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Hacking AngelList (or "social proof") (wensing.tumblr.com)
86 points by wensing on Oct 5, 2011 | hide | past | favorite | 34 comments

Ugh. To put this advice in context, social capitalists raise money based on reputation, hackers raise capital based on results of their startup / product. Pragmatically, success needs to be a mix.

To me - this is very clear distinction in Bay Area. The guys I know that are most impressive (and build the best startups) shut their doors, code like crazy and don't waste time with what other people other than their customers think of them. The product speaks for itself.

Then you have another set of entrepreneurs leveraging credentials, friendships and their previous successes to 'hack' the fundraising process, it detracts from delivering user experience.

Don't fall into this fundraising mindset - "if you want to raise money, there’s no substitute for working hard on your reputation". There is a substitute - its delivering measurable benefit to customers. Work hard on delivering value to the rest of the world. Its an important distinction because thinking about what investors think of you detracts from a maniacal focus on product.

Its pre-mature reputation optimization. You want to build your rep after you've proven delivering value to customers.. the product should speak for itself.

I consider social capitalism an evil because it creates conflicts of interest, and detracts from goal-oriented thinking. However, like politics and bureaucracy - it is an evil that startups have to confront at some point, or be confronted with. I balance this with a maniacal focus on delivering value while staying at low profile - its tough to create a professional persona in line with your startup before you have accomplished measurable customer value. Without this kind of timing, its very easy to detract from your startup goals because you personally have to conform to a misinformed notion of a professional persona. I'd be curious if others have had challenges along this line..

One last thought, social capitalism gets multiplied by orders of magnitude when you leverage the hub. ie, relationships for finance, advertising are going to be much more valuable in NYC. In optimizing reputation, spend cycles where they have the highest return.

It sounds like you're disagreeing with the post and say "success needs to be a mix" but that's the point of the article.

Don't miss that:

a) They've been working on the product since 2004 and it's best in class as a result of an insane amount of product development.

b) Every single lead they've generated has come through their "freemium" model, they've never spent a nickel on marketing.

c) Only recently have they learned that a best-in-class product isn't enough to get investors excited without talking about the market.

Matt wrote an incredible post here about the blood, sweat, and tears that went into building a market leading product:


This part is strange to me:

> c) Only recently have they learned that a best-in-class product isn't enough to get investors excited without talking about the market.

Isn't the whole point of there existing a separate class of tech-oriented investors and investment managers, who get paid pretty well for their work, that they are knowledgeable and well-positioned to evaluate things like market prospects? If who they fund depends so heavily on social proof and slickness of the pitch to investors (as opposed to the actual product and market potential), seems like capital is being allocated pretty inefficiently...

Yes, that's it exactly!

Thanks for the note - I was disagreeing with the message / sentiment of article. I meet so many first-time entrepreneurs and worked at funded startups where the founders think it is about impressing investors.

Kudos to Stormpulse for the hard work and the cool product. I just did not like the message of the article because I was considering how it would be interpreted by other startups..

I guess a direct link to our chronicles of toiling outside of the limelight could help.

this seems to be a bit of a false dichotomy.

your social capital is not useful only to raise money. it is useful to market your product. marketing your product gets it used which is the best way for it to improve.

that you can use social capital to help raise money is a great side-effect of the real reason it is necessary for startups: marketing.

"Its pre-mature reputation optimization. You want to build your rep after you've proven delivering value to customers.. the product should speak for itself."

There's another side to this story. Once you've built the product, have the customers, cash flow, and earnings, you're left with a vacuum in the social sphere. You don't know anybody other than your customers and vendors.

And if you try to raise money at that point( expansion, growth, acquisition, etc ), you can't get so much as a single introduction because you don't know anybody. The reality is that product does not speak for itself.

Hey, this is Nivi from AngelList. I am very happy for Stormpulse and I'm glad to answer any of your questions here.

A couple things:

1. We're getting out of the "gatekeeper" business as quickly as possible. Over 70% of the intros on the site are now driven by code and community -- not us. It took a lot longer than we thought it would. We're working on the remaining 30%.

2. We don't think of it as "applying" to AngelList any more. We think of it as creating a startup profile. Applications made sense when we reviewed and distributed every startup. Now startups create profiles and they live on AngelList well before and after they raise money. For example: http://angel.co/42-floors

Thanks Nivi. My post is meant less as a criticism and more as a fundraising how-to for others like us. I think the changes you are making are good.

Totally agreed. And I didn't thank you for writing the post. So, thank you. =)

This effort to close the remaining 30% will make the primacy of social proof and popularity over team/product/traction/revenue/earnings even more powerful on AngelList.

It sounds like there is a fantastic opening here for other people in the angel/vc community to take on the task of being a gatekeeper or "talent scout" of sorts for excellent businesses who don't already have the requisite social proof.

All social proof means in this context is that there is a community of gatekeepers and scouts rather than one or two gatekeepers or scouts.

I understand the direction you're going in, and in order to scale, it's inevitable. I don't begrudge you that.

But my understanding is that in the past, you guys made something of an implicit guarantee that you would look at all submissions and be the point of introduction for great companies who don't yet already have an introduction. The necessary shift you are now making will eliminate this opening.

