The Exchanges

Q How do they apply to you? What's the process like? And, and what are your admissions processes?

A Yeah, we have, we have a massive great pitch to us button on our website. You can't really miss it if you're there for longer than three seconds and anybody, anybody can and does use that button. So we get receiving an average month about 200 applications online. Um, we don't ask a lot of questions in that form. The goal is to, is to get, um, a discussion going. Of those 200 applications, um, we, we screen out roughly 20 each month for, for further due diligence, and we have a, a guy, a very hard working Irishman whose full-time job is, um, is doing that screening and doing that first round of interviews with startup founders. Then of that 20, um, our goal is to enter into commercial negotiations with four or five each month, Of which we hope to bring two new startups into our program each month.

AI assessment note: “we screen out roughly 20 each month for, for further due diligence”

Q How do they apply to you? What's the process like? And, and what are your admissions processes?

A Yeah, we have, we have a massive great pitch to us button on our website. You can't really miss it if you're there for longer than three seconds and anybody, anybody can and does use that button. So we get receiving an average month about 200 applications online. Um, we don't ask a lot of questions in that form. The goal is to, is to get, um, a discussion going. Of those 200 applications, um, we, we screen out roughly 20 each month for, for further due diligence, and we have a, a guy, a very hard working Irishman whose full-time job is, um, is doing that screening and doing that first round of interviews with startup founders. Then of that 20, um, our goal is to enter into commercial negotiations with four or five each month, Of which we hope to bring two new startups into our program each month.

AI assessment note: “we have a massive great pitch to us button on our website”

Q Now, you've enjoyed an incredible career, but can you start from the beginning and tell us where it all began and how you made your move into technology?

A I think I'd hesitate to call it a career, but I've definitely careered back and forth from thing to thing. Um, I, I, I started as a technology reporter, um, so long ago that in those days people read the news about the computer industry on, on the printed page in magazines, and I was the editor of a magazine called, called Macworld centuries ago. Um, when, um, when print publications started to go to this new thing, um, the World Wide Web, uh, I, I decided it was going to be faster and cheaper and more fun to be publishing things online than in print, and, uh, started trying to make a transition. I went to work at Microsoft for a few years for things that became part of the MSN network, and then took what I imagined was a, uh, a huge risk, and joined, um, A small internet search startup that nobody had ever heard of. Um, that huge risk turned out to be my, my, my first big lucky break, and I was an early hire at Yahoo back in the day.

AI assessment note: “I started as a technology reporter”

Q It's very bold. How's that going, and, and what role do you and Blue Chili take in those startups?

A Yeah, so, so over the past three years, Blue Chili has built a portfolio of 54 startups, and we're on track. In fact, I'm pretty confident we're going to smash our goal of 100 by 20 16. Um, so Blue Chili is a bit unique in that, um, we partner with non-technical entrepreneurs who've got an idea for a tech startup. What we've observed in Australia and a number of other markets around the world is that the great potential technical co-founders go off to work on their own ideas, or they move to Silicon Valley because the rewards are so much richer there. And in markets like Australia, as a result, all the great people move to Silicon Valley, or they want to work on their own ideas. So there's no shortage of entrepreneurs in Australia, but there's a real shortage of technical co-founders. So Blue Truly acts as the technical co-founder for the startup tennis portfolio. We actually have our own product development team, um, of nearly 40 people now, and they work simultaneously on five or six startups at a time. Um, we have an accelerator program. To make sure that the founders that we're working with, the entrepreneurs are fully skilled up on all the experience and all the, um, business model testing and market strategy validation that they need. Um, and then ideally the, the, the founding team graduate from our accelerator program at the same time as their product graduates from a p…

AI assessment note: “Blue Chili acts as the technical co-founder for the startup”

Q And you said about investing in, say, a portfolio of 20 startups. Do you have a sector in particular that you invest heavily in?

A Well, I think it's always a good idea if you're an, ah, an investor to, to focus on what you know, right? So, I have a, a 20 some year history of, of working on product development and product communications. And so I think probably where I've been most successful is investing in startups that are solving problems for other startups. So building the, the, the platforms and the tools that you need as a startup founder. So I recently, Had an Australian startup called Other Levels that, um, did an IPO on the Australian Stock Exchange, um, that was very successful. They're a business that provides analytics for app publishers to help them track whether anybody's Reading and responding to the push messages and the SMSs and emails that get sent to users of that app. Um, so that's a problem that I've faced before. Um, I understand what it feels like to be an app publisher and not know who my customers are and whether or not they're responding. Um, and so for me, that investment's gone quite well, and I think I've been able to add some value to that.

