
Village Capital is ditching Demo Days - kjhughes
https://techcrunch.com/2017/03/04/why-were-ditching-demo-days/?ncid=rss
======
salimmadjd
Former Village Capital graduate here.

I consider it one of the biggest waste of my time ever!

I'm hoping the program has grown more and I know Ross works hard and I
congratulate him on keeping the program going. If you're an international
company, perhaps their programs outside of US are more valuable since there
are no other options for you. But if you're US based, I would do my homework
before joining them.

Why? 1 - the program was so disorganized. We were forced to follow this
automated Powerpoint slide progression. If you needed it more time on one of
your slides you copied the slide twice, to give yourself double the time. So
basically we spent 3 months optimizing our pitches around this auto powerpoint
process.

2 - we were used to build credibility for Village Capital. They would shuttle
us around to their potential LPs to show it was a viable program. That's not
bad in itself, however, it felt like we were providing more value to Village
Capital, than Village Capital to us.

3 - Very founder-unfriendly terms. As I said we were one of the two top
finishers. However, their financing term (which we only learned the details
pass the half-way into the program) was nothing short of usury. We were forced
to do a down round (by 4x) OR do the revenue share financing, where we would
pay back 3X the money they loaned us.

I decided not to write about our experience, but given the reach of HN, I
decided for the first time to publicly speak about it to warn other founders
who might be interested in their program.

~~~
maj0rhn
Can you clarify what "the program" refers to? Is this the new variant where
demo days are discarded in favor of mock board meetings (as discussed in the
blog)? Or is the demo day/mock board meeting just the last piece, and the
underlying program is the same? Thanks.

~~~
salimmadjd
When we graduated. The cohort class would vote the top 2 finishers among
themselves. Which then would get the financing. This was a horrible idea!

It became very political. Basically we had 4 major sessions each 3-4 days
alternating between Salt Lake City and Houston. At the conclusion of each
session, we would rank each company on a set of criteria. The total score
would rank each company. However, the last ranking would determine the final
winners.

We finished #1 after the first session. However, I soon realized giving
feedback (even privately) became rather contentious. People could easily
mistake a genuine feedback for a political move to downgrade a company for
scoring reasons. As a result, the value of cohort feedback diminished a lot.

The mock board meeting, was probably one of the more valuable things in the
program. But the problem was the time with the mock board members was short,
these "board" members had very little context about the company (so not very
realistic). As a result, you had to spend most of the "board meeting" time
educating them about your business before getting into the actual practice of
a board meeting.

If you're in a remote location or city, with very little resources, then the
program might be somewhat valuable. But if you live in any big cities,
especially silicon valley. Then there is no value to it.

~~~
sandGorgon
This is bad. The biggest value I get from YC are my peers from the batch and
other alumni. We still reach out constantly and ask each other for pieces of
code, business leads,etc.

YC puts A LOT OF EFFORT to build the community in the right way.

------
sethbannon
"When we surveyed our companies and asked them where they met investors, it
was rarely at an actual pitch event."

Seems like the author might be learning a lesson based on Village Capital's
apparently unsuccessful demo days and applying it to all demo days. As someone
who's gone through YC's demo day and who's attended it a few times since, I
can tell you that startups meet _a lot_ of great investors there. That some
demo days add no value to either startups or investors is not in doubt. That
doesn't mean the structure of a demo day makes no sense.

One thing YC recently did to address some of the concerns he has is introduce
"Investor Day" immediately after their demo day. Will be interesting to see
how that experiment plays out. [https://blog.ycombinator.com/investor-
day/](https://blog.ycombinator.com/investor-day/)

All that said, his points about pitch day formats exacerbating existing biases
is quite interesting. Would love to see more data on that.

~~~
georgeglue1
_That’s why we made the decision to ditch the Demo Day — and why I encourage
others to rethink how they support innovation._

Notably, the article doesn't call for others to abandon Demo Days. They're
just giving a case study on their logic and their startups.

