Nobody Knows Anything: How I Successfully Pitched Investors as a 22-Year-Old Startup Founder

This post originally appeared as a leadership column in Fast Company.

The biggest difficulty I thought we would face starting Next Big Sound was convincing investors that they should trust us with such a large amount of money. At the time we were starting, in 2008, I believe Mark Zuckerberg was the youngest person to have ever raised venture capital. He did so when he was 19 years old. My co-founders and I were 21 and 22. I also anticipated difficulty in selling our software to seasoned music industry executives at global major enterprises. In fundraising and enterprise sales most of the people I was pitching were 20-40 years older than I was.

It certainly was not an easy process but I learned something early on. Nobody, experts or otherwise, knows anything…until you tell them a story that makes sense.

I'll tell you the process I like to use to figure out the story that makes sense: find the story, test the story, and then test the story again.  

It all starts with the story. Our story started with the music industry in 2009, in a state of dynamic change. I had experience stapling weekly CD sales reports together as an intern at the biggest label in the world. This taught me that the industry was not paying attention to where people were increasingly spending their time and attention and there was an opportunity to build a data company tracking all of this information. Venture capitalists categorically hate the music industry but most love data analytics businesses. In our story we positioned music as just the next industry to be transformed by data with Next Big Sound leading the charge. If I hadn’t workshopped a music-centric version of this investor pitch with investors over many months we would have ended up with a very different (and likely unsuccessful) story. We used compelling examples to drive the story home. Michael Jackson had just died that summer. To show the volume of online music data we showed that his sales spiked 1000% following his passing but his online activity jumped more than 10,000%!

Before you get discouraged that you don’t have a compelling story, remember that everyone has a unique advantage over everyone else. These advantages are usually the best place to find your story.

What unique advantage could three first-time founders have in a highly competitive marketplace where venture capitalists like Foundry Group are seeing thousands of pitches a year? How about the fact that as recent college graduates we were used to living with lots of roommates and on very little money? We spent the first 3 years of the business living in a 6-bedroom house with the first three people we hired. That’s the reality that drove part of our story that we were “cheap to keep alive.” What about our unique hiring advantage we had where we could siphon off the most talented engineers from our alma maters? That made it in the story too.

What unique advantage could a small team from Boulder, Colorado have over global enterprise software companies selling into Sony Music? How about the fortunate fact that my freshman year of college happened to be the same year that Facebook launched? I’d grown up with the technology we were tracking. When I stood in the boardroom presenting to all the label executives, I looked a lot more like the generation they associated with all these new technologies than our competitors who sent in more seasoned sales executives. By the time I got in the room I had also presented to hundreds of label employees and knew which parts of the Next Big Sound demo drove the most excitement, and which features caused people to tune out and check their phones, and shaped the demo accordingly.  

I've been incredibly fortunate to work with my two co-founders, David and Samir. We take our stories to each other for the first test. Once it's been revised the story is taken to the appropriate party for a second test. This is usually some portion of the NBS team but can include the board of directors, current or potential customers, vendors, partners, investors, or just friends of the company. This is where the wisdom of people who have years of relevant experience can send us back to the drawing board, and save big mistakes.

Finally, by the time the story goes to a broad audience at a conference, via an email blast, fundraising roadshow, formal sales presentation or company all-hands, it has been fully battle-tested.

The corollary to the title of this post is that as a 22-year-old, I knew as much as any of the people I was selling to. The phrase nobody knows anything isn't meant in a malicious way. It's just the recognition that no one can predict the future with 100% accuracy and thus, nobody knows anything…until you tell them a story that makes sense.

As the Head of Next Big Sound at Pandora, Alex White oversees a NYC-based team of two dozen data engineers, designers, product managers, and data scientists focused on prediction research and cross-platform performance measurement. White co-founded Next Big Sound with David Hoffman and Samir Rayani in 2008, while in his last semester at Northwestern University. Next Big Sound raised $7.4 million dollars across two venture financing rounds from Foundry Group, IA Ventures, SoftTech VC and other notable angel investors. On July 1, 2015 Pandora Media (NYSE: P) acquired Next Big Sound, Inc. White lives in New York City and posts regularly at alexanderswhite.com.

A Book Club For Ideas

I have a two problems that make it hard for me to join book clubs. I am extremely particular about which books I read and, secondarily, I have a compulsion to finish every book that I start. I have joined one book club in my life. Two friends and I decided to read Ayn Rand’s Atlas Shrugged. They both dropped out after the first few hundred pages and I was left trudging through the book alone for over half of 2010. This experience certainly doesn’t make me excited to join another book club.

