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Eric Paley is a Partner at Founder Collective, a seed-stage venture capital fund started by a team of entrepreneurs that launched companies and led them through successful exits. These founders are focused on helping the next generation of great entrepreneurs build important and lasting companies. 

Eric led Founder Collective's investments into numerous companies including The TradeDesk, Cruise Automation, Makerbot, Uber, HotelTonight, Kuvee, Bookbub, Contently, and Integral Ad Science. Eric has served as an Entrepreneur-in-Residence at Harvard Business School, is a frequent contributor to TechCrunch, and is a board member of the New England Venture Capital Association. In 2016, Eric was named to the Forbes Midas List of top technology investors.

Previously, Eric was the CEO and a co-founder of Brontes Technologies, a 3D imaging mass customization company, which was acquired in 2006 by 3M. Eric was also the CEO and co-founder of Abstract Edge, a web application development, and marketing company in New York.

Eric graduated Magna Cum Laude from Dartmouth College and as a Baker Scholar from the Harvard Business School.

You can follow him on Twitter: @epaley

He will be live on April 18th starting at 930 AM PT for one and a half hours during which he will answer as many questions as possible. 

  • JF

    Javier Feldman

    about 2 years ago #

    Hi Eric,

    If a seed stage company whose model was such that people used the product only, say, once to a few times a year (like say home buying or health care or travel), how could they demonstrate traction to you in a way that would convince you to invest?

    • EP

      Eric Paley

      about 2 years ago #

      Good question. I think that comes down to how much value they provide and how costly it is to acquire customers. If very costly, it becomes hard. If they can capture lots of value off an infrequent purchase, but the customer is easy to find, it can work.

      • AA

        Anuj Adhiya

        about 2 years ago #

        Are there any recent examples of such startups that you think are good examples of this?

  • TN

    Tri Nguyen

    about 2 years ago #

    One of the takeaways from this post (https://techcrunch.com/2016/10/15/overdosing-on-vc-lessons-from-71-ipos/) was that startups built by efficient entrepreneurs perform better over time on the public markets. Could you talk more about the signs do you look for that tell you an entrepreneur is or could be an efficient one - especially at the seed stage?

    • EP

      Eric Paley

      about 2 years ago #

      Some companies expenses get way out ahead of their progress. This is fine if the growth is extremely compelling, but unfortunately for many venture backed startups, this is not the case. On the other hand, if a company is doing $10s of thousands a month in revenue and their burn seems under control, then it's easier to imagine that they have signs of a formula that is working and possibly efficiently. If they doing hundreds of thousands and burning tens of thousands, even a better sign.

  • AL

    Arsene Lavaux

    about 2 years ago #

    Bonjour Eric,

    Thank you for doing this AMA.

    Here are a few questions for you:

    1) In seed-stage investing today, are both revenue and revenue growth requirements for newly minted startup entrepreneurs to raise a seed round?

    2) Where do you see the future of 3D imaging?

    3) At Founder Collective, you love the "weird and wonderful" according to what I could read on your blog. Could you elaborate on that?

    Merci beaucoup!

  • GH

    Glen Harper

    about 2 years ago #

    Hi Eric, thanks for being on the AMA. Can you give us some examples of growth strategies you used at the many investments you have been a part of, and how they were able to help these companies scale after they found product/market fit? Does Founders have any set growth templates they like to use, or is everything customized around the investment? Thanks!

    • EP

      Eric Paley

      about 2 years ago #

      Every company/product is truly different here. We've seen a wide range of channels and growth strategies work. It really depends on what your customer's require as a learning experience about your product and how easy/hard they are to find. We encourage our companies to think through their customer learning journey and experiment with their highest probability hypotheses.

