"There's no upside in transparency"

01072020: Interview by Email: @mattmireles

Greetings! Happy New Year 2020!!

For our 2nd “Interview by Email” we had the privilege of meeting @lpolovets who is an Operator and Investor.

For our 3rd “Interview by Email” We are delighted to have @mattmireles - 3X Founder Speakertext (acq), Dishcraft Robotics and a current Stealth venture; Operator - BD at AWS, and Investor - currently an Angel, past VC Scout (Social Capital)

Matt has *truly* been through the grind, has Zero hubris and is an extreme founder - someone who is unabashedly vocal about bullshit, albeit in a self-aware way. He bootstrapped his first startup while working as a 911 paramedic in the South Bronx and has written about how he bounced back from credit card debt and a failed startup to found his next company.

His pinned tweet probably says it all:


I’ve developed a deep respect for his (often contrarian) takes, and you’ll see a few in this interview.

I hope you enjoy this edition of “Interview by Email”

From: Matt Mireles <matt@mirel.es>
To: BUGGER OAF <buggeroaf@gmail.com>

What describes you?

1/ What describes you best?

Founder at heart, with a passion for paying it forward & investing in the next generation.

2/ Where are you based? 

Menlo Park, California (aka Greenwich Connecticut-West)

3/ How long have you been associated with startups?

Started my first company in October 2008. Currently on Company 3.
Started investing in early 2017. Currently invested in ~22 companies partially with my own money and partially as a scout for Social Capital (RIP).

As a Founder

3 lessons learnt founding startups?

Your network is an appreciating asset; invest in it!
In school, you are taught to worship knowledge and discount the value of relationships, which is backasswards advice. Knowledge is a depreciating asset! The people you know, your relationships––especially in startup land––are the ultimate appreciating asset. Tomorrow’s billionaire entrepreneurs & VCs are to be found amidst the bumbling, unimpressive startup founders you meet today. This applies at all levels.
Probabilistically speaking, everyone you meet & befriend today will be dramatically more powerful & important in 10 years than they are today.

Learn to trust & develop your gut instinct.
It is one of your most powerful tools as a human being. My biggest failures came from ignoring my gut instinct & letting myself get talked into things that, in my gut, I knew were wrong.

Don’t just demand excellence, be intolerant of mediocrity.
Be utterly ruthless when it comes to holding high standards wrt your team & the people with whom you surround yourself. Set the highest possible standards and do not compromise on the results for the person - if you’ve set reasonable standards and hired the best, they will find ways to surprise and raise the bar for excellence beyond the “reasonable” targets you set them


As an Investor:

3 lessons learnt entering VC? 

As a founder writing angel checks, and later as a scout for Social Capital, my biggest investing mistakes have come from:

  • Not trusting my gut instinct

  • Falling in love with the business & ignoring the weak founders

  • Investing based on my vision for what the company could become, ignoring the founders’ vision (or lack thereof)

My #1, #2 and #3 lesson is that it’s all about the people. The best founders are:

  • relentlessly determined to win

  • ruthlessly curious about the truth & confront bad news head-on

  • intolerant of mediocrity

  • always trying to learn & improve themselves

That said, my biggest takeaway as a small, often passive investor with limited contact with the companies I invest in has been to be more measured and not let myself get too excited based on limited data. It also has made me realize that, really, I have no idea who’s going to win big or even who’s going to fail. Its truly a roller coaster even quarter to quarter!

All that said, I derive enormous joy and selfish pleasure from helping the founders I work closely with to grow and develop as human beings. I have no idea who’s going to make me money, but man the people are awesome! 

The flipside is that I’ve come to learn that I really don’t enjoy being a passive investor. Going forward, I only see myself investing in companies where I have strong relationship with the founder(s) & can help him/her grow & develop. It’s just not fun otherwise. 

An unexpected benefit of this experience has been how incredibly much I’ve learned from my founders, many of whom are tougher, smarter & better entrepreneurs than I. They inspire me, and I often copy or emulate them. Talk about an amazing hobby!  

