Richie Norton

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Startupland: How to Ask Your Friends for Money—And Stay Friends – The Story of Zendesk

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Such a privilege to receive a review copy of Startupland: How Three Guys Risked Everything to Turn an Idea into a Global Business. This book takes you on an incredible journey about what it takes to create a startup and succeed. In fact, this is “the real story of what it takes to risk it all and go for broke,” the story of Zendesk by Mikkel Svane.

Startupland is that rare book every entrepreneur wishes they’d read years ago. Mikkel Svane tells a story that will grab you by the hand and give you an honest look at what it takes to launch a successful business. Read Startupland to be inspired, entertained and to help you discover practical ways to turn your idea into a global business.

Below is an excerpt from the book about raising money from friends and family and how you can ask your friends for money–and stay friends!

Hat in Hand

So, without any other options, we did something I never originally wanted to do, but what so many founders find themselves doing. We went to friends and family and asked them to invest. I now realize it was a last desperate action. Truthfully, I didn’t realize how desperate it was at the time. But think about what a terrible thing this is to do! There was a greater chance we would fail than succeed. And here I was asking my friends for money that could be lost, that would likely turn into nothing, that almost assuredly (statistically at least) would be wasted. Why was I risking this? What would become of these relationships if things deteriorated? I wasn’t taking the long view. But I didn’t try to sell anyone either.

“You are going to lose this money,” I said to these potential funders. “Think about it like a lottery ticket. There’s a much better chance that you’ll get nothing out of it.” Still, we made this friends-and-family fundraising round a formal process, working with a lawyer to draft the documents and creating a presentation in which we pitched the idea. I invited potential investors in to meet with us. In these discussions I made it clear that they would have no control or influence over how we ran the business. (They had no experience with what we were doing, so giving them any power could only bite us in the ass.) They would be completely blind as to what was going on.

And yet, despite all of this, these people, family, friends—maybe fools—wanted to invest anyway. I was surprised by the level of interest but also so heartened. They wanted to invest because they believed in us. They believed in the crazy idea that we could make something out of nothing.

It’s also just as true that we were really lucky with the timing. The climate for individual investors was perfect. We were still months away from the credit crunch in 2008. Real estate in Denmark was crazy hot. People had equity in their houses, and they had disposable money. They saw this as another opportunity.

My old friend Michael Hansen, the big-hearted, bigmouthed so-called king of Denmark, invested a bit. My friend Joachim, a television producer, invested and told his boss, who also invested. In fact, his boss wanted to invest more than our round allowed. Word spread, and it was fun to see so much interest. Most people put in around $10,000 to $15,000; the biggest investment was around $30,000. We even turned away some people. Some of our family members really had no idea what we were talking about; they just wanted to help and be supportive. We couldn’t accept that kind of money. And we had what we needed.

How to Ask Your Friends for Money—And Stay Friends

The first rule of asking your friends for money is never to ask your friends for money. The second rule of asking your friends for money is never to ask your friends for money. OK, got it: You should never ask friends for money. That is, unless they have way too much money. In that case, knock yourself out.

If you really are so desperate that you need to raise money from friends and family, make it clear that they will never get it back.

  • Set expectations low. Make it like a lottery ticket.
  • Don’t use the Zendesk case as an example. We’re the exception. Make it into a Scratchcard lotto game—something that is fun, but most likely just a waste of money.
  • Don’t give any influence in return. People are unsophisticated in this area. They don’t know how to run a business, invest aggressively, or take risks. They may not realize that a big portion of the investment basically goes to your own salaries. Don’t provide insight into the business. If you succeed, the last thing you want on your cap table (or roster of major shareholders) is a bunch of unsophisticated investors with influence.
  • Prepare yourself mentally for disappointing a lot of people. Even if you have succeeded in setting expectations low, you will still disappoint people. Even though they believe they can afford to lose the money when they invest, their financial situation may be very different twelve or twenty-four months out. And you may ruin a lot of relationships.
  • Prepare yourself for that—and don’t do it if you cannot live with that.

Excerpted with permission of the publisher, Wiley, from Startupland: How Three Guys Risked Everything to Turn an Idea into a Global Business by Mikkel Svane with Carlye Adler. Copyright (c) 2015 by Zendesk, Inc. All rights reserved. This book is available at all bookstores and online booksellers.

More info at www.startupland.com.

 

 

Written by on January 14, 2015 | Permalink | Trackbacks (0) Topics:

Book Review

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LIVE Workshop Announcement + Free T.I.M.E. Mantra Poster!

Scroll down to get details on my first ever LIVE workshop! 

But first, I have a Christmas present for you! Grab this awesome poster that I call the “TIME Mantra” now!

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T.I.M.E. – Today Is My Everything

T.I.M.E. is my mantra—Today IMEverything. The moment currently I’m in is the only one I’m guaranteed. I’ll spend it with intention and care. . . because I can. Yes, I can. I can do this. And I must. This is my time. The world needs my unique talent and contribution. No one else can do what I do, the way I do. I’ll intensify my efforts. Double them. Triple them. I’ll act with urgency. I have ONE life to live, and this is it. No more tomorrows. Today is the day. What matters to me, matters to the world. I will tap into what matters to me, on the deepest level of who I am, and I will act from that authentic core. My life has meaning. This is my chance to create purpose-driven experiences, to bring excitement, passion, energy and joy into my own life . . . and into the world at large. I won’t just take time, I’ll Make time. I’ll SHAKE time. I’ll revolutionize the way I embrace time in my day-to-day life. I’ll crush fear. I’ll dream. I’ll do. I’ll live from a space of intention and purpose. I am uniquely talented. There’s not another soul like me, anywhere—past, present or future. I’ll Serve,Thank, Ask, Receive and Trust. In short, I’ll Live to START, and I’ll START to live. I’ll start something stupid. I will create, ideate, innovate, initiate and inspire. Today. I will get as close to my dreams as possible, as soon as possible, and I will achieve the impossible. This is not a dress rehearsal. This is my LIFE. And I will live it—wide awake. The world needs me. The work needs me. I need me. I’ll show myself, be myself, believe in myself and BELIEVE MYSELF. This is my TIME.