But an idea club? Now that’s something I could get excited about. It would need to be small enough that a really deep discussion could emerge. Probably 4-8 people max. It would need to include people knowledgeable on the topic as well as a diverse, articulate, thoughtful mix of people. The closest things I’ve found to this concept are reading The Metaphysical Club, attending Palantir’s Jeffersonian Dinners, and organizing a chapter of Seth Godin’s Krypton University. These three things are influencing how I’m thinking about this “book club for ideas.”

The Metaphysical Club is a fantastic (true) book about ideas in America and the birth of pragmatism. Scholars and friends would gather in Cambridge, Massachusetts in the 1800s to discuss drafts of scientific papers and other emerging ideas. The group included a future Supreme Court justice and several philosophers and authors. It was never really discussed publicly by its members.

I had the privilege of attending a Jeffersonian Dinner hosted by Palantir in NYC at a nice restaurant in the meatpacking district. There was pre-reading ahead of time and you were told to come prepared to introduce yourself and speak for a few minutes to give your perspective on the topic. There were about 40 people there and we rotated seating throughout the dinner so that you got to meet a wide cross section of interesting people. Several were from Palantir but they were each asked to bring an “interesting” person along with them.

Krypton University was a four week self-administered course. Seth Godin prepared materials for the “students” each week and the “host.” Each week there would be a topic, things to read, watch and listen to, and some pre-assignment to bring. I hosted at the Next Big Sound office and had 4 people from the company join and a few others join in as well.

I think once every 2-3 months might be the right rhythm and allow schedules to align so people can plan accordingly and have some continuity to the group. I love the idea of having a topic and pre-work associated. Maybe we rotate the “host” so that person can identify the topic of conversation, assign pre-work, and kick-off the discussion. We’ll cap it at 6 people at first. I think it should be over dinner, or certainly lots of wine (like stereotypical book clubs). Maybe we can identify a guest to join each session who is relevant to the topic. The ideal setting in my mind would be JP Morgan’s private library on 36th and Madison. That room is now part of a public museum and thoroughly off limits for this sort of thing. I suppose a restaurant or apartment would work just as well.

Please reach out if you are interested in participating.

Figuring Out What Non-Fiction Book To Read Next

Many people who are not big readers get stuck figuring out which books are worth reading. There is the read-what-people-give-you-for-Christmas method, the grab-whatever-is-on-the-shelf-at-your-parents-house method, and the I-was-checking-out-at-the-store-and-it-looked-interesting method. There are also more proactive ways to do this.

The beginner proactive way to find what to read next is simply typing your favorite book into Amazon and looking at what other people who read that book also brought, their collaborative filtering for books I’ve found to be best-in-class.

The intermediate way to do this is finding people you really respect - bloggers, authors, entrepreneurs, etc. and trying to find if they’ve published any “best books I’ve read this year” or favorite reading recommendations (many keep some kind of public list). You can then look for commonalities across these lists. If Bill Gates, Seth Godin, Harvard Business School, and Brad Feld all recommend the same book - it’s probably worth looking into!

The advanced way to do this is triangulating research across lots of different sources. As you are reading the news, listening to podcasts, talking with friends, or watching TV - listen for authors or book titles and jot them down in a Notes app on your phone. When you’re reading a book you’re really enjoying read the acknowledgements at the end, look at the referenced works in the back, and jot these down as well. With your wide list of possibilities the research begins. I like to look at the volume of reviews on Goodreads and Amazon. The stars are a slight signal but can be deceiving. I like to look at the number of pages so I know how long a book will take me. I read about 50 pages an hour so a 250 page book is roughly ~5 hours. If I’m questioning whether a book is worth the time investment I might do a quick google search to see if a summary is available on wikipedia or PDF someone put together. If that synopsis seems valuable then I usually add to my wish list pile. When I’m actually ready to read a book I scroll through each of the books on my wish list that have been added in this fashion over the last 5 years. These books wax and wane in relevance over the years and I’m not afraid to drop books that are no longer as pertinent.

My main sources of new books to read come from my own research and the recommendations of trusted friends.  If you can’t tell, figuring out what to read next is a huge process for me but one that I thoroughly enjoy.

Free Advice?

I have a very close relationship with each of my grandmothers. I’m very lucky they are both alive and well. Last year over the holidays I had a curious thing happen to me when I told them that I was going to start to try writing more. They each said the same thing:

“Do you really think you should be giving advice away for free?”

