What VCs Actually Want Beyond an AI Demo | Rebecca Lynn, Canvas Ventures

00:00is it's really easy to create a company in gen in demo mode it is a very different thing to take that beautiful demo and put it in the wild and scale it and we've already seen a handful of companies that you know were backed by amazing investors kind of blow up because they weren't able to transition from that really cool slick demo into the wild essentially into full production the biggest question we have for companies is they come to us and we like the beautiful demo come to us when you have a customer that's live my name is Rebecca Lynn I'm the founder

00:36and managing partner of canas Ventures canvas Ventures is an early stage Venture Capital firm that focuses on investing in financial services digital Health Andi so some of the most recent outcomes of canvas Ventures are case Tech Gabby and futur advisor and importantly case text was a very early exit with AI and gp4 and they exited to Thomson reuter about 650 million Gabby was acquired by Experian and future adviser by Black Rock so I have always been a believer in in second mover I think first mover Advantage is a fallacy and the reason is is that it takes a lot of money and time

01:18and patience to really prove out a brand new market and once you prove it out you have a ton of technical debt I invested in Lending Club and from then on Lending Club ended up being the largest US tech IPO in 2014 and so lendy Club wasn't the first mover there was a company out there called Prosper who had really hit the market first the best position to be in in my opinion of a company is the startup that lets another company kind of seed the market prove that there's a market there and then they can take that learning and come up very quickly with a better product and better marketing and

01:51no technical debt I would challenge anyone to to come up with more than just a handful of companies that are public today that truly were the first mover there are very few I think the most important characteristic of a CEO is salesmanship really a CEO's job all the time is sales you're selling to your customer you're selling to your employees you're hiring people you are constantly selling the company that in my opinion really most clearly defines a CO who listens to their customer and then is a great sales leader it was Jeff tagney at doximity he from the very beginning brought on a

02:30customer advisory committee to help inform him of you know what was important to his end users in the product and what wasn't and where to take it very early on he would bring in this advisory panel to like an on-site sort of strategy session and they would wireframe me of five six seven different ideas and show them to this you know panel of end users that would really feed into their entire product road map and he did that from the beginning so when I'm evaluating whether a CEO really possesses sort of the salesman ship it becomes blazingly obvious as they're

03:01pitching us you want a CEO who can sell you on their Vision because of their excitement and how they thought about it and that they've talked to the consumer and you also want them to be incredibly honest and forthright with you as the same time because that's what ERS trust when you're in the sales process so when we ask a CEO about you know their ARR and is it booked or is it forecasted having that c be very open and transparent and upfront I think shows us that they are going to not only earn our trust but the trust of their customers and that's really important especially early

03:37on the mistake most startups make when they're scaling is that they believe too early they have product Market fit and they believe they they've got it and then they go out and they hire a very expensive salesperson who then wants to hire a bunch of people and they just burn a ton of cash too early and then they have to let that salesperson go and then go back to the drawing board and kind of sort out a little bit more you know what those elements of product Market fit are and then rehire it's hard to watch I think almost every startup does this especially in the Enterprise

04:08space and and our advice is you know just way to beat hire maybe that director level salesperson who can help you maybe a chief of staff that can help you in in your sales efforts and then really make sure you scale gradually when you think you have product Market fit have some more checkpoints you know before you go out and pay a lot of money for a head sales person person before you have product Market fit you know what there's an example so case text pretty early thought they had product Market fit and they hired a very good you know Season sales executive to come

04:41in they spent quite a bit of money on the sales exact and the team and it it wasn't working they weren't getting the traction that they had hoped for this is before they launched co- counil the GPT 4 product the founder to his credit made a pretty quick early decision to let that team go and it was really hard you know the salesperson was great it wasn't an issue with them it was an issue with you know where we were at that time with the product you know it was really about supporting the founder he kind of saw also that was the right answer but it was a hard answer it was a hard thing

