Episode Summary
“It’s the founders who are building companies. It’s the founders who are spending years without taking salary. When they’re first building out their companies, like a lot of this stuff is overlooked where we are looking at only the most successful companies where we know that 99% of early startups failed. And with that, it’s founders take incredible risk.”
-Sena Zorlu, Kubera Venture Capital
Understanding how investors think about your startup is a mystery. When you’re pitching, what are they hearing? What opinions are they forming? So many founders may think they’re communicating one thing, when actually it’s another, and it may not be at all what’s in the pitch deck, or conversation!
Sena Zorlu and I reveal to founders what investors see, think & discern. Many times, that founders have no idea they even communicated. Founders not only learn about this fascinating founder, investor & new stealth startup leader, they’ll gain insights into how investors tick, and also what founders can do to be more clear communicating with investors, and understanding why investor’s perceptions land where they do.
Sena Zorlu is Venture Partner at Kubera Venture Capital, and a stealth startup co-founder. She has been on both sides of the table and is diving headlong into the startup world again. She has helped me improve my knowledge as a venture capital investor. She’s especially effective at evaluating companies in our work together at Kubera. She’s amazingly insightful, a powerful communicator & a force to be reckoned with. So you need to hear from her.
Listen, imbibe & enjoy the vibe.
Episode Transcript
Greg White (00:07):
It’s time to wake up to TECHquilla Sunrise. I am Greg White, your Supply Chain Tech Adviser. With more insights into what you need to know to succeed in Supply Chain Tech startup, growth, investment, and transformation. So, let’s tip a glass to another enlightening TECHquilla Sunrise.
Greg White (00:41):
Hey, understanding how investors think about your startup is a mystery. When you’re pitching, what are they hearing? What opinions are they forming? So many founders, including me and maybe even my guest, think they’re communicating one thing when actually it’s quite another. And it may not be at all what’s in your pitch deck or the communication you intended. My guest and I are going to reveal to you what investors see, what they think, and what they discern the founders have no idea they even communicated. And by the end of this episode, you’ll not only have insights into how investors tick, but also what you can do to be a bit more clear in communicating with investors, understanding why investor’s perceptions land where they do, and what you can do about it to be more effective.
Greg White (01:33):
So, let me introduce our guest, Sena Zorlu, Venture Partner at Kubera Venture Capital and Stealth Startup Cofounder. I can’t wait to hear about that. Look, Sena has been on both sides of the table before. She’s a previous co-founder, current venture partner – along with me – at Kubera. She is my Sherpa, my guide to help me improve on being on the venture capital side of things. When you first start out in this, everything is a good deal, but especially when evaluating companies. In our work together, she’s been amazingly insightful, a really powerful communicator, a force to be reckoned with, a new mom. So, you need to hear from her. So, let’s do it. Sena, thanks for joining us.
Sena Zorlu (02:30):
Thank you for inviting me.
Greg White (02:30):
So, all of this conversation was spawned by an email you sent to me – that I’ve got right over here – that I refer to daily. And a number of the things that you’ve sent over time as we’ve discussed things like thesis and evaluation points, this most recent one was on traction and what that means. So, tell us a little bit about you, what you’re doing today, and maybe a little bit about your founder and investor journey.
Sena Zorlu (03:04):
Sure. So, I’ve been in the U.S. on and off for about 15 years. I came to this country first for college, for undergraduate. And I’ve been mostly on the East Coast. And then, I got to live in a couple of different countries. I went back to Turkey for a little bit. That’s where I’m originally from. I lived in Belgium for a little bit. And I lived in China for a bit.
Greg White (03:34):
I saw Belgium. I did not see China. Where were you in China?
Sena Zorlu (03:37):
So, China, I was doing an MBA program. And since I’ve been an entrepreneur, I didn’t have, like, a corporate sponsorship, so I had to pay for it out of pocket. And MBAs are expensive, so I found an international MBA that was much cheaper. And they had their exchange program in China, in Beijing. And I was like, “Okay. This is a wonderful opportunity to learn about what the hell is going on in China. How do they do business there?” And I thought it could give me an edge. So, I was like, “Okay. I’m going to Beijing.
