I said the wrong thing and suddenly our Series A pitch meeting was over

Transcript

• Well, picture this, we were raising our Series A for my startup Posterous. My co-founders and I were at Benchmark Capital on Sand Hill Road, meeting with Peter Fenton, legendary investor in Twitter and Yelp. We think it's going fine until Peter asks this question. So, are you a platform or a network? The three of us looked at each other and we sa... Read More

Summary

In this video, the speaker shares their experience of a pivotal pitch meeting for their startup Posterous. They were asked the question, "Are you a platform or a network?" and their response of "both" ultimately hindered their chances of securing funding. The speaker reflects on the importance of understanding the question being asked and the implications of choosing the right path for a startup. They discuss the differences between a network and a platform, using examples like Twitter and Weebly. The speaker also shares their regrets about not choosing to become a platform when they had the opportunity and how Posterous could have potentially been a different company if they had. The video ends with advice for founders to pay attention to the questions asked by investors and not pretend to have all the answers.

Questions & Answers

Q: Why was the question, "Are you a platform or a network?" so important for the speaker's startup, Posterous?

The question was important because it forced the speaker and their co-founders to choose a direction for their startup. They realized that saying both was not a viable option, and their inability to provide a clear answer may have led to the investor losing interest in their pitch.

Q: What are the differences between a network and a platform?

A network, like Twitter, relies on having a large user base as its primary source of value. The users themselves are the product, and the network can monetize by charging for ads. In contrast, a platform, such as Squarespace or Weebly, offers a product or service that customers pay for directly. The platform then has the ability to acquire new users because it generates revenue.

Q: Why does the speaker believe it is important to understand the questions asked in a pitch meeting?

The speaker suggests that investors ask questions based on their lived experiences, often having lost money on certain ventures. Understanding the questions allows founders to gain clarity and ensure they are addressing the investor's concerns. It is acceptable for founders to admit when they don't know the answer to certain questions.

Q: What happened to the speaker's startup, Posterous, after the pitch meeting?

Posterous did not secure funding from the investor, but it eventually sold to Twitter for around $20 million as a talent acquisition. However, Twitter later shut down the platform. Meanwhile, Weebly continued to charge its users and became a successful platform that is still in operation today.

Q: How did the launch of Instagram impact Posterous?

When Instagram launched, Posterous was one of the destinations featured on the post page. However, Instagram's popularity as a better alternative for posting by email led to Posterous's growth stalling. This realization made it clear that Posterous needed to become a platform instead of trying to be a network.

Q: What regrets does the speaker have about their startup, Posterous?

The speaker regrets not choosing to become a platform when they had the opportunity. Instead, they attempted to pivot and create a private sharing network, which did not generate significant growth or revenue. Looking back, they recognize that Posterous could have been a different company if it had become a platform.

Q: What advice does the speaker have for founders during a pitch meeting?

The speaker advises founders to pay attention to the questions asked by investors and not pretend to have all the answers. It is acceptable to admit when something is unclear or uncertain. They also emphasize that the answer to the platform vs. network question is unlikely to be both.

Q: How did the speaker's experience with Posterous shape their understanding of pitching and startups?

The speaker learned valuable lessons from the pitch meeting, including the importance of understanding the questions being asked and the significance of choosing the right direction for a startup. They acknowledge that sometimes the worst thing a founder can do is say both when asked to choose between being a platform or a network.

Q: What was the outcome for other companies mentioned in the video, such as Twitter and Squarespace?

Twitter, which was mentioned as a network, became successful by leveraging its large user base and charging for ads. Squarespace, on the other hand, has become one of the most profitable platforms on the web. The video clarifies that the mention of these companies is not sponsored.

Q: What is the speaker's general hope for founders and entrepreneurs?

The speaker hopes that founders and future founders can learn from their experience and avoid making the same mistakes. They emphasize the importance of understanding the implications of the platform vs. network question and provide good luck wishes to those embarking on the journey of building their own businesses and startups.

Takeaways

The video highlights the significance of understanding the questions asked by investors during a pitch meeting and not pretending to have all the answers. Choosing the right direction for a startup, whether as a platform or a network, is crucial for success. The speaker shares their regrets of not recognizing the opportunity to become a platform and encourages founders to pay attention to the questions posed by investors. By learning from these lessons, founders can avoid unnecessary challenges and make informed decisions for the growth and future of their startups.