Entrepreneur

This Entrepreneur Went From Selling Firecrackers To Landing $70 Million For His Canadian Startup


Michael LittMichael Litt

Even before starting his mini-paper route empire, Michael Litt was importing firecrackers from south of the border to distribute to his third grade classmates. Now he is a serious startup investor and founder at the heart of Canada’s new tech ecosystem.

In an exclusive interview on the DealMakers Podcast, Michael Litt revealed how he accelerated his startup, landed some of the most enviable investors on the planet, is disrupting the classic board meeting, and what it takes to get funded by him (listen to the full episode here).

Entrepreneurial Pedigree

Starting working and dealing young is a common thread we see with today’s successful entrepreneurs. I remember being kicked out of school for a few days for doing too much business and being a little too entrepreneurial.

Michael Litt’s backstory carries some of these same threads too. After selling firecrackers at school, he told DealMakers podcast listeners he then “got a newspaper route and I realized I can make more money by running multiple routes, so I got multiple routes. Then I paid kids in the neighborhood to run my routes for me.”

Before starting video production company Redwoods Media, and then the Vidyard, the video platform for business, Michael says he had a “blog where I took apart personal electronic devices. Everything from cellphones to media recording devices and published the references on the web, and actually sold that asset in escrow many, many years ago prior to Redwoods Media.”

Scaling Startups from Zero to Over 8 Figures

After attending the University of Waterloo in Canada, Michael and co-founder Devon Galloway beat the odds to get into Y Combinator in Silicon Valley. A feat which is now considered harder than getting into Harvard.

He says this “gave us this unfair advantage in that we were 100% obsessed in building this company. We had no distractions.

At the demo day, we’d already raised about $600,000. About two weeks after demo day, we closed a $1.65 million seed financing. So, we went to YC with nothing in the bank but the clothes in our backs and we left YC with a business about a hundred customers, real revenue and over a million and a half dollars in the bank to go and start a company with.” That all happened in just three months.

To date, the company has raised $70 million, and now has around 300 employees.

That HR element alone can have a big influence on success today. Especially with the rise of review sites like Glassdoor, and the high expectations tech workers have in terms of startup perks.

If you don’t have any experience with that, Litt recommends to seek out an executive coach. Learn how to build a pull culture. Know that the 101st person that joins your business is expecting a very different experience than the 10th person that joined your business.

A Different Approach to Startup Fundraising

Rather than the formal approach to fundraising we hear so much about these days, this startup founder says that they focused on great conversations and updates to educate investors on what they are doing. Litt says, “inevitably at some point in that process, well before we need to formally raise, someone comes forward with an offer, a verbal offer, a term sheet, because they want to get into the business.”

Today that lineup of investors is a celebrity cast including: Battery, Bessemer, OMERS, Andreessen Horowitz. They were part of a very carefully curated handful of potential investors the startup believed would be a great fit, and could add the most value.

The three things this guest on the podcast suggests to look for in a really unbelievable investor are:

  1. Operational empathy. An investor who understands that you learn as you operate. Look for investors who either invested in a diverse portfolio of companies that have been through these types of challenges, or better yet, look for an investor that actually has operational experience.
  2. Operational expertise. You want an investor that has a strong portfolio that can provide you with aspirational benchmarks. If you want to be the best, fastest, growing company, you need to benchmark yourself against those businesses. A lot of these stats are not publicly available. A good investor can actually compile these from his or her portfolio and inject into your business during board meetings.
  3. Personal alignment. Perhaps the most important is you want to work with somebody that you’re personally aligned with that you can have fun with.

If you’ve nailed those three things, you’re going to be very successful.

Disrupting the Board Meeting

One of the big things this entrepreneur is trying to change is the dynamic of board meetings. So, far they have mostly been a necessary evil for most founders. Though, they can be transformed and truly be used as tools to add value to all participants.

One way to do that is to make board member and investor contributions to the company a competition. Why not get them to compete for who adds the most to the business pipeline at every meeting. Then reward the leader?

Why not prep call all your investors and board members in advance. Then spend your meeting time working on the future?

Preparing for the Storm

The economy is changing. It’s the natural state of macroeconomics. So, how are investors and entrepreneurs like this preparing for it?

Michael states that “You best have a war chest. If you’re looking at raising right now or raising in early 2019, and you’re getting down to the short strokes of cash in the bank, do that raise right now, because the opportunity is here. The money is there. There’s so much money in venture right now that is available. So many companies are getting funded that probably shouldn’t be and you got to think about protecting that asset. You know the other path is to think about selling the company now as well. There are so many different paths that people can take but consolidation is needed in the market and so we’re ready for it and we’ll embrace it if it happens.”

The New Silicon Valley

Michael says, “I think Canada’s time is now. The government has made a bet on the digital industries basically what they call technology. They’ve put a ton of money into AI research, the Vector Institute in Toronto, the University of Waterloo is spewing out incredible graduates.”

To truly scale an ecosystem, you need talent, you need money, and you need mojo. Canada seems to have all those right now. There’s a lot of money that’s coming into these companies, generally from outside of Canada.

You’re now seeing interesting things like the CFO of Blackberry joining up with Patrick Pichette who was the CFO of Google to launch a growth fund that’s kind of co-located in Montreal and Toronto.

Get Funded

This founder and funder has now personally invested in over 65 companies. So, what’s he looking for in entrepreneurs to finance?

“A really, really, really talented product and technical leadership with domain expertise. So, if you’re building a product for a specific market or an ecosystem, ideally you have experience in that world to have real user and product empathy. Then we look for what we call a chip on the shoulder or the warrior instinct.

Summary

Michael Litt is clearly not only a leader in the Canadian startup ecosystem, but has many insights to offer today’s founders and funders. Listen in for more tips and strategies in the full interview via the DealMakers Podcast on iTunes, where you’ll also find out how and where to pitch him directly (listen to the full episode here).

Let’s block ads! (Why?)



Source link

Related posts

Become A Mindful Entrepreneur (And Boost Your Productivity)

admin

Spirit of the Entrepreneur: Holiday Spirits

admin

Twelve Years of Crab Fishing Gave This Entrepreneur His Pot O' Gold

admin

Leave a Comment

9 + nine =