AI assessment note: “investing in startups that are solving problems for other startups”

Q It's very bold. How's that going, and, and what role do you and Blue Chili take in those startups?

A Yeah, so, so over the past three years, Blue Chili has built a portfolio of 54 startups, and we're on track. In fact, I'm pretty confident we're going to smash our goal of 100 by 20 16. Um, so Blue Chili is a bit unique in that, um, we partner with non-technical entrepreneurs who've got an idea for a tech startup. What we've observed in Australia and a number of other markets around the world is that the great potential technical co-founders go off to work on their own ideas, or they move to Silicon Valley because the rewards are so much richer there. And in markets like Australia, as a result, all the great people move to Silicon Valley, or they want to work on their own ideas. So there's no shortage of entrepreneurs in Australia, but there's a real shortage of technical co-founders. So Blue Truly acts as the technical co-founder for the startup tennis portfolio. We actually have our own product development team, um, of nearly 40 people now, and they work simultaneously on five or six startups at a time. Um, we have an accelerator program. To make sure that the founders that we're working with, the entrepreneurs are fully skilled up on all the experience and all the, um, business model testing and market strategy validation that they need. Um, and then ideally the, the, the founding team graduate from our accelerator program at the same time as their product graduates from a p…

AI assessment note: “Blue Chili has built a portfolio of 54 startups... acts as the technical co-founder”

Q And you said about investing in, say, a portfolio of 20 startups. Do you have a sector in particular that you invest heavily in?

A Well, I think it's always a good idea if you're an, ah, an investor to, to focus on what you know, right? So, I have a, a 20 some year history of, of working on product development and product communications. And so I think probably where I've been most successful is investing in startups that are solving problems for other startups. So building the, the, the platforms and the tools that you need as a startup founder. So I recently, Had an Australian startup called Other Levels that, um, did an IPO on the Australian Stock Exchange, um, that was very successful. They're a business that provides analytics for app publishers to help them track whether anybody's Reading and responding to the push messages and the SMSs and emails that get sent to users of that app. Um, so that's a problem that I've faced before. Um, I understand what it feels like to be an app publisher and not know who my customers are and whether or not they're responding. Um, and so for me, that investment's gone quite well, and I think I've been able to add some value to that.

AI assessment note: “investing in startups that are solving problems for other startups.”

Q Surely being that storytelling, um, very narrative element that, as you said, it goes against the metric-driven VCs, So surely you won't be successful in your investment round, then, if you are, if going against their metric-based decision?

A The purpose of, of a great pitch is to begin a discussion, right? So, even a Y Combinator Termsheets happen after the pitch, right? They happen in the discussion one-on-one, in the, in the, in the, in the, in the room when everybody's mingling, and more typically in markets outside of Silicon Valley, they happen over the course of weeks, maybe months in a series of meetings. So that gives us months and months and months to go through the detail, to supply metrics, right? So the purpose of the pitch is to get invited back to have that detailed discussion. If you're not grabbing people by the heart and making them feel, wow, I really have to meet this team, you never get to next base.

AI assessment note: “gives us months and months and months to go through the detail, to supply metrics”

Q And now you're at Blue Chili. How did that, how did that come about? Um,

A About five years ago, ah, an old friend and I started a digital agency which specialized in helping startups, and we were trading off our experience as, as serial entrepreneurs in the startup space, and the community of, of other, um, experienced people working in the startup industry in Australia. Who were working on their own startup idea part-time, a couple of days a week, and who also needed to pay the rent or mortgage and so on. So we were able to pull together great project teams of experienced startup founders with expertise in user experience design or software development or online marketing, and we could pull these teams together on the fly and get them to work on a startup project, um, at a cost that other startups could afford. So we ran that business for a couple of years, and then, um, uh, Blue Chili, uh, was a business that was similar enough to ours that we used to refer each other to work, um, and, uh, they were looking to bring a few new members of management team on board, so they made us an offer that, um, we're pleased to accept.

AI assessment note: “they made us an offer that, um, we're pleased to accept.”