Greg White (04:12):
How long were you there?
Sena Zorlu (04:15):
So, I was there on and off. But because it was an executive program, it wasn’t like a standard MBA experience. So, it was like one week off of couple of quarters, where you had to go and complete some classes, but most of it was online. It was an amazing experience. So, that was up in Beijing. And then, later I went to Guangzhou. I wanted to do a couple of manufacturing stuff there. So, I got to see that area. I stayed there for a couple of months. It’s really a different world. Like, that’s another conversation.
Sena Zorlu (04:53):
But then, in 2013, I got an offer from Virginia Tech to help them with their partnerships for their executive programs. And then, I realized how much I had missed U.S. and I was like, “Yes. I’m coming back.” So, I was going back and forth between Virginia. And then, I met my husband in 2014, and he had grown up in California. And he was like, “Let’s go to Los Angeles.” And I was like, “No, no, no. I like New York. Let’s go to New York.” And then, we settled in San Francisco Bay Area. We thought best of both worlds. So, we’ve been here since 2015.
Sena Zorlu (05:34):
I started building my second startup when I was in Bay Area, working on internet of things, data on the commercial side of things, and I did that until 2018. And that’s where I met Balaji, who’s our managing director of Kubera. He was leading SAP’s early stage program, SAP.io. And my startup was one of the startups in the SAP’s early stage program. So, I met Balaji there. We got to work out in the same office. And then, when he was building the fund, he came to me and he was like, “Do you want to help me build this thing?” And, yes, I’ve been in venture capital officially for over two years, but at the same time it was an entrepreneurial experience to build this fund, you know, from the ground up.
Sena Zorlu (06:28):
And there was a lot of learning with, you know, what documents do you create, what are the processes, and all of that. It was incredible learning. So, we got to explore, like, everything from scratch and built our own thesis and investment modeling and everything. So, it’s been an incredible two years.
Greg White (06:49):
So, I’m the new kid on the block, right? I mean, you two are effectively founders. And James, of course, are effectively founders. And I’m the new kid. But I appreciate all the welcome and the help and everything. But share a little bit about – because I think you can do it better than I can – Kubera and, you know, kind of the founding thesis, not too much depth, but the official thesis. I think it’s interesting. It really interested me and inspired me to join you guys when I talked to Balaji about it.
Sena Zorlu (07:25):
So, I would say, at Kubera, our foundational pieces is on two areas. One is, we do invest their early stage. And we invest mostly outside of Silicon Valley. We believe that opportunity is found everywhere. And we would like to focus at people who are coming out of traditional industries and who are coming out knowing all of the pros and cons of those industries. And going back in as founders to digitize and to transform those industries. That is, I would say, our sweet spot for Kubera. And everyone on the team has done the traditional business side of things. And we have seen how digitization, AI, machine learning, smart data, and all of these processes, can really transform how companies are performing. Including from their manufacturing process to their services, agility to human relations, all of that.
Sena Zorlu (08:33):
So, that transformation that we’ve seen, I would say, in the past, like, 10, 15 years. You look at Fortune 100, you look at Fortune Top 10, there has never been a moment in history where those charts have been changing so quickly as to, like, who are the top companies. And we have found that every traditional company in the world needs to evolve into a software company. And that is inevitable. And you can get there now or you can get there eventually in the future, but you will have to get there. So, that was the first focus, where we looked at where Fortune 100 and Fortune 500 is. And when you overlay that on where startups are coming from, there’s a mismatch. And that’s one of the big reasons why these large companies are having so much difficulty transforming their processes.
