In this virtual chat, Startup Advisor and Angel Investor David Smith talks about the challenges and opportunities for startups during the coronavirus pandemic.
Learn more: dsdoes.com
Julie: Welcome to our special Facebook live series called Expert Connexions. My name is Julie Holton, I’m the Principal Strategist of mConnexions Marketing Agency. Through this series we are working to connect you to the resources and information that you need, that we all need, to get through this pandemic. At mConnexions, we work with businesses and nonprofits of all sizes and it’s safe to say that we have a special place in our hearts for startups and so I’m so glad today to welcome a good friend and a brainstorming collaborator of mConnexions, Dave Smith. Hey Dave.
Dave: Hey Julie how are you doing today?
Julie: I am good, thank you so much for joining us. Dave you and I have a lot of conversations off-camera and so I’m excited to actually come on camera and share some of these thoughts and insights with people. So thanks for joining us.
Dave: Absolutely I’m glad you have me here.
Julie: So Dave is an angel investor, he’s a start-up advisor and Dave you know for those who may not be familiar let’s first you know get some of the housekeeping out of the way. Tell us what is an angel investor? What is it that you do? How do you focus your time as an angel investor?
Dave: Angel investors are people who invest their own money into startups and the reason I make that distinction is because a lot of investors like the ones you see in Silicon Valley, they’re investing other people’s money. So if I’m investing your money for example and I lose it, I’m okay. But I’m investing my own money, so you know if I lose it it’s a big deal. It’s kind of like Shark Tank because most people haven’t heard of angel investors. So I tell people it’s kind of like Shark Tank except we don’t have the TVs, we don’t have the drama, it’s just you know pretty much over email and video conferences like this where I’m evaluating a start-up and then sometimes I write a check and invest in that company.
Julie: Okay so and I think that’s important to say because it also lets us know that you have a lot of experience in working with startups and looking at what it takes to make for a successful startup because obviously you’re more willing to part with your dollars when you feel the startups going to be successful. So with that in mind, I want to talk about the COVID-19 crisis. How has this first of all impacted your investing?
Dave: Oh man I wish I had a better answer for you. It paused it. So pretty much everything came to a standstill. I think it was March 11th March 12th somewhere around there, you know I’m wealthy and that’s how I’m able to invest in startups and all of a sudden one day overnight you know I was much less wealthy and so what that meant for me, for a personal standpoint, it was almost like I got punched in the face and knocked down and then I went into and I’m still in a position of trying to figure out you know where am I at financially and I need to make sure that I’m okay before I go back to redeploy capital this year and at the same time everybody else is in that same boat and everybody wants money. They’re like oh my gosh you know I just on the phone with somebody this morning and they want money for me and I’m just not I don’t feel comfortable today you know putting my money out when I’m worried about my own you know financial situation and you need to make sure that I’m okay, but on the flip side investors are really hot sorry founders are really hungry right now for capital and so there’s this duality where I want to be making new investments right now, but I’m afraid too because I want to make sure that my own financial situation is secure.
Julie: Absolutely and I appreciate you being you know so transparent about your personal situation because it really gives us insight into what other investors are experiencing right now. Of course with the changes in the stock market and the ups and downs and maybe more downs than ups of the last several weeks here and then the unknown of what’s ahead. I’m sure that changes a lot of strategies for investors and where putting their dollars, if they’re even putting their dollars anywhere. So you know Dave I know you also spend a lot of time and you and you have a business working with startups as an adviser. So what are some of the other than funding which obviously is a big issue for a lot of startups looking to get off the ground, what are some other challenges that you see startups facing with COVID-19?
Dave: I feel like the biggest challenge is the same as it was prior to the crisis, where it’s lack of cash in the bank. So I’ve talked with thousands of startups over the past half a decade, maybe a little bit more than a decade and they are always looking for money and so my advice before this was for founders to get money from customers. If you take money from me and maybe, I put five thousand or ten thousand dollars in your company I’m hoping that someday you’re going to give me back hundreds of thousands of dollars or even more. If you get money from a customer, they don’t take anything from you in the future, you don’t have to give them anything back. So I always advise startups to try to get money from customer’s number one instead of from investors and that’s the same advice that I’m giving out now. That’s the thing I told my friend this morning. How can you figure out you know what people how to position your service right now today in the midst of COVID, people want to buy what you’re selling today and get that money from them instead of from an investor who would want a piece of your company?
Julie: Such a great point too. Dave I know as you and I have been talking you know over the last several weeks over the last years even before the pandemic, you know they’re in a during a recession during a crisis that’s when we do see a lot of opportunity for startups particularly startups that can solve a problem related to the crisis or startups that have the ability to be forward-thinking as far as what tech platforms or software or you know you name it what products might be needed that really work as a problem-solving solution to help people get through it. We saw in 2008, we saw several companies and several startups that now are our big names. Dave what are some of the startups that come to mind for you that have been born so to speak out of a time like this?