Q And now you're at Blue Chili. How did that, how did that come about? Um,

A About five years ago, ah, an old friend and I started a digital agency which specialized in helping startups, and we were trading off our experience as, as serial entrepreneurs in the startup space, and the community of, of other, um, experienced people working in the startup industry in Australia. Who were working on their own startup idea part-time, a couple of days a week, and who also needed to pay the rent or mortgage and so on. So we were able to pull together great project teams of experienced startup founders with expertise in user experience design or software development or online marketing, and we could pull these teams together on the fly and get them to work on a startup project, um, at a cost that other startups could afford. So we ran that business for a couple of years, and then, um, uh, Blue Chili, uh, was a business that was similar enough to ours that we used to refer each other to work, um, and, uh, they were looking to bring a few new members of management team on board, so they made us an offer that, um, we're pleased to accept.

AI assessment note: “they were looking to bring a few new members of management team on board”

Q Surely being that storytelling, um, very narrative element that, as you said, it goes against the metric-driven VCs, So surely you won't be successful in your investment round, then, if you are, if going against their metric-based decision?

A The purpose of, of a great pitch is to begin a discussion, right? So, even a Y Combinator Termsheets happen after the pitch, right? They happen in the discussion one-on-one, in the, in the, in the, in the, in the room when everybody's mingling, and more typically in markets outside of Silicon Valley, they happen over the course of weeks, maybe months in a series of meetings. So that gives us months and months and months to go through the detail, to supply metrics, right? So the purpose of the pitch is to get invited back to have that detailed discussion. If you're not grabbing people by the heart and making them feel, wow, I really have to meet this team, you never get to next base.

AI assessment note: “gives us months and months and months to go through the detail, to supply metrics”

Q And in a recent article you said that when you have a great idea, to build a product is the wrong thing to do. So what should people be doing first when they have that great idea?

A I'll preface that advice with no one piece of advice is going to work for everybody, but... Um, if, if you're a, if you're a great product person, so if you've spent five or seven or 10 years building tech startup products, then your greatest skill and your most likely path to market is to bootstrap and build your own product. Um, that way you're not using other people's capital, um, and you're applying your time and experience to something you know well how to do. But in Australia, um, and a lot of other places in the world, Many non-technical entrepreneurs spend a lot of time going to meetups trying to find that potential technical co-founder. Um, so that wastes a whole chunk of time, and then potentially when they start to build out their, their product team, um, they might spend several 100,000 dollars building a product first, and then take it to market, and then find that the economics don't work. That perhaps they're, they're too early to market, or perhaps the customer demographic that they imagined they were going to, to appeal to doesn't, doesn't, uh, take up the product, or perhaps even just at the end of the day, even though they're acquiring customers, the cost of acquiring customers is greater than their average revenue per customer, and then the economic models don't work. So, in the last few years, in, in lean startup methodology, um, we've developed, uh, a bunc…

AI assessment note: “validate a business model, to validate a marketing strategy, all in advance”

Q Okay. And now we're talking to investors and we've got to that next base, you yourself have immense experience with this through Blackbird and your investments with them. What do you personally look for when determining whether a startup will be a success then?

A So it's been a while, but the, the formula that I use these days is that let's assume that no matter how exciting, no matter how much traction an early stage startup has received, there will be hard times at some stage. And in order for me to work as hard as I should, in order for the founders to work as hard as they need to, to make this business successful, we all really need to care about a couple of things. We really need to care about the customer that we're addressing. We really need to care about the problem that they're facing and how we solve that, how well we solve that for them. If we've all got, all been to business school and we've identified an opportunity for To, um, create an e-commerce site that sells custom personalized handbags to win between the age of the 25 and 35. If that's just a, a niche that we've identified, I'm sorry, but we don't care enough about it to really win in a customized handbag space. I've learned from doing, um, charity fundraising for, for endurance events, things like Oxfam Trail Walker, that even though I've got friends who, who really love and care about me, when I ask them to donate to, um, my Oxfam Trail Walker walk later this year, I know it's going to take a bit of bothering from me to get them across the line. You know, I'm going to have to do a little bit more work, and investing is the same kind of thing. As an early stage inve…

AI assessment note: “we all really need to care about a couple of things”

Q And you wrote an article on how to hack a pitching event. Now that we have our idea and hopefully a product, the next logical step is to start pitching. So could you share with us your biggest tips and biggest no-nos for pitching?