Sena Zorlu (09:32):
They have innovation officers, whose job it is to build relationships with startups. Maybe, bring some pilots with the business units. But I’ve built enterprise software, it doesn’t work. And it’s so difficult to work between startups and enterprise that we thought these companies need to be built where these problems are actually occurring, where the human capital is. You’re looking at a lot of cities in America where the predominant economic income is still coming from these traditional industries. But there is talent. There’s talent from universities being built up. We found a magical equation with – what we call -subject matter expertise that comes from the industry paired with a technologist that understands what technology can do. And we have found that that becomes a very powerful match made in heaven. So, I would say that’s the first part of the thesis.
Sena Zorlu (00:10:40):
And then, second part of it, we do very early investments. And we have decided when we say very early, we mean in the early stages of product development, in the early stages of getting some sort of inkling as revenue. We have always invest at, I would say, sub-$1 million revenue.
Greg White (11:05):
Well, that will enlighten a lot of people, won’t it? Because, I mean, you’ve founded a few companies, right? I have too. It’s the million dollar threshold that nobody wants to touch you until you hit that. So, this whole concept – and this was attractive to me too – of seed, pre-seed, seed plus, whatever you want to call it, whatever you have to do, whatever you have to call it so you don’t put a letter next to it, because a letter means that you have to have a million dollars in revenue. I think that’s been a great service to the industry. It has helped a lot of companies get the right kind of investors that can not only provide money, but actual assistance in the founding stage.
Sena Zorlu (11:52):
Absolutely. And, also, once you get out of the main technical hubs, you will rarely find investors that have appetite to invest in these rounds. A lot of the investors are looking for traction, traction, traction. And then, when we see traction – like that email that you were talking about – not all traction is the same. Not all million dollars account do the same thing. So, it’s like, as investors, what we try to look for is the recognition of an early pattern, the recognition of some sort of early signs of go-to market success. Which is very different from just revenue, because you could sell services, you could have one amazing customer that you are solving their absolute need, and 70 percent of your revenue may come from creating the perfect product for them. But that doesn’t mean repeatable revenue. So, not all traction is created equal as well.
Greg White (12:52):
That’s well said. And you said it well here, by the way. I think it’s interesting to think about those topics because, you know, as you’re discussing that, I’m thinking of a slide. I’m thinking of attraction slide or go-to market slide or whatever. And I think about what founders so often communicate, what they expect that an investor wants to hear, or they think they need to say. And it’s difficult for them to get into the mindset. I can tell you, it was a transition for me to sit on this side of the table and go, “Oh, that’s what they wanted to hear.” It really is a difficult transition to make that in your mindset. So, I want to get to that in a second.
Greg White (00:13:46):
But I want to understand a little bit about your transition from founder to investor. So, one of the other thesis of Kubera is we want to elevate everyone. We are specifically looking for female founders, people of color, disadvantaged populations, things like that to provide capital to. I don’t sense that you have, like, a crisis story, but tell me a little bit about how you’ve experienced founding and investing as a female.
Sena Zorlu (14:28):
So, one thing that was very interesting to me that I hadn’t quite grasped when I was sitting on the founder side was, how many meetings your investors have to take on a daily basis?
Greg White (14:44):
Gosh, that’s a good point.
Sena Zorlu (14:46):
This, to me, like when I got a meeting from a fund that I was very interested in, I always thought in my mind, “Okay. Like, this is half of the sale, getting the meeting.” Getting the meeting is not even five percent, and that was quite shocking to me. And I’ve had founders where they got meetings, especially coming out of accelerators because you have these, like, buzz over companies and they book a bunch of meetings because the accelerator arranges it for them. And there’s this false hope of thinking everything is done, which I went through some of this as well.
Sena Zorlu (15:26):
So, one thing is, I think founders need to understand how the funnel is built on their side and how the funnel is built on the VC side. So, a lot of times you hear people talking about when you’re fundraising as a founder, you must have a CRM. You must put a lot of funds into the top of the funnel. And the average, I believe, is about 60 to 100 VCs that you have to reach out to, to get a deal.