I was pretty shocked to hear this from two women, both of whom are extremely giving of their time, effort and knowledge. I think it illustrates a wide chasm between the way the business world used to work, and the way it works today - at least in startupland. I think this is one of the most welcome differences between entrepreneurship and traditional business - entrepreneurship is not a zero sum game. In the music industry, my background, if I have the #1 record this week, you can’t have it. Therefore, the incentive to help others succeed could potentially come at a cost. In startupland, I can have a successful music analytics business, you can have a successful solar panel startup, and literally the whole world is better off the better each of our businesses do. More jobs, tax revenue, and hopefully a positive impact for humanity.

I expect absolutely nothing in return for mentoring at Techstars (the program we went through in 2009), for grabbing a quick coffee with new or seasoned founders, or getting together with a soon-to-be graduate. I have made friends, sourced future hires, converted conversations into customers and many other things that have directly impacted my business. But far and away the impact is not immediately tangible. Maybe some of the advice I give will help founders avoid a fatal mistake or land a new customer they wouldn’t have otherwise found? Or perhaps they’ll hire someone I know and respect. The startup world has exploded in the last five years but it’s still a small place. The real reason is hard to explain to my grandmothers. I enjoy it. I feel a debt to those who helped me. I learn something each time I hear their questions, fears, and their approaches to problems. It helps me see patterns in the marketplace.

As the requests to "pick my brain" have become much more frequent, I figured out how to continue this without impacting my business. One of the founders of Unreasonable Institute used to have tea every month where he’d invite those he was too busy to meet with 1:1. I borrowed this idea and changed it to Next Big Drinks where I would invite the 15-20 people each month I was too busy to meet with 1:1 and combine it with a fun excuse to drink with the NBS team, customers in the music, book, and brand space, prospective hires, and friends of the company. We held these every 4-6 weeks for a couple of years and they were some of my favorite nights of the year. I know that co-founders first met each other at Next Big Drinks and we hired people that we invited to Next Big Drinks years earlier. I LOVE the serendipity of introducing a new founder of a music tech company to an executive at a large entertainment company who happen to both be in line for a drink at the same time. Or a marketer from a book publisher, a record label, and a consumer packaged goods brand who all have common pains but different products.

I explained to my grandmothers that I don’t get anything immediate out of these connections but dozens of people met with me over the years who never should have taken my meeting. They were doing it as a favor to the person who introduced us, because I somehow got through one of their screens, or maybe they were just paying it forward? It was only thanks to these hundreds of meetings that we were able to develop the storytelling capabilities that allowed us to grow Next Big Sound through exit. I feel an immense obligation to pay this forward and help the next generation of entrepreneurs.

"Confidence and Composure In the Face of Complexity and Uncertainty"

I said this quote to myself every morning in 2015. During the last year as an independent company there was a lot of complexity and uncertainty in the Next Big Sound business. Our last direct competitor was acquired by Apple in January (the deal was done at the end of 2014 but it was leaked in January). In February we were named The Most Innovative Company in the Music Industry by Fast Company and upstreamed to their Top 50 Most Innovative Companies list overall. We had a growing book analytics business and a brand business but I was closing most of the deals myself and it was still not predictable or scalable. We hadn’t raised capital in over 3 years, we had a high Series A valuation we were just growing into, we had offers of equity or debt financing but no surefire place to spend the money to accelerate things and a management team who had worked together for years but was hungry for growth and new challenges.

Each morning I took a deep breath and said the above quote. I realized that in the face of complexity and uncertainty we each have a choice. The default response is to waiver, hedge bets, and be overwhelmed at the myriad potential outcomes (most of them not good as a venture-backed startup).  Or you can choose to maintain your composure. Your co-founders are looking at you, the whole team is watching, the investors are looking at you - should we be afraid? Double-down? Is it time to panic and scramble again like we’ve done so many times before? What is going to happen?

The type of confidence I’m talking about here is not one of defiance, rose-colored self-delusion, or bull-headedness. It’s the supreme confidence that we will figure things out, no matter the circumstances.  

No one has any idea what is going to happen. While fear, uncertainty, and doubt is extremely contagious (and certain strains are fatal) - calmness, confidence, and composure is less contagious but the most powerful antidote.

Coffee Shop Crawls

One of my all-time favorite weekend activities is the “coffee shop crawl.” Saturday or Sunday morning, ideally after a nice run, Caroline and I like to spend several hours at a string of coffee shops. It's like a pub-crawl, only nerdier. She’ll read the paper or work and I’ll usually be catching up on blogs, the news, or reading a book. I usually get chai, iced tea, or a small snack at each place we stop since I like to avoid coffee on the weekends.

While she has a weakness for Starbucks Frappuccinos, I prefer the the more pretentious independent or boutique shops. Some of my favorites in NYC: Third Rail, Pushcart, Gimmie (from my hometown Ithaca, NY), Stumptown, Local, McNally Jackson bookstore/coffee shop and Prodigy.