      • FC

        Founder Collective

        about 2 years ago #

        One of the things we say at Founder Collective is that we're seed focused, but sector agnostic. We don't focus on SaaS or consumer products exclusively, so we've seen companies scale with sales teams and Facebook ads. Here are a few stories about more unusual approaches to growth we've seen:

        Langley Steinert is the CEO of CarGurus, which may go public soon and he credits a lot of their growth to a team of inside sales people: https://youtu.be/oY7PB26A5hU

        Chad Laurans is the CEO of SimpliSafe, quite possibly the biggest independent IoT company and they grew in large part by advertising on talk radio: https://youtu.be/uVVf2ISOeJU

        In our portfolio, BaubleBar used retail pop-ups to get the word out about their jewelry: https://soundcloud.com/founder-collective/sets/episode-7-baublebar-co-founder

  • BG

    Bernie Gengel

    about 2 years ago #

    Hi Eric, at what stage is it best for entrepreneurs to get in contact with seed investors? I feel that if your selling a product it should be post-revenue or at least a crowdfunding page to prove the concept but if you're developing software it should be pre-revenue, is this farfetched? I’ve tried cold calling, direct email, and networking events, received a few leads for a potential investment… I wanted to know what is the best way for entrepreneurs to find a compatible investor?
    Lastly, prototypes are great, having a compelling pitch and deck is essential and having a long term vision/mission... are business plans dead?

    • EP

      Eric Paley

      about 2 years ago #

      On when to raise, 2 thoughts:

      1) Revenue, product, prototypes, teams - all of this are signs of progress and super helpful in raising money. They aren't required, but getting well beyond an idea is required. VCs are not in the business of vetting ideas (contrary to conventional wisdom). We're in the business of vetting businesses. To get from an idea to a business, there is a big project that a founder needs to do. This is the customer development phase and it can't be skipped. This is what demonstrates that the customers will care about your idea (or do care).

      2) Wait as long as you can to the point where cash is truly the bottleneck. It always feels like a bottleneck, but often isn't truly what's holding you back. The further you can get without VC, the easier it gets to raise (and the higher the price).

      3 Share
      • BG

        Bernie Gengel

        about 2 years ago #

        Thank you for the wisdom Eric, means the world.

      • AA

        Anuj Adhiya

        about 2 years ago #

        re: customers will care about your idea vs do care.
        Going off of Javier's question on businesses with infrequent use cases, its extremely likely that you find yourself in the "will care" bucket vs the "do care".
        This may mean that at least initially, customer acquisition costs may be high (or higher than they should be or appear to be) until there is a robust acquisition process in place.

        Do you believe the case can still be made to investors to look beyond the present and take the plunge?

    • EP

      Eric Paley

      about 2 years ago #

      On business plans, I wrote this one awhile ago:

      https://www.inc.com/magazine/201310/eric-paley/writing-advice-for-start-ups-and-entrepreneurs.html-

      If you're talking about a great presentation, that's a must. If you're talking about the 30 page written prose that Micah and I put together for Brontes in 2003, you can skip it completely. It's a total waste of time.

  • CA

    C Anyaoha

    about 2 years ago #

    How do you go about building an effective startup team?
    There are a couple of people interested but do not display passion...thinking of it as a cool idea. Might there be passion threshold (enough passion)? I have so much drive it might raise the bar high for others to meet. I've had people initially join only to pull out due to some external reason.

    I have everything I need to start development of my product & I know I need a good trustworthy team to take it to the next level.
    Need all the advice I can get :/

    • EP

      Eric Paley

      about 2 years ago #

      I think it really helps to have a great co-founder. Someone that you can't believe is willing to work with you (in a sense) because you're so lucky to have that person. I think it's easier to build a team when the starting point is two strong founders, instead of one. I was incredibly lucky to be working with Micah Rosenbloom. It's easier for other talented people to bet when they are betting on two impressive founders. Passion comes from many places. Not everyone will be passionate about the same things. Some of us at Brontes were passionate about the market. Others about the tech. Others joined just to be part of a great team.

  • AA

    Anuj Adhiya

    about 2 years ago #

    Hey Eric - so cool to finally have you on!
    What do you believe is the most unique aspect(s) of FC that should prompt a seed stage company to seek your firms involvement vs other investors in the space?
    Conversely, under what circumstances do you think seed stage companies should not consider FC?