Sena Zorlu (15:57):
So, I’ll give you a diverse statistic. On the VC side, I have been told that to make investments, I have to source a hundred X of the number of companies that I would like to invest to. So, let’s say, if I’m going to invest in two to three companies a year. Which is, by the way, the average that a VC firm general partner invest a year, two to three companies. Not more, they don’t want to take on more responsibility than that. So, that means, they will have conversations with 200 to 300 companies.
Sena Zorlu (16:31):
Now, when I first started with Kubera, I started as an associate. So, I was the gatekeeper. I was the one that screened all of the deals. I was the one that filtered all of the databases and everything. So, my KPI was to screen about 600 companies. And I created a database for us so that we could successfully invest in five to six companies. Now, that’s an incredible number. So, the trick with that is, you need to understand where these deals are coming from. And then, you have to have a quantitative process to understand where the successful deals are coming from.
Sena Zorlu (17:08):
So, let’s talk about our case, which a lot of micro funds will be where we have someone like Balaji, who is super connected in the industry. And just by being himself, deals fly to him. See, you and me, we’re not there yet. We can try to get there –
Greg White (17:26):
We still have to grind it out.
Sena Zorlu (17:31):
Yes. But it’s one of those things where, like, whenever I have a shiny new company, most of the time he’s heard about them. There’s a reason for that.
Greg White (17:37):
Or the industry, or, you know, a competitor, or something like that.
Sena Zorlu (17:43):
Competitor. And he has wonderful relationships built with other venture capitalists, which I think a lot of founders are also neglecting. Like, what you communicate with one VC may transfer to another. There’s a lot of conversation, good or bad. But, usually, when we like a deal and when we decide to invest in it, immediately we’re telling our other VC friends, “Do you want part of this deal? We have 500K allocation left.” We are going to give that opportunity to the friends that we like. So, there’s a lot of conversation. And when you come into the industry, you’re not hooked into the conversation. So, that top of the funnel where your partners are bringing you deals, that’s your high quality beats.
Sena Zorlu (18:32):
So, when people say warm introductions matter, they matter. Because if a lead is coming to you from someone who says, “You should take a look at this founder. You should take a look at this technology. They’re building something interesting.” Yes, we are going to be paying attention to that company first. And they may exist on a database, you know, on the same line, but they will not be weighed equally. That doesn’t mean that we will never look at the companies that we don’t get a warm introduction from. But that’s where, I would say, I would suggest to the founders to look at the more gatekeepers of the fund as opposed to aiming for the top managing directors of the funds.
Greg White (19:18):
Yeah. I agree.
Sena Zorlu (19:21):
I would say, like, you get a lot of cold emails. Greg actually gets a lot of inbound traffic from our website, mostly from this podcast. How many of those emails do you read, the cold emails that you get?
Greg White (19:36):
I try to read them all, but I don’t put them at the top of the stack. You know, if Paul Noble from Verusen sends me somebody, or you send me somebody personally, I do that.
Sena Zorlu (19:48):
That’s different.
Greg White (19:49):
And the reason for that is, I trust your judgment.
Sena Zorlu (19:53):
Yes. It’s pre-screened for you in a way.
Greg White (19:55):
It is somewhat pre-screened. Yeah, no doubt. I agree. Look, that’s an important part of life. You’re more friendly to the people you’re more familiar with. Someone who is recommended by a friend is more likely to be your friend. It just works that way.
Sena Zorlu (20:18):
Absolutely. Absolutely. I mean, but one disadvantage of that is a lot of these underrepresented populations, they are not in-sync with these traditional friend groups. So, we may get deals from, you know, an ivy league circle than an underrepresented founder may not be part of. We may get deals from people that may look like us, which they may not have had the chance to do so. So, a lot of the time, the most important passage that we need to have is an open communication, and push towards cold emails or web based applications. I try to attend a lot of demo days for female founders. And I see that it may not match my thesis, but I have done a lot of introductions where I thought the founder was pretty strong. And it doesn’t match our thesis. We’re a small fund and we’re a very specific fund. But we make friends along the way.