------
ilamont
I was prepared to skeptical--investors of course will dislike situations which
set up competitive bidding scenarios.

But the writer has some good points, including demo days favor men more than
women, as well as extroverts:

 _For entrepreneurs who don’t pitch well — or who don’t fit investors’ mental
image of a successful entrepreneur — Demo Days may hurt more than they help.
The preparation teaches entrepreneurs to focus on transactions more than
relationships (when, in reality, an in-depth conversation after the pitch
matters a lot more than the pitch itself).

The Demo Day format is not ideal for investors, either. If you’re picking who
pitches best, not who runs the best business, you’re not getting the best
results._

What I have seen happening at accelerators, universities, and startup events
in the Boston area is this intense focus on pitching. It's all about showing
off the team, presenting a problem, sharing market or usage stats, prepping a
slick video, and getting the deck just right. This approach emphasizes
superficial qualities over the product or service being built. Product demos
are almost an afterthought, and information about build progress or actual
discussions with customers are turned into a couple of bullets on slides 4 and
5.

So yeah, by all means, ditch the demo days. But don't assume that focusing on
"building relationships" will solve the problems of investors favoring certain
types of people, or glossing over product and customer discussions.
Extroverted founders and talented salespeople can project empathy, ask the
right questions, and send other signals that are more likely to suggest a
"good relationship" to investors. These qualities/skills will not determine
who runs the best business.

~~~
ryandrake
Eerily similar to problems associated with tech interviews: favoring
extroverts and smooth pitch-people over substance.

~~~
vostok
I actually like tech interviews specifically because it's hard to BS your way
through them.

I've definitely seen smooth talkers with great resumes get through any other
filter, but I've never seen a false positive with the technical interview.

~~~
waisbrot
I've seen people who can whip up a nice solution to an interview problem but
can't plan out a larger system. Or they have some cool way of solving the
interview but then it turns out they want to write 100% of their code as
monkey-patches. Or they write great code but cannot get along with anyone. Or
they can solve the interview but don't actually have the deeper expertise that
they said they did. I'd call all of those false positives from the technical
interview.

I guess you could counter that you need to have a 10x longer technical
interview that covers all these aspects, but a long interview process is going
to filter out all the candidates who are good enough not to have to put up
with one.

~~~
alfalfasprout
This is why I wish system design questions were more common. I couldn't care
less if you can do a bunch of palindrome algorithm problems on a white board.
I do care if you understand the scalability, maintainability, and implications
of your code. And if you understand how different data structures work and are
used. Most whiteboard problems fail spectacularly at this.

~~~
vostok
I agree that, in principle, system design interviews are great. The problem is
that, in practice, I have seen them generate way too many false positives.
This was at great companies and with people who had absolutely stunning
resumes.

------
lebanon_tn
Is this what Garry Tan was referring to on Twitter?

[https://twitter.com/garrytan/status/838101657107881984](https://twitter.com/garrytan/status/838101657107881984)

~~~
2arrs2ells
No - Garry was talking about investors claiming to "skip" YC Demo Day who were
never invited in the first place.

~~~
lebanon_tn
It's not clear to me from the article that Village Capital has attended a YC
Demo Day. It only mentions that organizations like YC helped popularize the
concept.

------
hobofan
I think for someone that has gone through a startup program most that is
written in the article are obvious truths. Yes, there might be a lucky few who
benefit from a demo day, because that's one of the few chances where you might
get the attention of investors that might usually not be that easy to reach.
However most people will meet their investors during the program via some
connections.

To me, demo days feel like they are mostly PR events for the accelerator. It
is a very easy way for an accelerator to get people to notice it, since it is
one of the few events an accelerator is usually hosting, where they have
significant presence and they can attract a lot of reports with the startups.
Apart from that, it is very hard, especially for smaller accelerators, to even
be mentioned in an article of one of the startups they funded.

------
sandGorgon
Its funding criteria is very unusual -
[http://vilcap.com/method/](http://vilcap.com/method/)

Did they ever have demo days in the first place ?

 _At the end of each program, the entrepreneurs assess each other in an open
and transparent process. The two highest-ranked ventures receive seed capital
from VilCap Investments and co-investors. In 2013, this peer-selected
investment model won the Harvard Business Review /McKinsey M-Prize for
innovation._

Is a survivor-style fundraising mechanism better than a demo day in front of
investors, who are probably well experienced to look beyond stagefright?