    • EP

      Eric Paley

      about 2 years ago #

      We truly always start from the founder's perspective and have structured the fund to make our alignment stronger than just good intentions. We actually dilute alongside the founders over time and that removes a great deal of conflict. We typically do a ton of founder advocacy during the lifetime of a company.

    • EP

      Eric Paley

      about 2 years ago #

      On the second question, why should someone not consider FC? That's a tougher one. We like founders that are eager to engage the hard parts. So founders that are great story tellers, but don't like to really tackle the hard problems, are probably going to find that we're not on the same wavelength.

  • JP

    John Phamvan

    about 2 years ago #

    Hi Eric
    As an investor you are clearly in a position to dispense advice to your portfolio companies.
    However, what would you say are the top 3 things you've learned from (and of) these startups in all the time you've been associated with them?

    • EP

      Eric Paley

      about 2 years ago #

      I've learned that I can advise on the margin and be helpful, but there is no substitute for great leadership and amazing business judgment. Founders are making countless decisions in real time and no one can guide them through every one of those decisions/actions. Those who have the instincts can figure it out on the fly. There is only so much any advisor can help.

    • EP

      Eric Paley

      about 2 years ago #

      Ok - here's a second one - great founders learn really fast and adapt. I never think to myself, that person was an amazing founder, but the market just didn't respond. That doesn't make sense. A great founder would react to the non-response to the market and shift to find something that the market is responding to. Learning quickly and minimizing iteration time is the key to finding those opportunities to win.

  • JT

    Jiten T

    about 2 years ago #

    Hi Eric,

    Thanks for taking the time out to share your knowledge with us.

    My question is: what are your views on the trends in tech for the next five years? And as a VC which sectors/verticals in tech would you have a bias towards while making decisions to invest over this time frame?

  • CA

    Carlos Abad

    about 2 years ago #

    Hi Eric, what are the most important aspects to go deep when you are investing in a early stage startup? and how do you help them later achieve their goals before the next round?

    • EP

      Eric Paley

      about 2 years ago #

      Unfortunately, it's a bit of speed dating, but I think for investors and founders the most important thing is getting to know each other. It's a marriage that will be in place for a long time and is nearly impossible to break up. The single most important variable for a startup to be successful is an amazing founder. We try to get deep here in a short period of time.

      3 Share
    • EP

      Eric Paley

      about 2 years ago #

      We try to help the company achieve goals first by discussing "what really matters? What is true evidence that we're derisking the business?" Sometimes that's revenue traction, but it could be many different things. Nothing worse in a startup that achieving the wrong goals :-(

      Then we work as hard as we can to help the founders meet those goals that really matter.

  • JD

    James Dunn

    about 2 years ago #

    Hi Eric - thanks for doing this!
    From your own experience investing in startups, what percentage of startups do you estimate fail before product/market fit and how many after that?
    For the ones that fail after reaching product market fit are there any patterns as to what caused their failure?

    • EP

      Eric Paley

      about 2 years ago #

      Great question. Sadly companies really die for both reasons, but the symptoms are the same - they don't learn fast enough. Either they don't learn fast enough that the market doesn't care about their product and quickly discover what the market does care about. Or they found something the market cares about, but they don't learn fast enough how to build a business that services that market need extremely well. Lots can go wrong after product market fit that require learning and adaption (market shifts, competitive threat, financing needs, cost structure, leadership challenges etc.).

      3 Share
  • DO

    Danielle Olivas

    about 2 years ago #

    Hi Eric,

    I appreciate your time today!

    Has FC ever invested in first time, unknown entrepreneurs? If yes, what did they do to convince your firm to invest?

    Thanks!

    • EP

      Eric Paley

      about 2 years ago #

      Many many times. In fact most of our startups are led by first time founders that were unknown to us before they came to pitch us.