Sena Zorlu (21:30):
And then, we have also, as female investors, we are trying to build our own little group. We have a little WhatsApp group of, like, about 15 female investors and we pass deals to each other. And we do that because we want to excel each other in the industry. And it’s like, if there is this bro culture that shapes the industry, why can’t we build our own subculture in it? And that’s not to say we see ourselves as completely different, but it’s, like, it’s another subset of networking that we can do where we try to find people that may look like us and try to lift them altogether. So, I think it’s changing.
Greg White (22:17):
I think it’s important from a cultural standpoint, from a racial, sex, standpoint, all of those things, but also from a socioeconomic standpoint. Like, I’m a poor farm kid born in a trailer park, so I can empathize with those people who don’t have ivy league connections, haven’t grown up doing this their whole lives, look at entrepreneurship a new way. And I think that’s what’s really powerful about the awareness that’s been created in the last couple of years is, you can see the value of somebody with a different kind of upbringing. And figure out what kind of gifts they bring that complement the gifts that someone with an ivy league education has. And connecting those people, to me, it’s easier than ever before. It is easier than ever before. But we still are really, really [crosstalk].
Sena Zorlu (23:15):
And that’s the beauty of technology. Technology is the biggest democratizer in the world. It’s the biggest opportunity created in the world. So, when you look at technology in that way as encompassing all of us, we can’t have the decision-makers be from one percent of society, because then the products that they will back will not speak to 99 percent of the society. And that’s why it’s so critical to bring diverse voices.
Sena Zorlu (23:47):
I think it’s happening. I think the change has started for two things. One is, I think there’s a real shake in traditional industries, and that includes venture capital. Venture capital is a traditional industry. Money is a traditional industry. So, the old institutional money is being shaken up. If you look at banks today, the way they’re being disrupted by digital banks. If you look at Angel Cole, like, syndicates funds. If you look at Republican and other crowd funding platforms. There is wealth creation that’s being democratized right now that will create ripple effects. And that’s absolutely coming.
Greg White (24:33):
Yeah. No doubt. I completely agree with that. And I agree that it is time. And as you said, I’m quoting you on this, “Technology is the great democratizer.” I would say, it’s the great democratizer of relationships. If you think about LinkedIn and Twitter and other meaningful relationship type tool sets, I mean, if someone –
Sena Zorlu (24:59):
I met my husband online.
Greg White (25:02):
Yeah. And, now, since the pandemic, I think LinkedIn – it’s funny, somebody just posted something the other day, Nick Roemer, I think, is his name. He lives in Scotland. And he’s trying to find a place for all of his or many of his connections to physically get together when we can get together. Now, I had an experienced the other day saying that with the folks at Supply Chain Now. Jeff Miller, who was new to the group, came up to me and shook his hand. I wanted to give him a hug because I was like, I forgot that I had never physically met him before. I was like, “Oh, right. We need to introduce ourselves.” It just feels so natural. And I think we’re overcoming that because we’ve had to. And I think we can do the same with social interaction – I mean, socioeconomic interaction with the financial industry. Certainly, we can do it because it’s being done.
Greg White (26:00):
For instance, in Africa, 80 percent of the population is unbanked. And yet they have figured out a way for people to pay with their cell phones or, you know, applications or whatever. So, the opportunity exists. It’s just that we, the consumer; we, the mass population, we have to adopt it and then things will change. And when more and more people start to adopt this notion of spreading the wealth, it will happen. It’s just going to happen naturally.
Sena Zorlu (26:32):
It will happen. I think it’s happening already. And I think the first phase of it is sort of like affirmative action, where we have to push to get funding to a lot of underrepresented folk, including female, where we have female specific funds, we have social impact funds, we have LatinX funds, and things like that. So, that’s an essential way to get things going. But as these investments produce results, we are going to mainstream it in a way where they’re not going to call me a female founder. They’re going to call me a founder. So, that’s where we’re going. We’re not there yet, but we’re getting there.