The routine begins when I pull up Yelp or Foursquare in our neighborhood, or one we want to check out for a few hours, and find 2-3 places we want to stop at that look good (wifi, seating w tables, bathrooms, good reviews). This turns out to be a GREAT way to explore different parts of NYC, catch up on reading, spend time with Caroline, and unwind after travel or a long week.

One suggested tip: when traveling to a new city for the first time I use Yelp or Foursquare to find the highest rated espresso in the city and head to that area. It's usually one of the most interesting neighborhoods in the city, not fully gentrified, and filled with cool shops, bars, and restaurants.  

Practice

I used to imagine that once you had the golf expertise of Tiger Woods, or the musical ability of Bela Fleck, you could only get better. Yet it is amazing to me how quickly skills and muscles atrophy.

I always knew that, without practice, skills decreased over time but I figured that the horizon was decades, not weeks or months. After running a marathon in October I might be unable to run half that distance by the end of this year without continual training.

Deliberate practice is now a well-known concept: a repetitive and intentional rehearsal of the most difficult portions of the task at hand. Every single day, continuing to press against the ceiling of your ability is how growth, improvement, or even maintenance at an elite level is achieved.

If the best golfer in the world needs to take practice swings before every shot, hit the driving range on off days, watch his diet, and workout throughout the entire year, what should you be doing to stay sharp?

Sports

To break up some of the more serious posts I’ve decided to intersperse some lighter, lifestyle ones. This one is about sports :)

My dad was never into watching sports on TV so I wasn’t in the habit of constantly watching games and checking scores apart from what I discovered on my own.

The first sport I fell in love with was soccer. I was 8 during the 1994 World Cup in the US and watched it obsessively all summer. Alexi Lalas was my hero. Like me, he had red hair and played guitar. The only difference being that he played for the New England Revolution and the USA National Team and I did not. I actually got to meet him during a soccer camp a few years after the ‘94 World Cup and he commented that he “liked my red hair.” I now play in a competitive men’s soccer league on the Lower East Side in NYC with 8 guys that grew up in Ithaca with me. We all happen to live in the city and call ourselves the Ithaca Lightning, our childhood team name from 15+ years ago.

The second sport I fell in love with was baseball. The New York Yankees are my team and I fell asleep listening to games on the radio almost every night. I’d rush down to check the box scores in the morning. I played on a team called the Belle Sherman Yankees in elementary and middle school and remember seeing the world champion team in 1996 at the Macy’s Thanksgiving Day parade the one year we went to see it live. After our Series A funding announcement and move to NYC we were bombarded by vendors of all stripes selling us black car services, short term housing rentals, and anything-else-you-can-think-of. The only good vendor call to come out of that period was the Yankees trying to sell us a box. Of course we had to sample it out so we got sweet seats and a tour each of the next few years as we considered buying a box for a season.  

The next sport I got into was football in college. My high school football team literally did not win a single game when I was there and Cornell and Ithaca College weren’t much more fun to watch. Growing up in Ithaca people are usually fans of Buffalo, the Giants, or the Jets. I never watched the NFL too closely until college when my friends and I would go to Northwestern games every weekend and I still watch regularly. Now that I live in NYC and can watch football on most Sundays (instead of going into the NBS office) I’m all about the Jets. Caroline grew up outside Philadelphia and is all about the Eagles. We got to go to Jets vs Eagles last season and bought jerseys.

To recap my allegiances:

• New England Revolution and now switching to the new NYCFC team. We went to the NYCFC team opener at Yankee Stadium but they finished at the bottom of the league their first season (they are doing MUCH better now).

• NY Yankees

• Northwestern

• The Jets

Luck and Timing

Incredibly hard work is a given. A 24/7 obsession with your problem area and your business is table stakes. Yet for some reason the outsized role of luck and timing is not discussed as a major element of “success.” I think it’s because the acknowledgement of chance runs opposite to the narrative of entrepreneurs who bring their product or service into the world through sheer force of will and personal agency and charisma.

Whenever this topic comes up in entrepreneurial circles someone will quickly say “you make your own luck” and the group will move onto another topic. I think this does a disservice to all entrepreneurs in recognizing how they can set themselves up for lady luck to join them as they build their company. No company has ever succeeded without her visiting at least once or twice.

To pick out a few of the lucky breaks we got along the way:

A. Samir was not originally planning to join the entrepreneurship class where we shaped the original idea for Next Big Sound. He ran into a friend at the library who convinced him to come checkout the first pre-class orientation session.