      How did they convince us? They demonstrated that they were much more serious about building a great company, then they were about raising capital! When a founder is intensely focused on their business and moving quickly to build traction, the pitch gets very compelling to VCs!

  • EB

    Eleanor Bennett

    over 2 years ago #

    What are the most important digital marketing strategies that you use to promote Founder Collective?

    • EP

      Eric Paley

      about 2 years ago #

      While lots of VCs are promotional, the industry doesn't really promote in the way that our companies do. At FC, we really just try to be engaged in the broader conversation of our industry. I guess that boils down to content marketing, community building, and social marketing. We think of it all as just engagement. By being involved in the broader discussion, we think we can help founders beyond our portfolio, but also make sure that people know who we are and how we think.

  • TS

    Terence Strong

    about 2 years ago #

    What are the things that inhibit a startup from moving from $10k per month to $100k per month?

    • EP

      Eric Paley

      about 2 years ago #

      Usually either 1) customers that don't really care that much about the product. 2) Customers that are hard to find and educate (getting the right channels). 3) A team that isn't good at marketing and selling to customers.

      If a founder has strong conviction that #1 isn't the problem, they need to work on 2 & 3. Many of our portfolio companies are in that spot for a significant period of time before they start to build real traction.

      3 Share
  • KA

    karim Abd El Kader

    about 2 years ago #

    Hey Eric- Thanks for conducting this AMA!

    Based on your strong background and experience in the VC space, what should seed investors look for in potential startups they may invest in from product, team, growth and revenues perspectives?

    Thanks,
    K.

    • EP

      Eric Paley

      about 2 years ago #

      I describe it as the founder is many steps ahead of me at thinking through the challenges of the business and starting to address them. So on product as an example, what are they learning from their customers about the product and what are the plans to adapt etc.

  • MD

    Mark Anthony de Jesus

    about 2 years ago #

    What advice would you have for first time founders that have no inherent domain expertise but are passionate about solving huge problems in such verticals to raise their odds of success?

    • EP

      Eric Paley

      about 2 years ago #

      1) Go find a co-founder (or at least senior team member) who brings the domain experience.

      2) Become native in the field quickly, by learning everything you can.

      Best complement Micah and I would get when running Brontes - A dentist would ask us "Where did you go to dental school?" Neither of us did, but it was validating that we did a good job getting native quickly.

      3 Share
  • SK

    S Kodial

    about 2 years ago #

    Hi Eric
    What question do you not get asked as often as you hoped or thought you would when it comes to startups/tech/investing?

  • DH

    Dani Hart

    about 2 years ago #

    Hi Eric,
    Thanks for joining us here!

    I'm sure you've seen your fair share of startup pitches. Can you elaborate on what makes a good pitch? Are there ever situations where the pitch was bad but you still gave the startup an investment? If so, what changed your mind (and was the team an unproven one)?

    • EP

      Eric Paley

      about 2 years ago #

      In my mind, the purpose of a pitch is to explain why an opportunity is uniquely compelling. So style helps and substance is even more important. If you're asking, "has anyone pitched you poorly on style but you invested?" I'd say that's happened many times. It doesn't help, but sometimes the substance is clear enough that style matters much less. Having said that, it's hard to explain something new to an audience. The more compelling the style, the easier it is to get across why an opportunity is extraordinary.

      • EP

        Eric Paley

        about 2 years ago #

        I'd add that a good pitch usually requires a good story that really helps educate the investor about the opportunity. It requires some key nuts and bolts elements (team, market, product, etc) but hopefully packaged in a great story telling wrapper.

        I'd make the comparison to a television commercial. I've bought things that had pretty uncompelling commercials on a style level, but I'm much more likely to be open to understanding the product if the style of the commercial stands out.

  • TD

    Ty Danco

    about 2 years ago #

    Looking back at your portfolio, are there any commonalities or hidden themes that you weren't aware of at the time? Have you surprised yourself at all?