Pick a topic you'd like to discuss in detail:

Raising a seed round is a lot harder than most Valley outsiders think. 

A lot of founders––especially first-time female & POC founders––don’t know anyone who’s ever actually raised capital before and just see the Techcrunch headlines about idiotic company X raising millions from big names and assume the company just met with a handful of investors and bam, money in the bank. 

Here’s the reality of my own personal fundraising history:

  1. Had $500k soft-circled, then round imploded (Q2 2010)

  2. Tried to raise $1.6M, closed $1.1M over the course of a year after pitching way too many investors to count (Q3 2010 to Q3 2011)

  3. Tried to raise $2M, failed (Q2 2014)

  4. Raised $600k Pre-Seed in 3 weeks from a napkin-sketch idea (Q3 2015)

  5. Pitched 90+ investors over 4 months and almost gave up until––at the very last minute––First Round came in and we raised $4M in what became an oversubscribed round (Q2/Q3 2016)

  6. Tried to raise $3M, failed (Q4 2018)

  7. Raised $2.8M from A-list investors, but only after pitching 181 investors over 5 months (Q2/Q3 2019)

Recently, I caught up with an old acquaintance––a talented African-American founder with a math degree from MIT––who had successfully raised $200k after pitching 16 investors...and then gave up because he thought he was failing! “They don’t want to invest in people who look like me,” he explained. 

When I told him my own stats & struggles, he was shocked. He had assumed that I’d only pitched 5-10 investors! 

I’ve had 3 conversations like this with African-American founders I know, including one whom I’d actually invested in. Each time I wanted to reach through the phone, grab the person and yell, “You fool! You’re outperforming the average! You only think you’re losing because you don’t know what normal is.”

It kills me every time I hear a story like this. The byproduct of this dynamic is that a lot of entrepreneurs get prematurely discouraged, ESPECIALLY people of color who have already been primed to believe that the predominantly white, moneyed world of tech doesn’t want them. I mentor & invest in a disproportionate number of these “Valley outsiders” and I see it a lot. So I decided to speak out & be more transparent about my own experience so that people have a realistic sense of what it actually takes to raise money.

Most founders are too insecure to publicly admit how much they actually struggled, how many investors actually rejected them. They just publish the final number on Techcrunch and everyone is none the wiser.

There’s no upside in transparency.

2 big trends you're seeing around you.

YC as a legacy product - Instead of being the gold standard of startup advice, YC is now more like a standard VC: sometimes the advice is good, sometimes not.

Once upon a time, YC’s advice was the gold standard of startup advice. All the smartest founders wanted in! While YC’s brand remains incredibly strong amongst founders, especially outsiders, the quality of their advice & overall product since PG left has gone downhill. Many of the YC founders I’ve invested in have told me that the program no longer lives up to the hype. I’ve also seen, first-hand, some YC partners give questionable advice to startups.

In one instance, I found out that a YC company I’d invested in had <60 days of cash while attempting to raise a Series A. (This company was part of YC’s vaunted Series A program)

“Raise a bridge, IMMEDIATELY!” I texted the founder.
The founder responded that their YC partner had counseled to hold off, as “we expect a term sheet in the next week or two and don’t want to take the dilution hit.”

The startup yet to raise a Series A. It’s now been 6 months. 

I expect YC to continue to be a dominant force in VC because of the incredibly marketing execution & distribution advantage, but the product itself is meh. And what’s worse is that they don’t even realize it because YC’s culture is very insular, kinda like Facebook. I thought they were better than that.

3 investors you’d work with outside your captable?

Adam D’Aguelli (True Ventures) - @adaugelli
Michael Dearing (Harrison Metal) - @mcgd
Ben Narasin (NEA) - @bnarasin

3 twitter accounts you recommend we follow

@jenistyping
@impcapital
@isadwatson

3 people you'd like to see interviewed on this blog.

Polly Rodriguez, Founder/CEO of Unbound - @polly_claire
Ben Narasin, Partner at NEA - @bnarasin
Sarah Cone, Managing Director at Social Impact Capital - @impcapital