A Yeah. So there, if, if, if you Google how to do a great startup pitch, right, you will find, um, templates, um, a lot of templates on, on, on the same kind of basic, um, model, right? So, um, at some point a, a VC or, or a tech startup entrepreneur has put up a template and everybody else has copied or made the changes to that. Basically you get up in front of an audience and say, um, here's a, here's a problem and here's the traditional solutions to that problem that don't work very well. Here's our suggested, um, better solution to that problem, and this is how big we think the market is, and this is how much of that market we think we can claim. This is the awesome rockstar team that we have working on this problem. This is how much capital that we're hoping to raise, um, and this is when we expect to close around. That's the, I'm generalizing, but that's the broad model, right? The reason why that model is so popular is that we, is that we pitch to people who are reviewing many, many, many pitches at a time. And investors like to make rational, logical decisions about the investments that they make. And for most of us, that's the worst possible way for us to be judged, right? Because if you're trying to be the next Airbnb, there's 30 other people all trying to be the next Airbnb, and if you're all just going to be judged on rational, logical metrics, then there's almost alw…

AI assessment note: “if you're all just going to be judged on rational, logical metrics”

Q And in a recent article you said that when you have a great idea, to build a product is the wrong thing to do. So what should people be doing first when they have that great idea?

A I'll preface that advice with no one piece of advice is going to work for everybody, but... Um, if, if you're a, if you're a great product person, so if you've spent five or seven or 10 years building tech startup products, then your greatest skill and your most likely path to market is to bootstrap and build your own product. Um, that way you're not using other people's capital, um, and you're applying your time and experience to something you know well how to do. But in Australia, um, and a lot of other places in the world, Many non-technical entrepreneurs spend a lot of time going to meetups trying to find that potential technical co-founder. Um, so that wastes a whole chunk of time, and then potentially when they start to build out their, their product team, um, they might spend several 100,000 dollars building a product first, and then take it to market, and then find that the economics don't work. That perhaps they're, they're too early to market, or perhaps the customer demographic that they imagined they were going to, to appeal to doesn't, doesn't, uh, take up the product, or perhaps even just at the end of the day, even though they're acquiring customers, the cost of acquiring customers is greater than their average revenue per customer, and then the economic models don't work. So, in the last few years, in, in lean startup methodology, um, we've developed, uh, a bunc…

AI assessment note: “tools that you can use to, to validate a business model”

Q And you wrote an article on how to hack a pitching event. Now that we have our idea and hopefully a product, the next logical step is to start pitching. So could you share with us your biggest tips and biggest no-nos for pitching?

A Yeah. So there, if, if, if you Google how to do a great startup pitch, right, you will find, um, templates, um, a lot of templates on, on, on the same kind of basic, um, model, right? So, um, at some point a, a VC or, or a tech startup entrepreneur has put up a template and everybody else has copied or made the changes to that. Basically you get up in front of an audience and say, um, here's a, here's a problem and here's the traditional solutions to that problem that don't work very well. Here's our suggested, um, better solution to that problem, and this is how big we think the market is, and this is how much of that market we think we can claim. This is the awesome rockstar team that we have working on this problem. This is how much capital that we're hoping to raise, um, and this is when we expect to close around. That's the, I'm generalizing, but that's the broad model, right? The reason why that model is so popular is that we, is that we pitch to people who are reviewing many, many, many pitches at a time. And investors like to make rational, logical decisions about the investments that they make. And for most of us, that's the worst possible way for us to be judged, right? Because if you're trying to be the next Airbnb, there's 30 other people all trying to be the next Airbnb, and if you're all just going to be judged on rational, logical metrics, then there's almost alw…

AI assessment note: “for most of us, that's the worst possible way for us to be judged”

Q And now we've validated our market and know that it's a viable business. What now, what would you advise the majority of people who don't know how to code? Would you suggest that they learn through something like Treehouse, or would you suggest they outsource? What, what are your thoughts?