Greg White (27:18):
The sooner the better. Yeah. I agree. So, let’s shift gears a little bit, and let’s talk about you as an investor. Actually, not talk. I really want to ask you some questions about some of the things you see, have seen, think you’ll see as am investor. And, you know, one of the things we’re talking about is, how do founders and investors communicate? So, tell me why do you think it is so hard for founders and investors to speak the same language? You’ve just outlined a couple of great examples of those gaps. What do you think the main impetus for that gap is?
Sena Zorlu (28:05):
I think it could be couple of things. I think one is through, I would say, mostly Twitter. There is this culture of worshiping investors, which I have had as a founder. Like, whenever I met someone that I’ve been following on Twitter and they have, like, hundreds of thousands of followers, you are a little bit fame struck. I think what founders need to understand is, you are on equal terms. And I think even founders are at an advantage, where it always tries to look like investors are at an advantage. You know what I mean? Because they’re more ungettable. But I think it’s the opposite. I think money is a commodity. And are there super angels that put incredible value in the companies that invest in? Of course.
Greg White (29:11):
There are small, small [crosstalk].
Sena Zorlu (29:11):
But it’s founders that are taking the risk. It’s the founders who are building companies. It’s the founders who are spending years without taking salary when they’re first building out their companies. A lot of this stuff is overlooked where we are looking at only the most successful companies, where we know that 99 percent of early startups failed. And with that, founders take incredible risk. Most investors do not. First of all, they come from either built wealth or family wealth or whatever that may be, so they are usually more cushioned to take risk in life. An innocent state, these funds are created to invest in a high risk asset class. So, they are doing their job. They’re just investing in high-risk asset class.
Sena Zorlu (30:09):
But for founders, I think it’s more profound. I think it’s more life-changing. And I think the risk that a lot of founders take, particularly if they’re engineered. Today, as work is more remote, a mid-level engineer is taking a risk of $150,000 to 200,000 plus benefits by doing their own startup. That is, you know, quantitative risk. So, a lot of companies get to a series A level in about four years. So, let’s say you’re a higher level engineer, you are actually risking a million dollars just by committing to a startup. So, I think that’s less talked about.
Greg White (31:01):
It is less talked about because investors don’t want to give you credit for that million dollars as if it wasn’t investment, right?
Sena Zorlu (31:01):
And there are a lot of investors who are offended when a founder tries to take salary. So, we can’t ask for experienced founders, multi-time founders, and not grant them any of this. Because not all founders have the luxury to live in a bunk bed with five roommates and build. There are a lot of people who are family people, who are paying mortgages, who have a real life. So, a lot of this evangelical view of, you know, hustle, and don’t live for a couple of years, eat noodles, and raise 250K from friends and family. No. A lot of founders do not have the luxury to do these things. So, I think one thing that investors could do better probably is, perhaps, better communication of understanding how startups fail.
Sena Zorlu (32:14):
One thing that was astonishing to me was, when I was building a company, it was very difficult for me to see where the white light was. But I’ve met some masters that had experience in exactly what I was building and they knew the challenges that I were going to face. And so, if that communication could be a bit better, perhaps we could save people time, either to pivot or to focus on something that’s meaningful. I think that could be very interesting. But, also, share wisdom where they can help out – like, actually help out.
Sena Zorlu (32:55):
One thing that was amazing for me was, when I was building my IOT company, TechCrunch had this special program where they matched promising female founders with the most famous investors in Silicon Valley for, like, office hours. And I got matched up with Bryan Schreier of Sequoia Capital, who is, I would say, one of the most famous investors in Silicon Valley. And I spent 20 minutes with him talking, let’s say 10 minutes of it was me pitching and trying to explain what I do. Those 20 minutes was the best feedback that I had ever got on Sensor, because I wasn’t asking money. And it was just like a very friendly chat. And whenever I think about anything that’s scaling, I go back to what he told me – and I’ll share that for free. What he told me was, “No Sequoia company ever failed for lack of money. They fail for lack of focus.” And that, to me, changed everything. Because the thing is, if your business works, you will find money. That’s a given. That’s a given.
