The Exchanges

Q When did you like to start thinking about fundraising again? When was it? Was it because I always recommend for startups nine months is the time that gives you a bit of, a bit of runway to, to really start making relationships again with VCs and get the VC fundraising going again. Did you, did you agree with the nine month assessment or do you have a different timescale?

A Yes, I agree that you want to start raising money, uh, As early as possible. Nine months is, is a great runway. I mean, in my case, that means I would have never stopped fundraising, which was pretty much the case. But typically five months, four to five months is when I would start aggressively looking for money and going out on road shows and start trying to close new investors. It's always better to use a rifle than a shotgun. Every time I've gone out and tried to meet with, you know, 20 investors, inevitably I will get 20 no's. You know, where I go to Sand Hill Road, and I, you know, go up and down, and, you know, have three meetings on one day, and two meetings on the next, and it's like, it's always a struggle. It's just never, and I've done it so many times in my life, you know, between the, I've had three venture-backed companies, and that's all you do.

AI assessment note: “typically five months, four to five months is when I would start aggressively looking”

Q So do you as a manager try and implement those kind of strict timelines on your team then without them being forced on you from events like CES?

A We do, but the problem when you have internal deadlines is it's kind of like a, a child pushing on their parent for, against the rules of the family. If you're absolutely rigid with your child, then you become this totalitarian regime within your household. And it's the same within a company. If you are so rigid on internal deadlines and people are bust Seeing their ass to get to these internal deadlines, You feel like you're a cruel person because they're not being able to spend time with their families. They're giving up, you know, children's birthday parties and family vacations just to make these deadlines that are artificially constrained within the business. When it's external, you don't have to play the bad cop there. It just happens. One of the big external drivers for us was the launch of the new Star Wars toy line, which was called Force Friday. That was a hard deadline. We had to get our product on the shelves, and the software had to be done. There was no ifs, ands, or buts about it. That's when the product hit shelves. So everyone kind of rallied around that date, and we made it. So having external, external launch dates is actually a really interesting component for a company like ours, because when you launch software, you can kind of fudge your release date, because you're always updating it. When you sell into retail, they say, okay, we're going to launch you o…

AI assessment note: “We do, but the problem when you have internal deadlines is”

Q When did you like to start thinking about fundraising again? When was it? Was it because I always recommend for startups nine months is the time that gives you a bit of, a bit of runway to, to really start making relationships again with VCs and get the VC fundraising going again. Did you, did you agree with the nine month assessment or do you have a different timescale?

A Yes, I agree that you want to start raising money, uh, As early as possible. Nine months is, is a great runway. I mean, in my case, that means I would have never stopped fundraising, which was pretty much the case. But typically five months, four to five months is when I would start aggressively looking for money and going out on road shows and start trying to close new investors. It's always better to use a rifle than a shotgun. Every time I've gone out and tried to meet with, you know, 20 investors, inevitably I will get 20 no's. You know, where I go to Sand Hill Road, and I, you know, go up and down, and, you know, have three meetings on one day, and two meetings on the next, and it's like, it's always a struggle. It's just never, and I've done it so many times in my life, you know, between the, I've had three venture-backed companies, and that's all you do.

AI assessment note: “typically five months, four to five months is when I would start aggressively looking”

Q But then how impactful has Techstars been in your trajectory with Sphero?

A Huge, right? I mean, uh, the company was birthed through Techstars, really. Ian and Adam didn't have enough momentum to actually start their business until they got into Techstars. And then Techstars Put them in contact with a whole bunch of mentors, as well as expose them to investors. So the business got birthed really through Techstars, and for me personally, that's how I became associated. And then they ran a second program with Disney Accelerator in 2014. Going through that and the exposure we got into the Walt Disney Company has transformed the business. I mean, it, it, it, the accelerator doesn't, you know, put us, it gave us, you know, warp drive. That's what happened when we came out of Disney. It was just incredible what happened with Star Wars.

AI assessment note: “Huge, right? I mean, uh, the company was birthed through Techstars, really.”

Q So do you as a manager try and implement those kind of strict timelines on your team then without them being forced on you from events like CES?