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Why?

Think about the last time you met someone who you truly trusted. Someone you could share anything with and they’d listen, with no judgement, and help you go from where you are to where you want to be. I want to be that for you like I am for my clients.

I want to show you the possibilities, help you overcome the challenges, avoid traps, give you the world’s best modern strategies, tactics and insights that you can implement now.

The benefits you’ll gain are critical and urgent to creating success. If you want to start a business, you can. If you want to grow your business, you can. If you want to stay at your job and move up the ladder, you can. If you want to stay at your job and start something on the side, you can! It’s your life!

YOU decide what you’re going to do with it.

That means you’re responsible for doing what it takes to go from where you are to where you want to me.

Dreaming is cool, but living the dream is where it’s at!

There will never be the perfect time to start, will there? You have to begin where you are. Successful people make things happen, regardless of circumstance.

As Thoreau said, “Begin where you are and such as you are, without aiming mainly to become of more worth, and with kindness aforethought, go about doing good.”

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To success,

Richie

P.S. If you’ve ever wanted to increase your income and design your ideal lifestyle, I can show you how to leverage your existing resources – even if you don’t have the perfect idea yet. I’ve helped thousands of people, and if you’ve ever wanted to transform your business and life, NOW is your chance. Where will you be six months from now? I want you to be able to look back and be proud you took this essential step to creating the business and lifestyle you want. Join “Time Is the New Money: How to Cash In.” 

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3 Nasty Habits that Undermine Your Ability to Achieve Goals: How to Change

What has your goal-setting path been so far?

Pick an option (in your head):

1. Set goals and achieve them (mostly)
2. Set goals and quit them (mostly)
3. Set goals, strive, and don’t achieve them (mostly)
4. Don’t set goals (mostly)

This isn’t a right or wrong questionnaire. It’s just a fact about your past. Understanding where you are now is important to understanding how to fill in the gap to where you want to be.

Life’s not fair.

I’ve consulted, advised, coached (whatever you want to call it) THOUSANDS of people and organizations. I have access to top achievers in their industry and I’ve seen what it takes to win. I’ve also comforted and consoled people who just can’t seem to get a break. Life’s not always fair. No one said it would be.

HOWEVER, there are certain things that most definitely set people back. I’m going to point out 3 nasty habits that undermine your ability to achieve goals and make a suggestion for each on how to change. Change isn’t an easy process, but it’s also not some mystical, magical thing. Change can be as simple and fast as turning on (or off) a light switch.

3 Nasty Habits that Undermine Your Ability to Achieve Goals: How to Change

1. Believing success is found, not created.

There are a few outliers who are lucky enough to “find” success. For the most part, though, success is created. It’s engineered. It’s dialed in. It’s worked for through rain, sleet, snow, blood, sweat, tears and smarts.

Change: If you believe you’re going to be “found,” think again. Instead, “find” yourself. Pick yourself. Do the work as if you’ve already been discovered. In reality, people who are “found” by an agent (or whomever you think will make magic happen for you) have already found their voice and developed it so they could be in a position to be chosen. That said, stop worrying about being chosen, choose yourself and CREATE success.

2. Trying to do it on your own.

Not smart. No one successful achieves their goals “on their own.” You need an accountability partner. You need a coach. You need someone who has walked the path before. A guide. A leader. A mentor.

Change: Find someone.  Ask someone. If you can, PAY someone to help you, teach you, lead you to success. Attend workshops, seminars, online courses, masterminds. Get with people who have achieved the success you desire and learn from them. Further, add value to the lives and businesses of the people that reveal their success secrets. Don’t let it be a one-way street. Success breeds success. Get on the success train!

3. Giving up too early.

Ah. The most common nasty habit for non-achievers. Giving up. Now, I’ve written about strategic quitting (a smart thing to do). But, what I’m referring to here is quitting because it’s hard. Quitting because you can’t see how the beginning will get you to the end. Quitting because you don’t want to endure.

Change: You need a game plan. If you know you may quit in the middle, give yourself your own fork-in-the-road-scenario. Tell yourself what you’ll do when you get there. Instead of quitting and turning around, make a left turn or right turn. These turns aren’t quitting. They aren’t turning around. They are just a different trail that will still get you to the same place at the top of the mountain. Figure out something, anything, you can do to stay on the trail instead of turning around. The scenic route may take you longer, but you’ll still get there and be glad you didn’t go back.

What’s next?

I’ve been asked (badgered, really) to finally do a LIVE workshop. I’m not making an announcement yet, but I’d love to hear your voice on what I should reveal in the workshop.

Please take a few seconds to answer a few very short questions in this survey here. I’d really appreciate it.

Thanks in advance! It means the world.

Written by on December 2, 2014 | Permalink | Trackbacks (0) Topics:

Goal Setting

Lifestyle

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