~~~
Danihan
Another overlooked aspect of this is simply debate experience and skills.

Being able to defend any given perspective quickly and easily is just a
learned skill. People who took years of debate have a massive advantage.

------
startupdiscuss
Does this create an opportunity?

Do investors who target women and unattractive men have less competition for
the same product?

Or does the effect last through all rounds of funding, customers, going public
and so on? In that case the investor would be rational to mimic the
preferences of the market.

I suspect it lasts through a few rounds of funding but at the point the
company is large and can afford PR, and so on, it no longer matters.

This might mean that the smart investor should target the ignored company if
the investor has enough money to get them to the point that they are self-
sustaining.

~~~
Danihan
UglyFounders.com?

~~~
Mangalor
What's ugly is only attractive men getting funding regardless of substance.
Like a beauty pageant.

~~~
astrange
This is probably two categories "attractive people" and "men" being conflated,
"attractive men" are who you meet on Grindr and not at a VC pitch.

------
hugs
This is why I enjoyed the Indie.vc program - No demo day. Instead, stay where
you are and focus on building your business. Since the goal is growing a
business, not prepping for another funding round, there's no need for a demo
day.

~~~
jkaljundi
Can you tell more about the experience? Indie.vc otherwise sounds fantastic.
Good option to other debt and loan options for startups.

~~~
hugs
That's​ a very open ended question which is hard to answer. Do you have a more
specific question? My company (Tapster Robotics) was part of the first Inde.vc
"batch" of 8 companies. We were the guinea pigs as we figured out what worked
and didn't. But I liked that we didn't have to move (I'm in Chicago), though
we did meet up once a quarter in different cities to catch-up for a few days.
With no demo day (and no expectation to raise another round) all our
discussions revolved around building the business, not grooming ourselves for
the perfect investor pitch. My previous startup followed the "traditional"
Silicon Valley model of being in forever-VC-pitching​ mode. This time around,
I'm happy to be off that treadmill.

------
phantarch
This makes a lot of sense. If investors can get a real feel for who they're
investing in rather than a lot of marketing/canned pizzaz, I think they'll
make consistently better decisions and founders will get a much clearer
understanding of where they fall short.

Not to say that showing a proof of concept should be ditched entirely, but
making a marketing pitch is not always the same as having a good idea.

------
paulsutter
"You desperately need a good pitch when you have a bad company. When you have
a great company, you don’t need a great pitch." -Peter Thiel (Maureen Dowd
interview NYT)

------
rebootthesystem
I don't think there's anything new here. This is real life, human nature
--however one might care to put it. Startup demo's are not about demo's at
all.

From politics to selecting an air conditioning contractor and beyond,
presentation and engagement matter a lot. It's not that people are stupid or
superficial, these things (and others) create impressions and confidence. And,
in some cases, they are crucial to the success of the venture.

When I first launched into the world as an entrepreneur, decades ago, I was
too much of an engineer. One key element that was missing is I sucked at
selling. You can engineer an amazing product but, contrary to the popular
saying, people won't beat a path to your door unless you are good at selling
it. The history of business is paved with the carcasses of great products that
never got off the ground because the people involved couldn't sell them.

In my case I recognized this from the very start and actively sought help in
the area where I was most deficient. The first few months after we started to
sell our hardware product were terrible. I'd mess-up presentation after
presentation. Yet, with constant coaching I eventually figured it out. Within
about eight months or so I was so comfortable selling that I could actually
sell a product without saying a single word about it during a demo.

These presentations to potential investors have a far greater purpose than
simple product demos. They serve to communicate to the audience a range of
information about the entrepreneur. Important data points. One of them being
whether or not the person can actually sell what they are making. If you can't
sell and are going to hire someone to do so, you might be better off having
them do the presentation. Folks who understand selling can sell anything,
including a startup looking for funding.

To paraphrase an observation made decades ago by Smokey Yunick, a famed race
car designer:

"When all the smoke and bullshit clears out you have to sell the damn thing".