A We do, but the problem when you have internal deadlines is it's kind of like a, a child pushing on their parent for, against the rules of the family. If you're absolutely rigid with your child, then you become this totalitarian regime within your household. And it's the same within a company. If you are so rigid on internal deadlines and people are bust Seeing their ass to get to these internal deadlines, You feel like you're a cruel person because they're not being able to spend time with their families. They're giving up, you know, children's birthday parties and family vacations just to make these deadlines that are artificially constrained within the business. When it's external, you don't have to play the bad cop there. It just happens. One of the big external drivers for us was the launch of the new Star Wars toy line, which was called Force Friday. That was a hard deadline. We had to get our product on the shelves, and the software had to be done. There was no ifs, ands, or buts about it. That's when the product hit shelves. So everyone kind of rallied around that date, and we made it. So having external, external launch dates is actually a really interesting component for a company like ours, because when you launch software, you can kind of fudge your release date, because you're always updating it. When you sell into retail, they say, okay, we're going to launch you o…

AI assessment note: “We do, but the problem when you have internal deadlines is”

Q It's a change with those three companies. Have you seen investor sentiment change with those changes?

A It's the same thing time and time again. It's just, you could just change the name of the company, change it like, oh, we're software as a service now, or we're, We're making physical products. It's the story changes, but the behavior of the investors is pretty much the same. Term sheets may change a little bit depending on the, uh, the wins, economic wins of the day, but the experience is always the same. You go into some beautiful office that, you know, nicely appointed. You're paying your whole way there. You get an hour with them. You do your pitch. You do your demo. Seven out of 10 of them won't give you a response. They'll always go into the maybe category and hedge their bets. A couple of them will be like, this isn't for us, and a couple of them are saying, I'm interested, let's have a second meeting.

AI assessment note: “the story changes, but the behavior of the investors is pretty much the same.”

Q Brad Feld wanted me to ask you about, and it's, let's say the retail, um, element doesn't go so well, and you're at your next inevitable board meeting. I want to hear, and this is a question from Brad, so I can't take creative license for it. When you disagree with your board, how do you resolve it, and what have your learnings been in maintaining a happy board environment?

A Uh, those are, you know, several questions wrapped into one. So, when you disagree with your board, what do you do? I think the first thing you do is you need to listen intently, and you need to be thoughtful and take it in, as opposed to just reacting And get into an argument with your board. If you are arguing with your board in the middle of the board meeting, you need a mental, you know, some little light needs to go off saying you're doing something wrong. They're there to help you become better as a company and as a CEO. So first thing is you listen, and then I process it, and then I try to come back to them with something thoughtful, or I see if they can sway me in their viewpoint. Oftentimes, I will take it as a challenge, like, ok, they didn't understand What I was communicating here, and so they had a difference of opinion. So I have to go back to them with more data, more information, a better plan to convince them. I always try to get unanimous decisions around, you know, the strategy of the company with the board. So how do you keep a happy board? The way to keep a happy board is to never surprise them. Always get in front of them. When you go to the board meeting, there shouldn't be any information that's presented where they're going to look at and go, what the hell is this? I've had that happen Several times in my career, and even though I should know better, yo…

AI assessment note: “The way to keep a happy board is to never surprise them.”

Q But then how impactful has Techstars been in your trajectory with Sphero?

A Huge, right? I mean, uh, the company was birthed through Techstars, really. Ian and Adam didn't have enough momentum to actually start their business until they got into Techstars. And then Techstars Put them in contact with a whole bunch of mentors, as well as expose them to investors. So the business got birthed really through Techstars, and for me personally, that's how I became associated. And then they ran a second program with Disney Accelerator in 2014. Going through that and the exposure we got into the Walt Disney Company has transformed the business. I mean, it, it, it, the accelerator doesn't, you know, put us, it gave us, you know, warp drive. That's what happened when we came out of Disney. It was just incredible what happened with Star Wars.

AI assessment note: “Huge, right? I mean, uh, the company was birthed through Techstars, really.”

Q Brad Feld wanted me to ask you about, and it's, let's say the retail, um, element doesn't go so well, and you're at your next inevitable board meeting. I want to hear, and this is a question from Brad, so I can't take creative license for it. When you disagree with your board, how do you resolve it, and what have your learnings been in maintaining a happy board environment?

