Entrepreneur Tips from Steven Hoffman, Founders Space Chairman
For our start-up founders today, we have a treat! Our post is this awesome interview with Steven Hoffman, a serial entrepreneur, investor, and the Captain and Chairman of Founders Space, ranked one of the Top 10 incubators by Inc. Magazine and the number 1 accelerator for foreign startups by Forbes Magazine.
Q: Steve, you travel the world and have met start-up founders from all over. Aside from the passion to take huge risks on their ventures, what are a few similarities you have observed between these founders that have crossed cultural boundaries and contributed to their overall success?
Startup founders in practically every country tend to be enthusiastic, young at heart, and open to new things. They believe they can make a difference. They are also optimistic–sometimes to a fault. They believe in their ideas and their ability to do whatever it takes to succeed. Whenever you generalize, you run the risk of stereotyping, but the differences are sometimes more interesting than the similarities. Startup founders in China tend to be born entrepreneurs. They see an opportunity and lunge at it, while Europeans tend to be more cautious and analytical. While Chinese want the quickest path to riches, Europeans tend to move more slowly and think carefully about every aspect, sometimes to their own detriment. Americans tend to be the most idealistic and dreamy. Americans love to think anything is possible. In Taiwan, they have the opposite problem. They tend to think small, believing they have a better chance of succeeding if their idea isn’t too big. Koreans are in the middle. And most Japanese still prefer to work for big companies than take the risk.
Q: What are some worldwide trends in entrepreneurship that you think the U.S. hasn’t seen yet, but would benefit from the trends?
QR codes are huge in China. Everyone uses them to promote their businesses, make purchases, and share events and information. I used to think QR codes were silly, but now I’m a believer. They are a major driver of commerce and information sharing.
Payment and commerce through chat applications is another big opportunity that Asia has taken the lead on. The US is just realizing the potential but has a long way to go.
Cleantech is moving faster outside the US than inside. Our government isn’t nearly as supportive as those of other countries.
Q: Founders Space is rated as one of the Top 10 incubators in the U.S. as ranked by Forbes. Your organization provides a variety of resources to founders. If you were to focus on just the videos posted on your website as a starting point, which video is the most popular with founders and why do you think it is so popular?
My most popular video is Hunting Unicorns: http://www.foundersspace.com/investing/. Startups love the practical advice. Every entrepreneur wants to know exactly what smart investors are looking for in a startup.
Q: There is this myth that it’s easy for founders to raise capital from investors if they simply come to the Bay Area and do a few pitches or demo their product/service. There are multiple workshops, incubators and programs targeting and tailored to founders. For founders who experience multiple rounds of rejections from investors, it can be demoralizing. Under these circumstances, successful founders who have exited from their companies have advised these founders to “bootstrap it” and refine the product/service until there is enough traction to attract new investors. Would you agree with this advice? What additional motivational tips would you give to these founders?
My biggest tip is not to waste time trying to raise money before you’ve figured out your business. If you have the data to back up your assumptions and prove that there’s a real business, it’s not hard to raise capital. The problem is that most founders don’t have much more than an idea or an app with very few users. That’s not enough to get funded, and it’s better to hold off until you have something solid.
Q: For foreign founders coming to the U.S., sometimes a difference in culture may contribute to unknowingly offending certain cultural norms in the U.S. For example, speaking too quickly during a pitch with a heavy foreign accent might unnecessary create confusion, making it difficult for investors to understand what was being presented. What are some effective resources foreign founders may find helpful in becoming aware of and managing some of these cultural challenges?
I tell all foreign startup founders to speak slowly, especially if they have an accent. Also, the problem isn’t usually the accent. The problem is that their pitches tend to be convoluted. They need to simplify their pitches and focus on clearly explaining their product. This sounds easy, but it’s not. Explaining something as complex as a new business idea in simple, clear language can be a challenge, and we work with our overseas entrepreneurs to help them surmount this challenge.
Q: How do investors view a previously failed attempt at a startup by a founder currently pitching to them?
It used to be a real stigma. But now it’s just accepted as a fact of doing business. Most startups fail. That’s part of the process. Of course, it’s always better to have a success story, but failure isn’t looked down upon like it used to be. Most investors actually like to see entrepreneurs who have had past experience, even if that experience wasn’t successful.
Thanks to Steve for his words of wisdom and taking a Visa Pit Stop with us! If you enjoyed this article, please share it with your friends and subscribe to our blog!