A So, I think, uh, Majority of startup founders would want to have best of breed in everything that they do, right? So, um, if, if, if I'm appointing a VP of sales, I'm going to try and get the best possible personal account for that job. Same with, with your, your VP of marketing and, and ideally you CTO as well. So I guess the, the, the question there comes down to, you know, your own self knowledge of your, and, and for most of us, we would want the best possible technical, Um, founder of the business, and from us, if that was going to be us, then we would have learned that about ourselves when we were in our early teens. Um, great software developers. Um, I, I, I think, I really do think there's, there's, there's something, um, very early in, in the development of the person, um, perhaps even inherited from their parents, um, that, that, that makes people particularly good at, at, at certain kinds of learning and, and performing certain kinds of tasks that, that makes them really, really gifted software developers. Um, so you and I can learn to play the piano. Certainly we could learn another language. Absolutely. Are we going to be the best, um, And so I was going to become a professional tennis player. Probably not at this stage in our lives. So I think if all you need to do is build a very, very basic minimum viable product and time is not an issue. And certainly I would s…

AI assessment note: “Go and learn some coding skills and see if you can get far enough”

Q What would you advise in terms of finding co-founders? Would you say do meetups? Would you say do online forums?

A Um, so if, if you check Quora, actually, um, Quora's, somebody asked a question a little while ago, you know, how do I, what's the best way to attract a co-founder, and, and, um, I'm, I'm pretty excited about the fact that my answer to that question is, is that, is the top rated answer. So, look, great technical founders, um, are, you know, It's not a good thing to stereotype people, and so every, every great software developer or every great hardware engineer is going to be different to the next, but in general terms, if we may just stereotype a little bit just to make some progress, um, these are people who are interested about solving interesting problems, and They don't see generally, they don't see business problems as, as nearly as interesting as great mathematical or logical or programming problems. And so I encourage people to, to, to break their business goal and their customer aspiration and the, the journey of their business down into the kinds of things that are going to motivate a technical, a potential technical co-founder. So there are, there are things like, um, recommendation, algorithm, um, There are things like, um, drunk walk solutions to trying to find the best way to get a package, um, um, or several packages, um, in a delivery vehicle through multiple stops along the way. There are kinds of, of, of great programming, um, problems that always merit further…

AI assessment note: “break their business goal and their customer aspiration... into the kinds of things that are going to motivate”

Q What would you advise in terms of finding co-founders? Would you say do meetups? Would you say do online forums?

A Um, so if, if you check Quora, actually, um, Quora's, somebody asked a question a little while ago, you know, how do I, what's the best way to attract a co-founder, and, and, um, I'm, I'm pretty excited about the fact that my answer to that question is, is that, is the top rated answer. So, look, great technical founders, um, are, you know, It's not a good thing to stereotype people, and so every, every great software developer or every great hardware engineer is going to be different to the next, but in general terms, if we may just stereotype a little bit just to make some progress, um, these are people who are interested about solving interesting problems, and They don't see generally, they don't see business problems as, as nearly as interesting as great mathematical or logical or programming problems. And so I encourage people to, to, to break their business goal and their customer aspiration and the, the journey of their business down into the kinds of things that are going to motivate a technical, a potential technical co-founder. So there are, there are things like, um, recommendation, algorithm, um, There are things like, um, drunk walk solutions to trying to find the best way to get a package, um, um, or several packages, um, in a delivery vehicle through multiple stops along the way. There are kinds of, of, of great programming, um, problems that always merit further…

AI assessment note: “refactor our business challenge into something which is a really interesting software developer challenge”

Q And now we've validated our market and know that it's a viable business. What now, what would you advise the majority of people who don't know how to code? Would you suggest that they learn through something like Treehouse, or would you suggest they outsource? What, what are your thoughts?

A So, I think, uh, Majority of startup founders would want to have best of breed in everything that they do, right? So, um, if, if, if I'm appointing a VP of sales, I'm going to try and get the best possible personal account for that job. Same with, with your, your VP of marketing and, and ideally you CTO as well. So I guess the, the, the question there comes down to, you know, your own self knowledge of your, and, and for most of us, we would want the best possible technical, Um, founder of the business, and from us, if that was going to be us, then we would have learned that about ourselves when we were in our early teens. Um, great software developers. Um, I, I, I think, I really do think there's, there's, there's something, um, very early in, in the development of the person, um, perhaps even inherited from their parents, um, that, that, that makes people particularly good at, at, at certain kinds of learning and, and performing certain kinds of tasks that, that makes them really, really gifted software developers. Um, so you and I can learn to play the piano. Certainly we could learn another language. Absolutely. Are we going to be the best, um, And so I was going to become a professional tennis player. Probably not at this stage in our lives. So I think if all you need to do is build a very, very basic minimum viable product and time is not an issue. And certainly I would s…

AI assessment note: “Go and learn some coding skills and see if you can get far enough”