Sena Zorlu (34:19):
So, when your business is stuck – well, let me back up for one second. Except for pre-seed when there are too many unknowns. But it’s like, when you come to a point where your business, your startup is a well-oiled machine, it is so easy to find investors that want to put more oil in that machine. Because that’s very predictable. That’s very de-risked. It’s when the machine has problems or the machine is just building up, that’s when nobody wants to invest in you.
Greg White (34:19):
When you’re building, right. Yeah.
Sena Zorlu (34:57):
That’s our stage. We don’t even know what oil it needs.
Greg White (00:35:00):
Right. Is it a machine? We don’t even know if it could be a machine yet or if anyone wants the machine, right?
Sena Zorlu (00:35:06):
Exactly. Exactly. And it’s not always the same. Like, we always assume as founders that money can solve all of your problems. Money can’t solve all problems. So, that’s my biggest learning is, venture capital wants to give money to problems that can be solved with money. But if your problems can’t be solved with money, such as customers not really wanting your product, such as you haven’t figured out who your perfect customer is, such as the technology doesn’t exist, like VR technologies, things like that where it’s like there’s not enough markets for it. These kinds of problems will block you in a way where it’s not about pitching to 200 more investors. It’s just you are blocked for some other reason that you have to figure out. Whether you need to decide that your business is not venture backed and you can run it as a service business or a hobby business, or you can say, “Okay. I’m going to pivot in a meaningful way. And I will find my perfect customer.”
Sena Zorlu (36:11):
So, for me, that was the light switch that I hadn’t seen when I was building, because I was so consumed in what I was building. Or like the few customers that I have, I was so consumed by their requirements, and servicing them, and keeping them happy, and the invoices, and everything. That it’s like there is a big picture out there where nobody wants to give you money for being you. They want to power a machine.
Greg White (36:46):
Yeah. Wow, that is fascinating. Sorry. I was writing all that down. VCs want to give money for problems that can be solved with money, right? So, we need more of X. We need more sales reps. We need more engineers. We need more features.
Sena Zorlu (37:09):
Yes. Go ahead. Sorry. No, go ahead.
Greg White (37:15):
This is just like a regular phone call with us, isn’t it? Because people want it. They don’t want to give money to figure out is there something here, is there a market here, do we fit that market, those sorts of things. I have never heard anybody say that before. That is a fantastic insight.
Sena Zorlu (37:41):
So, when it was told to me, it was also, like, light opening. Right now, every slide I see in a pitch deck, every company I look at, I look at their use of funds and I say, “Can their problems be solved with money?” That’s it. Like, everything is so binary for me right now. Like, that gut feeling has developed, I would say in the past two years, where I can see where a company is going to get blocked usually from a pitch deck. But we have seen a lot of pitch decks where we have no idea what the company is building, so that’s another problem.
Greg White (38:21):
That’s the one we were just talking about. Right. But, I mean, that is the gap. If you think about it –
Sena Zorlu (38:28):
That is the gap. That is the gap.
Greg White (38:29):
– saying that is the gap in communication between investors and founders, is, we have thought in the past, “If I could just get money, I could -” We haven’t thought about, “Is our problem really solved with money?” We just think every problem can be solved with money, right?
Sena Zorlu (38:29):
A lot of startups raise money for runway. And usually that runway is to support for you to be alive. But you haven’t created enough reason for your company to be alive yet. So, it’s like you may have reasons to ask for that money. Of course, every company needs money. But it doesn’t mean it makes sense for you to get money. Because venture capital is the most expensive type of funding that you could ever get for your company if you think about it.
Greg White (39:26):
Yes, that’s right. Because you’re giving away parts of your company for that.