05:11for him to execute and so helping him think through how to message it how to make that happen and introducing him to other Founders who've had to make similar tough choices so that he can get their firsthand experience and advice was really helpful often times the founder does have Instinct and data that I don't so I first seek to understand why they're heading in the direction they're heading and then if we become pretty convinced that it is the wrong direction we try to show not tell and so we we try to find the right people to introduce them to that will offer them

05:45you know a more complete picture of the way we're thinking about the world and often times we get there it's not that they were completely in the wrong direction and we were right often times there's some kind of meeting in the middle I think the first thing that we need to do is check our assumptions understand where the founder is coming from and then get them the resources if they do need to make a shift and they decide they make a shift like help them on that journey and it does happen I me there's I think every company it's often times many stages you has to Pivot

06:09either from strategy or product or Channel or you know whatever it might be and when they they get there you know our job is to help them figure out how to make that shift what do you do when a potential client says we love your product but it's way too expensive do you give in on discounts right away or can you confidently defend your price hi I'm Peter on with over 15 years of sales experience at companies like Google Dropbox and slack I've obsessed over how to effectively answer questions like this in a way that builds trust that's why I created Peter on sales school with

06:51EO to equip startup Founders and sales professionals with the modern skills to excel in Enterprise B2B sales this online course offers real life examples and ready to use B2B sales Frameworks that you can incorporate immediately from crafting the most effective pitch deck to authentic customer Discovery and even negotiation I walk through how you could do it all and limited to just 10 students I'm also offering oneon-one bespoke feedback on assignments ready to learn and grow your sales confidence check out the link in the description or find me at EO [Music]

07:35school so there's a ton of opportunity in gen the clear thing that we has come to us is it's really easy to create a company in gen in demo mode to create this beautiful demo that blows everyone away it is a very different thing to take that beautiful demo and put it in the wild and scale it and we've already seen a handful of companies that you know were backed by amazing invest ERS kind of blow up because they weren't able to transition from that really cool slick demo into the wild essentially into full production the biggest question we have for companies is they

08:09come to us that's a beautiful demo come to us when you have a customer that's live for the CEOs who come to us to pitch sort of their series A and B companies and even we look at a lot of seed deals also the questions I ask are really about how's the consumer using the product what have they learned from the consumer since they started the company what was surprising to them what thesis proved what was different and what I'm looking for is that they're listening they're actually looking for that feedback from their users and that they're listening and they're adjusting

08:38accordingly right that they're not sort of dogmatically adherent to maybe solving their own problem that was what you know the company stem from that they're listening to what their end users really want and need the second thing I really look for from the CEOs is what gets them out of bed in the morning they really motivates them to do a startup because there's going to be really really hard times in the startup there always are what is it about them that is driving them forward what's going to help them pick themselves up when things get really hard and Shake

09:06themselves off and keep going and so I always like to hear the CEO's stories all of them could easily go get a job and get paid you know quite a bit of money at a big company and what is it about this particular opportunity that is really energizing them I was motivated to found cus Ventures because I wanted to create the Venture firm that I would want to fund my startup I didn't start inventure Capital thinking I would be here you know a decade plus later when I started in Venture Capital it was really a GU I was going to start Venture Capital learn how they made decisions and I was going

09:40to get them to invest in the company that I was working on and unfortunately I enjoyed the job so much that I I remained adventure with canvas this is my startup and one of the things I I try to stress is just be more confident in yourself one of the most formative things was you know what my best friend from business school where we're taking a leadership class and we had to rank ourselves we had all of these things and we had to rank you know one through five you one being the best how good you were at everything and then we had to get up and say what we

10:09ranked ourselves and you know everyone was pretty you know I don't know modest or whatever and she's like I'm a one I was I was like who is this person right and she just explained in the world of banking that's the first thing they teach you like fight for yourself because you know you're working for somebody else and why would anyone want to hire you unless at least you believe that you were the best possible person for that job and that really stuck with me you know why would I expect somebody to invest in me give me money give me that promotion if I didn't believe I was

10:36the best person for that job be more confident in yourself no one's going to believe in you more than you