    • EP

      Eric Paley

      about 2 years ago #

      Ty - Thanks for the question my friend.

      I surprise myself every time a company works out well ;-) Only because we dream alongside the founders, but we know how hard it is to make a startup a success.

      Hidden themes are very interesting. I try not to be thematic, but if you look across my portfolio, I seem to have a real interest in where bits and atoms meet. Brontes was a first example as a founder, but this can be seen in many places in my career as an investor - Uber, Cruise, OPOWER, Makerbot, FormLabs etc.

  • DW

    Djibril W

    about 2 years ago #

    Hallo Eric. Greetings from Africa. Is it possible for startups in Africa, specifically Kenya gain access to your venture fund?

    • EP

      Eric Paley

      about 2 years ago #

      It's pretty hard for a bunch of reasons. Most of all, we struggle to help as much as we'd like. We do have a couple of investments that are operating in Africa (Andela, HelloPeter), but that isn't our primary focus.

  • DF

    Damien Fuentes

    about 2 years ago #

    Something a little more granular... either as applied to all seed investors or to your group specifically: what has been the best pitch (or best structure of a pitch) you have experienced or prefer to see?

    • EP

      Eric Paley

      about 2 years ago #

      This is a bit hard to generalize against, but Sudden Coffee comes to mind and then I do my best to generalize.

      Kalle was the 9th rated barista in the world in the 2015 competition. He asked me to meet him at a Blue Bottle Coffee. He ordered a pour over and two cups of hot water. He then poured Sudden (his new 3rd wave instant coffee) into one cup and Via from Starbucks into another. He then asked me to taste blindly (he labeled but moved the cups around). I told him that one of the coffees was awful but the other two were equally great. I apologized if the awful one was his (you can imagine it wasn't). He then revealed that the awful one was Via. His and Blue Bottles were equally good. I was stunned. He had just made instant coffee for me that was as good as Blue Bottle. We invested!

      Ok - now trying to generalize - Don't forget that the reveal does matter. Every startup pitch benefits from that moment of drama or excitement included in the pitch. Investors have emotions and compelling facts are usually insufficient. Be careful not to read into this that I think every pitch should have a stunt. This was totally authentic and showed off Kalle's vision perfectly.

      • DF

        Damien Fuentes

        about 2 years ago #

        That sounds like you're describing "Time to Aha" in the pitch. Instant coffee supported the venture.

  • SA

    Shane Arcuri

    about 2 years ago #

    Do you have any suggestions for entrepreneurs who aren't necessarily making anything new and are simply recreating an already existing business model? Example, I'm starting up a recreational marijuana distributorship on the west coast. Distribution is nothing new, and neither is the product. What can I do to put myself ahead of the competition or already established distributors?

    • EP

      Eric Paley

      about 2 years ago #

      These are rarely VC types of businesses, but I'd still encourage you to think about differentiation. You're starting from a place of saying "what advice do you have for undifferentiated businesses." I'd say that if you're not going to find interesting ways to better serve your customers than the competition, then it's really hard to build a good business. Focus on your customers and how to serve them better than anyone else. That's what good businesses do.

  • AC

    Andy Cook

    about 2 years ago #

    Besides people who are eager to engage the hard parts of a business, are there any other common traits in exceptional founders that you've seen across your portfolio companies?

    • EP

      Eric Paley

      about 2 years ago #

      Impatience. Not rude impatience, but impatience nonetheless. When you're working hard to prove something every day, you should be extremely impatient about making it happen.

  • EP

    Eric Paley

    about 2 years ago #

    I think I got all the questions. Happy to interact over Twitter @epaley and follow us @fcollective. Thanks everyone for tuning in!

  • AA

    Anuj Adhiya

    about 2 years ago #

    Hi Eric,
    Im going to be greedy and ask a couple more:
    What do you believe is the biggest advantage of Boston's startup ecosystem (If I recall, you'll had an office in Boston before SF)?
    What advice would you have for newbie founders to best tap into the system?

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