Sena Zorlu (039:30):
Parts of your company for that. Absolutely. And the best money that you could get for your company is actually customer money.
Greg White (39:39):
Yeah. Yes. The saying that I always had was, we don’t have one problem that can’t be solved by more sales. Right?
Sena Zorlu (39:47):
Yes. Absolutely. Yeah. A lot of that [crosstalk] by software.
Greg White (39:51):
It’s interesting that what you just said is, founders think every problem can be solved by money.
Sena Zorlu (40:02):
With time, because time does equal money. And I think a lot of founders, when they raise, they raise to have more time to figure it out.
Greg White (40:13):
Right. That’s right. And that is the kiss of death. That’s something, I think, even I recognized early on, is –
Sena Zorlu (40:21):
I’ve done it.
Greg White (40:22):
I’ve done it too. I have absolutely done it. You don’t raise money for runway. And people don’t give money. They don’t provide or invest money for runway. They invest money for acceleration, for milestones, for outcomes. So, you have to always present from that standard, that standpoint. And, in fact, you’ve just pre-cursored another episode that I’ve done. So, I do this monthly show, Sena, where we give companies three minutes to pitch their company live on five social channels. And the first time we went through it, I thought, “Oh, my gosh. We just left these people blind and in the dark as to what they should say in three minutes.” So, I’ve created another episode, that is, the seven things you need to do to pitch your company in three minutes. Now, just saying seven things in three minutes makes it sound very daunting, but you can do it very quickly. And with the kind of focus that you have just provided, things like you don’t buy runway, buy milestones, that is incredibly valuable.
Sena Zorlu (41:33):
Absolutely. And I think it’s a good exercise to do even when you’re not pitching to investors. Are you able to explain what you do in five sentences, even less? You know, I’m not saying every company needs to be an Uber for X, but a clear definition of who you are and who is this product for, I think, it’s very critical and it can be very difficult. So, I’ll give you an example. With our previous company, we were a technology first company. So, we had brilliant cofounders who come from incredible engineering backgrounds, who built a technology, and we try to find a place for it in the market. We failed.
Greg White (42:25):
A hammer searching for a nail, right?
Sena Zorlu (42:27):
Yes. We failed. But there are a lot of companies that come out of that phase as well. So, it’s not a cookie cutter solution to any startup, of course. But, I would say, this is cookie cutter for, like, 99 percent of startups. There are startups that are tackling incredible challenges. I’ve been looking at, you know, what’s going on in space. And five years ago, people who wanted to build telco networks in space, they were seen as insane. But today, as you see, billions of devices going through in oil fields, and power lines, and everything. And it’s like people who are living with their RV in the middle of nowhere. And it’s like all of our data and technology is built for what is available today. And we need to prepare the infrastructure for what’s coming tomorrow.
Sena Zorlu (43:21):
So, there are startups like that where it’s like, “Whoa. This is big.” And I think we are in the perfect time where there is money for crazy people. There’s crazy money for crazy people. And I use crazy in the best of ways. There is enormous amounts of money available for people who are doing the most daring of things, and I think that’s incredible.
Greg White (43:56):
How can I help you improve your shot at Supply Chain Tech success? Four ways. One, subscribe to TECHquila Sunrise wherever you get your podcast to make sure you’re notified of my new episode every week. Two, follow me on LinkedIn and see my Supply Chain summaries every weekday. Three, if you’re a startup founder or a growth stage leader, and you need an active advisor to propel you through your Supply Chain Tech journey, I’m currently considering select strategic advisory roles. Or four, if you need an incubator or investment for your Supply Chain Tech, reach out to me on LinkedIn and let’s talk.
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Decoding the Mysteries of Founder & Investor Relations with Sena Zorlu, Kubera Venture Capital, Pt 1
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Sena Zorlu is a company builder, and an early stage investor at Kubera Venture Capital. She built three companies and is currently working on a stealth startup. She is based out of San Francisco Bay Area. Connect with Sena on LinkedIn.
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