Dave: Uber and Airbnb are two that jump right to mind that are huge companies right now that I think we’re starting right around 2008. I interviewed the founder of Doug’s song last week and he started doing security right around that time, maybe 2009 I think was when he started that. So you know right still in that recession and these companies you know when they do well in a time like this like a crisis right now where everybody’s holding out of their cash so tightly and if they’re able to sell to customers right now than when people are looser with their money you know those companies just blow up because you know if you can make it now you can make it anytime.
Julie: Absolutely you know and you mentioned Doug song and doing security right out of Ann Arbor. Of course skyrocketing now to know and you know nationally of course. Dave, you mentioned your interview with him. So tell us about what you’re doing now to work with startups and really businesses and organizations of all sizes to get through this COVID pandemic.
Dave: I took a couple years off from work Julie. So right now today I’m helping with a webcast like what we’re doing right now except for I’m targeting startup founders and bringing in startup experts to help them just like you’re doing in this question-and-answer style format and what happened with me was just like I’m advising my startups I stopped working a few years ago and I was mostly homeschooling my son and then he went back into public school in September and right around December I decided hey I want to start a company and so I was all geared up at the beginning of the year to you know start a new company and then boom you know I’m in the midst of that COVID hits and I’m thinking how in the world am I going to get you know anybody you know use my services right now when they’re holding on their cash. This is a brand new service. Why are they going to take a risk on me?
Julie: Which I’m sure a lot of startups right now a lot of businesses are like yes Dave that’s what we’re going through.
Dave: Yeah and so I watched what you were doing with your webcasts and I saw the success you’re getting that and I saw too I was advising my founders you know continue on you know trying to sell into this just business as usual and it was on one of your webcasts I don’t know if you remember the guest it was of a female but –
Julie: I do remember because we had a conversation afterwards. It was with Shari Pash who’s a you know yet she’s a strategist, she’s a coach who counsels her clients on business development and membership and yeah it was with Shari.
Dave: So I was asking about the head in sales on behalf of my startups and you know the advice that came back from you too was if it’s not COVID right now, it doesn’t matter and I was thinking like oh my gosh not everything is COVID like you know if I’m selling matches what does it have to do with COVID, but I thought on that and I thought in my life anybody who calls me now who wants to do anything that’s not related to how COVID has impacted me which you know is in a lot of ways you know financial and stress, sleep, health, and then when my son, if it’s not related to those categories I’m not interested and so I watch what you were doing and I thought you know how can I help startups in this COVID environment and so we decided my friend Tappan from Detroit and he’s an investor, we decided we’re going to help founders by doing a Q&A like you’re doing. On the web we’ll just have these lunch sessions and don’t really think anything of it, but it’ll be coping with COVID. So we’re going to help startup founders cope with COVID and Julie your advice was so spot-on this thing just took off because it was COVID related. All of a sudden we had national speakers. Some of these books that are behind me over there we’ve got some of these authors who are coming on the show that’s brand new, it didn’t exist three and a half weeks ago. If you told me, Dave three a half week from now you’re going to have you know these national authors, national leaders, on your show, a show that doesn’t exist, I would have thought you’re insane, but because I followed your advice and because it was related to COVID it you know just resonated with people and you know you’ve helped hundreds of people on the show or at least we’ve had hundreds of attendees you know we’ve got these big names and they’re just you know keep coming in. Every week we’re having a nationally famous person who I never would have thought of getting before and it’s because we tied it in a COVID and so I’ve been advising business owners and startup founders to do that same thing. Try to think about what are they doing today and how can that tie into COVID and sometimes it can tie in in unexpected ways. So one founder who I was talking to I was saying how can you work with gyms where people go and workout, yoga studios, these places that are shut down. So that you know they’re paying rent, they have no customers, how can you use their assets you know either their physical space or their customer lists or the fact that they need revenue, how can you use that to accelerate your business because I’m thinking if my friends can find a way to tap into those people you know maybe using their customers, you know making them brand ambassadors, or things like that, then all of a sudden these people are going to be answering the phones and saying oh my gosh you know Dave is calling me and he wants to give me money and I need money right now because my business is shut down.
Julie: Such a great way I think what you’re outlining here is the collaboration that’s happening. A lot of stuff whether it’s between business owners or within the business community for startups to really be to take this opportunity to work together and figure out what do you have that I need? What do I have that you need and be able to really kind of bridge that gap and help and by the way, I did not pay Dave to talk about our ideas, but Dave I’m it really underscores though how much even during the time of social distancing how much we need as humans to be connected and I think that webinar series like yours and like this one it has really helped provide one, some critical information that will help people deal directly with COVID and beyond COVID. I know even during your interview sessions, you’re talking with these incredible speakers, these incredible founders, about issues maybe not related to COVID that will still help business owners through their transition or through recovery period and all of that is so relevant right now, but so not only are you providing that important information it’s also connecting people because even we’ve seen even here within our chatbox and people be able to connect with other business owners who are dealing with something similar or questions and answers within the comments and not just fueled by the speakers and so I think this idea of collaborating especially during a time when we’re not able to be together in person has been really critical here.
