC (by which I mean not that he's dysfunctional, but that he's stateful). This slide was accompanied by lots of other evidence, including multiple prior meetings. The slide was just the final increment that pushed him over into yes. It is very unlikely that if a random person had walked up to him and shown him the same slide, Fred would have been convinced.

What convinces VCs is, in order, (a) growth, (b) the founders' personal characteristics, (c) what you say to them. If you seem like an effective person and you have graphs that go up steeply, your pitch could be a bunch of platitudes and they'd still be eager to invest. (As would we, to be honest.) Whereas if you seem like an ineffective person and have no traction, you could have the best story in the world, and they will all say no. (Here we're a little more forgiving; we try to distinguish between genuine ineffectiveness and similar but curable phenomena like youth, inexperience, diffidence, and fear.)

brlewis• 15 years ago

Therefore, if you have the best story in the world, take it to potential users first.

mseebach• 15 years ago

So it's a classic instance of focussing excessively on that single straw that broke the camels back, not the many, many straws that preceded it.

NY_Entrepreneur7• 15 years ago

I don't quite 'get it': So, "Could you expand on your answer a little, please".

You seem to be saying that the key is "traction", significant and growing rapidly.

Then it sounds like someone who was just featured on the TV show 'Diners, Drive-ins, and Dives" and has significant 'traction' growing rapidly would get a VC investment?

Or so could someone who opened a pizza shop in a hot, new shopping mall.

So, it sounds like nothing about the core technology, Buffett 'moat', potential business size, or business planning is relevant?

Then, suppose the business is a new Web site. Suppose the founder gets from his ISP a static IP address and 15 Mbps upload bandwidth. Suppose his largest Web page can be sent for less than 200,000 bits. Suppose he half fills his bandwidth 24 x 7 for

     ( 15 * 10**6 ) / ( 2 * 200,000 ) = 37.5

pages sent per second. Suppose he sends three ads per page and gets $1 per thousand ads displayed (CPM). Then his revenue would be greater than

     1 * 3 * 37.5 * 3600 * 24 * 30 / 1000 = 291,600

dollars a month. Now just why would he accept equity funding?

Net, it sounds like, for an entrepreneur, when equity funding might help, his project is 'too early', and, by the time the funding is available, the VCs are too late.

So, it sounds like VC funding is for where (A) the business has suddenly encountered some problem and needs cash fast or (B) the founder wants to take some cash off the table and not for usual business formation.

Then back to the restaurant: All across the US, restaurants and Main Street businesses get built without VC funding, and commonly those businesses need much more in capital equipment, ovens, site renovation, trucks, etc. than a Web site filling 15 Mbps upload bandwidth. So, if those businesses don't need VC funding, why do new Web sites?

simonw3• 15 years ago

What an odd comment.

The difference between a restaurant and a technology startup is that a startup is "an organization formed to search for a repeatable and scalable business model" - http://steveblank.com/2010/01/25/whats-a-startup-first-princ...

As for your static IP address example... a company that is serving 38 pages a seconds with 3 ads and a $1 CPM isn't exactly a trivial thing to build. If you do build that without taking any investment, good for you! You've bootstrapped your company. I imagine you'll find that you need a lot more than a static IP address and 15 Mbps upload bandwidth to get there though.

tptacek3• 15 years ago

Comment threads where 'pg talks about how he or others decide to make equity investments seem to draw out responses like this one, which all seem to amount to "nuh-uh, it's super hard to get funding".

Well, respectfully, no shit. None of these firms are charities. Every new founding team in the world --- I think literally every one of them --- discovers the seeming chicken/egg problem of traction and money. Think about it; if that problem didn't exist, everyone on HN would have a funded startup.

VC firms will make speculate on a new team if that team has impossible-to-ignore traction. They'll speculate on an unproven business model if the team has an impossible-to-ignore track record. Where are the instances where successful VC has ever speculated on both at the same time?