A Uh, those are, you know, several questions wrapped into one. So, when you disagree with your board, what do you do? I think the first thing you do is you need to listen intently, and you need to be thoughtful and take it in, as opposed to just reacting And get into an argument with your board. If you are arguing with your board in the middle of the board meeting, you need a mental, you know, some little light needs to go off saying you're doing something wrong. They're there to help you become better as a company and as a CEO. So first thing is you listen, and then I process it, and then I try to come back to them with something thoughtful, or I see if they can sway me in their viewpoint. Oftentimes, I will take it as a challenge, like, ok, they didn't understand What I was communicating here, and so they had a difference of opinion. So I have to go back to them with more data, more information, a better plan to convince them. I always try to get unanimous decisions around, you know, the strategy of the company with the board. So how do you keep a happy board? The way to keep a happy board is to never surprise them. Always get in front of them. When you go to the board meeting, there shouldn't be any information that's presented where they're going to look at and go, what the hell is this? I've had that happen Several times in my career, and even though I should know better, yo…

AI assessment note: “So, when you disagree with your board, what do you do? I think the first thing you do is you need to listen”

Q It's a change with those three companies. Have you seen investor sentiment change with those changes?

A It's the same thing time and time again. It's just, you could just change the name of the company, change it like, oh, we're software as a service now, or we're, We're making physical products. It's the story changes, but the behavior of the investors is pretty much the same. Term sheets may change a little bit depending on the, uh, the wins, economic wins of the day, but the experience is always the same. You go into some beautiful office that, you know, nicely appointed. You're paying your whole way there. You get an hour with them. You do your pitch. You do your demo. Seven out of 10 of them won't give you a response. They'll always go into the maybe category and hedge their bets. A couple of them will be like, this isn't for us, and a couple of them are saying, I'm interested, let's have a second meeting.

AI assessment note: “the story changes, but the behavior of the investors is pretty much the same.”

Q now and kind of the hardware landscape as a whole, How do you look to establish that focus on particular areas, and where are the areas that you're focusing on? I read a brilliant article the other day about software distinguishing the winners in hardware. Is that something that you agree with, and how do you kind of apply that focus with the two diametrical worlds of software and hardware?

A Well, that's our constant struggle every day within the company. It's a, it's a challenge. The first thing is, is just recognizing that it is a challenge, and that you have to get the teams talking to each other, Working together for us, what was a driving moment, uh, having a major event where we needed to have the product kind of be put on display. So we've had a couple of major defining moments in our company and they always center around an event where we, the team is rallying to make a specific goal because it's an external event that we can't control the day. So the very first one was CES, which was just a few months after the tech stars program ended. And we needed to show some traction for the little bit of venture money that we raised up to that point. We only had about a million dollars in the bank. And, you know, we're spending a lot of money making all these prototypes and stuff. So we had to kind of gain some traction so we could get some more money. So the hard date was first week of January, 20 11. And having that deadline, that external deadline really rallied the team together. I remember this one time where Ian and I were talking one late night and we couldn't make the ball roll straight. It was November, mid-November, and we came in the next morning. We said, guys, we're going to have to pull out of CES. We can't make it. And it was a small team at that time.…

AI assessment note: “you have to get the teams talking to each other, Working together”

Q now and kind of the hardware landscape as a whole, How do you look to establish that focus on particular areas, and where are the areas that you're focusing on? I read a brilliant article the other day about software distinguishing the winners in hardware. Is that something that you agree with, and how do you kind of apply that focus with the two diametrical worlds of software and hardware?

A Well, that's our constant struggle every day within the company. It's a, it's a challenge. The first thing is, is just recognizing that it is a challenge, and that you have to get the teams talking to each other, Working together for us, what was a driving moment, uh, having a major event where we needed to have the product kind of be put on display. So we've had a couple of major defining moments in our company and they always center around an event where we, the team is rallying to make a specific goal because it's an external event that we can't control the day. So the very first one was CES, which was just a few months after the tech stars program ended. And we needed to show some traction for the little bit of venture money that we raised up to that point. We only had about a million dollars in the bank. And, you know, we're spending a lot of money making all these prototypes and stuff. So we had to kind of gain some traction so we could get some more money. So the hard date was first week of January, 20 11. And having that deadline, that external deadline really rallied the team together. I remember this one time where Ian and I were talking one late night and we couldn't make the ball roll straight. It was November, mid-November, and we came in the next morning. We said, guys, we're going to have to pull out of CES. We can't make it. And it was a small team at that time.…

AI assessment note: “that's our constant struggle every day within the company. It's a, it's a challenge.”