B. We were going to shut the company down if we did not get into Techstars in 2009. I got connected to Jason Mendelson through a long daisy chain of random connections and he stuck his neck out for us to join the program with him as our lead mentor.

C. There was at least 45 days in between our lease in Boulder running out and the close of our Seed financing. My aunt had happened to move to Boulder a year or two earlier and David, Samir and I moved in with her and her boyfriend (now husband) for 2-3 months. If we’d had to sign a lease or pay rent in that time we would definitely have spent the remainder of our cash.

D. We got connected to a senior major label executive who had just left the company. Due to his tax and financial situation he did not want to be paid cash but in equity during that first year as our head of sales (which we could afford). His former employer had just shelved an internal initiative to build a centralized analytics dashboard and established a committee to review existing products in the market. The chairman of that committee had been hired by our head of sales and we thus had access to feedback on what they were looking for just as we were building our premium product.

E. One of our early customers moved to a major book publisher, we kept in touch, and ultimately signed a large 3 year agreement with them. This allowed us to continue to capitalize the company through revenue and avoid a dilutive financing.

F. In January of 2015 our last direct competitor was acquired by Apple and we were named Most Innovative Company in the music industry by Fast Company. Interest in acquisition heated up and by March we had multiple parties interested in acquiring the business. Pandora had just opened up their data to artists for the first time in October 2014, and just hired their first VP of Corporate Development, we were Pandora’s first ever acquisition.

Luck and timing. Timing and luck. A little more background on each of these lucky breaks and how we set ourselves up to recognize and be exposed to them. Of course this is easy to do in hindsight but impossible to recognize in real time.

1. I knew Samir through A&O Productions, the largest student group on campus, and we could have connected outside of the course.

2. We had applied to Techstars the year before, gotten rejected, but managed to survive another year and reapply etc.

3. We each could have moved home and in with our parents. Or worked with our investors to advance enough money to pay rent. In either case we would have lost a lot of momentum.

4. We were connected to hundreds of people leaving the music industry but this person was flagged by David, connected to me, and we hit it off immediately. After our first phone call I was sent the longest email ever with tons of thoughtful feedback on our product and business and that started the positive working relationship.

5. We eventually signed our first major book deal and launched nextbigbook.com but this was after two years of me pinging my contact every six months and checking in if they were looking for a solution like we could provide.

6. Exactly five years prior to the Pandora acquisition announcement I sat down with Tim Westergren and two other top executives to discuss Next Big Sound powering a Pandora artist dashboard. The Apple acquisition and Fast Company recognition were outside of our control but we certainly had initiated data licensing conversations with Pandora as soon as they first released their data via AMP in 2014.

You can go through each one of these events and explain how we set ourselves up in a position to receive these lucky breaks yet there is no denying the importance of luck throughout this process.

For those interested in thinking about this more I just finished an interesting book on this very topic called Success and Luck: Good Fortune and the Myth of Meritocracy.

Being Purposeful In Your Career

One pattern I’ve seen a few times, that I never expected to see from A+ co-workers or friends, is people being passive and reactive in their careers. I don’t mean they don’t care what happens, or that they take things lightly. I mean instead of deciding the trajectory of their desired career and identifying companies and roles that might be a good fit to explore, people are taking random calls from recruiters (don’t get me started on recruiters) and going through the process with one company that happened to reach out to them.

We’ve grown incredibly open about this difficult topic at Next Big Sound, to the point that we sometimes ask folks if they are interviewing elsewhere and address it directly. It’s taken years to mature to the point where we can openly discuss with NBS workers that the challenges we have at NBS might not be a good fit for what they want to work on on a daily basis. We’ve actually facilitated many jobs for former employees. I’ve been very fortunate to work with extremely talented colleagues at Next Big Sound over the years. While most still remain on the team, several talented people have moved on from NBS over the last 7+ years. One of the things I’m most proud of is that we still keep in touch with almost all of our former employees. Prior to acquisition we even created a listserv for our alumni called exbigsound@nextbigsound.com.

So what is the alternative to being reactive to offers that come to you? Being purposeful. Being proactive.

If you aren’t using your strengths on a regular basis, if you feel drained in the mornings before you go into work, if you stop believing in your mission, if you don’t like spending time with your co-workers, if you feel like your learning has plateaued or you are no longer contributing, it might be a good time to look for a new job. Even this is style of waiting until you are unhappy is less proactive than I’d like to see. At Next Big Sound we do 10 year planning exercises: I bet you’d be surprised how many proactive steps you can take each year, even at your current job, to march steadily towards your imagined future.

The people that are marching steadily forward are the ones I want to follow, push, help, and work alongside.