You mention that there is a community of gatekeepers and scouts, but I really don't see it this way. One cannot, by policy, contact anyone on the site without already having a "follower" relationship with them.

It would be nice to see a handful of angels/vcs take upon this mantle of being the go-to talent scout for great but unconnected businesses. There's no reason these people couldn't use AngelList as the platform on which to do it, of course.

That's the idea. And it doesn't have to be angels / VCs only. It can also be the community of entrepreneurs. Don't worry :-)

In other words, it pays to be the pretty girl in the room. The fact that the underlying product, business, and people did not change highlights how most venture deal flow is filtered by relying on relativistic gauges of peer interest. It's pretty sad, honestly. Of course, not all are like this, for example YC and other programs with formalized processes.

We did change by committing to B2B, but insofar as we didn't change the foundational product, team, or market, you are correct. Which is why I call it a hack -- doing what it takes rather than what you think is important.

I wouldn't call it a hack so much as learning to sell to your market. Just like showing you that Tide will take the stains out of your clothes better than the next detergent, or that Bud beer will help you attract women, whatever. In this case your market is VC's and your product is your company, you finally started pushing their buttons.


Yes! Well said.

This post makes it seem easy, I've met Matt in person, here's what is not very well pronounced in the article:

1. Matt is an amazing speaker, in person he is captivating when he discusses StormPulse.

2. He has been iterating on the idea for 3-4 years now? He actually launched it on HN IIRC.

3. His customer development skills are NO f*%kin' JOKE - he has been becoming intimate with his customers needs for a good while now.

4. He is very approachable, there are many people that you get a weird vibe from & may feel like you don't have their full attention - Matt is not one of them.

So basically - this is less of a hack & more of a culmination of years of hard work!

Thanks, auston! Speaking at RefreshMiami and the South Florida HackNTell were big confidence boosters that also contributed to the good outcomes.

The IBM SmartCamp pitch is extraordinarily compelling; like a good resume, it feels like you had to work hard to cut all the awesome things you had to say into a small space. It's also really well paced; for instance, the logo slide with the FedEx quote is set up to be a payoff moment for all the previous slides, which build up from smaller customer testimonials.

So my question is: it obviously took you awhile to get to this point, but don't you feel like, if you can put together a pitch like this, there's not a whole lot of additional "hacking" required?

Wow, thanks.

I'm definitely getting more comfortable with pitching, but don't consider myself a master by any stretch. I think the next frontiers are frame control and getting a better grasp on market sizing and pricing.

But yes, hopefully not much more hacking required to close this round of funding. :)

So, our fault for not having caught it the first time. But the reason is more innocuous than you might think. On a busy day, we can get 50-100 startups showing up. That's a lot of applications to read - so we run an algorithmic filter to decide what to even look at. My guess is that your initial pitch didn't make it past the filter. The second time did, but not because you had a ton of offline traction with press and investors, but because you had a referrer who's known to the community - Joshua Baer. Yes, that's a bit of social proof (knowing an entrepreneur who's respected in the community) but not a particularly high bar. We'll try and do better in the future, and meantime, congratulations!

For the record, I have looked at our first application again and I can see how it left something to be desired. I do think AL is working great for us now and I think hustle can create enough social proof to make things happen. The bar isn't too high, even though it is a barrier. Geography is huge, probably too much. But a few flights can overcome that sometimes.

Regardless of your feelings on cashing in on your social capital, it's clear that reputation goes a long way. Yes, it doesn't come cheap but the results come from long-term, compound effort. I don't doubt the 25,000 hours Matt quoted in that pitch. But the long-term, compound effort is an important catalyst. (You guys might know it as 'hustle'.)

I can second what auston (and others) have echoed about Matt. I had the pleasure of having Matt do a presentation on Price Hacking for Hack and Tell in South Florida (where he's very active in the community) and it was easily one of the best presentations we've hosted.

Thanks Mike ... really liked doing that HnT and was glad we could veer away from tech topics and talk about the biz. Hope we can cross paths again soon.

I'm sure we will, my man! ;)

I've pretty much given up on AngelList for the time being. I'm not in in the valley (although not too far) and not in a large metro. All of my past success has been bootstrapped so I know no one in the VC community.

I did reach out to a few people I met at conferences but that got me nowhere. I thought being a TechStars finalist might help too.

Meh. I decided it's really not worth the time/effort now. Maybe I'm doing something wrong (yes, I've read all the relevant posts on "hacking angellist") but for now, I'll focus on the product and growth. Perhaps I'll try again later.

Don't miss one of the best "are you sure you've got what it takes to build a start-up" posts chronicling Matthew's 7-odd year journey with SP to date:


For a guy that's spent 7 YEARS building his product he does a remarkably good job talking about the market, great write-up and post Matt!

It pays to pitch in person and connect with people for real. That's what I got from the article. And having traction helps win the in-person pitch.

That is incredibly good advice. Thanks!

Excite them about the Market so they are intrigued about the product.

Did you guys get any writeups prior to Gigaom? Was is the case that you had lots of customers but just not a lot of glamour?

We did appear in TC in Sept 08 but nothing on the order of the GigaOm writeup.

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