You lay out a scenario here illustrating that by the time you have enough traction to (you think) satisfy Wilson or Graham, you won't need them anymore. Bully for you! The same thing happened to us, and hundreds of other startups; it's called bootstrapping. If you can bootstrap, you should; you'll keep more control and ownership.

But I should point out that lots and lots of companies that bootstrap themselves to a comfortably thrumming business end up taking VC in the long term, for the same reason a conservative poker player is eventually going to bet heavily on pocket aces. Eventually you come across an opportunity that begs you to scale up quickly and buy market share. Part of the point of bootstrapping is to allow you to be choosy about the hands you play.

In the meantime, stop complaining about investors not giving you the time of day. It's silly. There are things to complain about regarding investors, but not handing free money out to unproven businesses isn't one of them. Investment firms are themselves businesses (they aren't investing their own money!) and their responsibility isn't to you or even the startup system; it's to their LPs.

rdouble• 15 years ago

Then it sounds like someone who was just featured on the TV show 'Diners, Drive-ins, and Dives" and has significant 'traction' growing rapidly would get a VC investment?

In New York, they probably would.

fredwilson4• 15 years ago

Great comment Paul

The slide was absolutely the final thing I needed to see the vision

jprobert• 15 years ago

Can you share the slide?

Hitchhiker• 15 years ago

A disjoint suggestion, I would sincerely request some readers to go check out http://www.amazon.com/In-The-Plex-ebook/dp/B003UYUP6M/

It is a fascinating book and one that I regret not reading earlier.

niklas_a• 15 years ago

That's just silly. If you seriously let one slide convince you, you are bad at making investments. What about the team, current progress, previous achievements?

borism• 15 years ago

still haven't sold me on that one...

shin_lao• 15 years ago

I don't like when people try to find a single reason for decisions, especially in that case.

Generally there's a couple of reasons spread over time that eventually trigger a decision.

The worst part is that it's very difficult for us to make a list of these reasons because:

  * We don't remember all of them

and

  * We want to believe we are rational and therefore exclude the irrational reasons

That being said I think it's paramount to be able to explain your business and why it will work in few words because that way you can spread the idea within and outside the company easily.

nirvana• 15 years ago

I must confess, I immediately started thinking about a similar slide for my startup, with each of the areas which had been successfully conquered in the past, and then a last one for us.

It's kind of an easy formula, at least for what we're working on.

pace• 15 years ago

Strange post, feels like blogspam. As Murkin already said: the 3 minute video (which can't be forwarded) has nothing to do with this mentioned slide and as PG said, it was for sure NOT the slide that sold Soundcloud to Fred, it was clearly the traction at that time. Just check Alexa.

Wondering why Fred posted this, maybe Soundcloud needs some attention. The Soundcloud founders did some really good job regarding building traction and raising dumb money. But c'mon this network IS about music and not sound. And it's so overrated, this thing is a kind of Dropbox for DJs with all the legal struggles the music industry will soon approach them with -- and then everyone including Fred will realize that an exit is far far away or never will happen ...

fredwilson4• 15 years ago

The title of my post is Sound Someone changed it here It is not at all about the slide It is about sound and why it matters

CurrentB• 15 years ago

That video seems to be the exact opposite of a single convincing slide. I watched it and have no idea what SoundCloud is supposed to do. In the context of social media platforms, I would think that sound, for the most part, would be music. The video hardly mentions music and talks about generic "sounds", which may be interesting from some perspectives, but I don't have the faintest clue why it would be a be the basis of a missing youtube/twitter/flikr/whatever as the slide mentioned implies.

kgermino• 15 years ago

>That's what sold me. One slide. This 3min video expresses it well.

I think that sentence lane makes it clear that it wasn't just the slide that sold him. The slide was the single thing that made everything click and allowed him to see the vision but if all he knew was the slide I doubt the guy would even get a second glance.

"That's what sold me. One slide."

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