~~~
ilamont
_One of them being whether or not the person can actually sell what they are
making._

If the founder is indeed going to be in a position of standing up to a group
of potential customers and selling something to them, whether it's a car or an
expensive software package, then I can see the importance of such a
presentation.

If, however, the sales takes place in a store, on a website, or in a catalog,
then a different set of skills are needed--developing sales funnels, setting
up distribution partnerships, converting online visitors, and writing stellar
marketing copy. Yet I have never seen a demo day or investor pitch session
that focuses on _those_ skills, even though they will have a huge impact on
the success or failure of many types of ventures.

 _If you can 't sell and are going to hire someone to do so, you might be
better off having them do the presentation._

That makes sense. Serious question, though: but do demo day organizers
encourage it? How would investors or audiences react?

 _Folks who understand selling can sell anything, including a startup looking
for funding._

I know this is true, yet I find this disappointing. It means that great
salespeople can sell a turkey, which not only hurts investors but takes money
away from more capable enterprises.

~~~
rebootthesystem
> If, however, the sales takes place in a store, on a website, or in a
> catalog, then a different set of skills are needed--developing sales
> funnels, setting up distribution partnerships, converting online visitors,
> and writing stellar marketing copy. Yet I have never seen a demo day or
> investor pitch session that focuses on those skills, even though they will
> have a huge impact on the success or failure of many types of ventures.

I understand what you are saying. Still, selling hasn't really changed in a
long, long time. People were doing what you listed back in the days of mail
order catalog selling. The technologies are different today but a lot of the
same skills apply.

Selling isn't about technologies, it's about people. Of course, anyone can
spend thousands of dollars a day on AdWords, blast a product out and generate
tons of traffic. That doesn't sell. Generating good copy that sells and
excellent landing pages and maybe even videos requires understanding how and
why people buy. If someone can't sell themselves in an in-person demo they are
not going to do well in any other medium. Are there corner cases? Of course.
Yet, they would be better if they could sell in person. Writing copy or making
a great video don't happen in isolation of an understanding of interpersonal
dynamics.

Why doesn't Coca Cola just say "Our product tastes better and it's $1.23 per
bottle. Buy it"? Instead they create these elaborate commercials with cute
computer generated bears or groups of people dancing, etc. They understand
they need to sell on emotion, not logic.

Most products, even something as dry as penetration testing software, have an
emotional element. In some cases it might be more overt than in others, still,
it's there. In the case of penetration testing software you need to convey
strength, confidence and experience in order to generate one of the most
powerful emotions: Trust.

------
tommynicholas
One thing to bear in mind is how different Village Capital is than YC. I think
it makes a ton of sense for them to do it this way, I think Techstars (alum!)
should consider it, but it does seem like it works for YC.

------
spodek
A related article I wrote as an entrepreneur and professor of
entrepreneurship: "11 Reasons Why Business Plan Competitions Should Die":
[http://www.inc.com/joshua-spodek/11-reasons-why-business-
pla...](http://www.inc.com/joshua-spodek/11-reasons-why-business-plan-
competitions-should-die.html)

------
ptrptr
So maybe solution is in changing optics for such events - Demo Days are
primary for PR stage play helping humanizing startups and their creators and
not for helping entrepreneurs raise money and meet investors?

------
paulcole
"Because we were sick of idlewords mocking them incessantly"