Dave: I think you’re right on Julie and I’ll go back to the thing I just talked about coping with COVID web series and I think I used the word I did, and what I should have said instead is we did. It’s the other big difference in that from things I’ve done a lot in the past is that I just involved other people and you know there’s at least a dozen people who are putting in time on every week and there’s my two co-hosts are putting in a ton of time, but you know we’ve got super fans we’ve got people who are helping spread the word. The two biggest speakers that actually you know really expanded it were from a friend Rick Mason and he said hey I’ll get some speakers and he was the one who got Doug’s song. He was one who got Brad Feld, who I don’t even know except that I interviewed him yesterday. It’s amazing to see what you’re talking about: that power of collaboration and the power of we and like what this time is when you collaborate with people how it can just really take off.
Julie: Absolutely and so I want to bring in a comment that we have from Stephanie. Stephanie and hey Stephanie, Kristy, those of you joining us thanks for the comments. Stephanie said, Dave what are some exciting new startups that we should be watching and maybe supporting right now or even whether it’s specific um startup companies or types of startups. What should we be looking for right now?
Dave: Okay Stephanie, I’m going to show you, I’ve got this COVID symptom tracker on my phone right now. So this is an I don’t even know if it so it’s an app I think it’s out of Boston primarily. I’m so excited about this thing.
Julie: Developed by doctors?
Dave: Developed by doctors, yes. Every day on this thing, it takes me maybe 30 seconds maybe a minute, and I go in and I say hey I haven’t been tested for COVID, I’m not symptomatic, and what this does is it really helps you know get more data. Right now I’m concerned about myself. You know, I don’t want to get sick, I don’t want to make anybody sick if I am sick, and so I’m nervous, you know should I be going to Meijer? How do people get infected and what this app does is for county level data, it will give you estimates of how many people are in that county are infected. So that we can make good decisions and you’ll hopefully detect this earlier and know what’s going on. Testing a big part of it and this is a way to get a little rough test and get some data without having to go anywhere. That’s something I’m really excited about right now.
Julie: And I’m going to jump in on that Dave because I you know when you first sent it to me, I’ve got it on my phone too, I actually right before we went live I filled out my info for today which by the way is two quick questions. It takes less than 30 seconds to say have you been tested for COVID and are you feeling any symptoms and thankfully for me no and but the really cool thing behind this too is the ability to use technology to connect all of us you know throughout our country really. This doctor is behind it and he explains in detail as you download the app why this information is so important and what the researchers are using this data for so that our healthcare providers can prepare so that as you know they can they can watch the spread of the virus and prepare in those areas. So really cool Dave, I just wanted to throw that out there and what I like too is you know talking about the health aspects of it. I mean here we are you know business advisors of course on a very serious interview session here talking about I mean it is a very serious topic you know talking about COVID 19 and in the health and wellness of our businesses but there’s also you know again the human side of all of this and we are all people too and we are faced outside our doors with a virus that we know is severely injuring and killing people and so that at all times is a concern. So I’m glad you mentioned that app for sure but okay what else? I interrupted you, what else are you watching and are you looking for right now when it comes to startups?
Dave: I think health in general is going to be a really exciting field. I think this crisis I know for me personally I’m thinking more about health. I’m drinking water every day, I’m exercising, I’m feeling really healthier than I have in a long time and I didn’t really know what viruses were, what bacteria were, right at the beginning of this thing right up right around the time they shot down MSU, I think that next day March 12th March 13th my son was sick and I was thinking oh my gosh does he have COVID and we went to the doctors and they said he had an ear infection. I found out your infection could be bacterial or viral. I was like how do these things work? I hadn’t really thought about that until you know since sixth grade and I think that you know that micro focus of me expands to the whole country. I think there’s going to be a whole ton of money flowing into a health tech, you know things like telehealth. Things like preventing diseases in the first place and I think a lot of this was already science advancing up amazingly and I think this is going to pull that ripcord and there’s going to be money flowing in. I think there are some regulations that have slowed things down and gotten in the way and I think this crisis will be an opportunity to you know get rid of things that don’t make sense and put in place things that do make sense. I’ve heard in other countries that temperature is a big indicator of this COVID thing and you know imagine if we all had something that could tell our temperature and we just stopped this we just stopped anyone at the airports you know right starting January 1st when we knew that there was an outbreak in China and we just stopped them if their temperature was above a certain threshold and just you know check them out. Maybe held them in quarantine for 14 days you know.
Julie: Take care of them.
Dave: Right take care of them. We would’ve prevented thousands of deaths, hundreds of thousands of sicknesses, all this fear all you know trillions and damages you know by just doing a simple thing like that. So health care is something I’m really excited about you know in terms of disease, curing, prevention, Diagnostics, people being healthier. I think the second Category I’m thinking a lot is about connecting with people. There’s another app on my phone I got right before the crisis called cocoon and this one it’s kind of like Facebook but just for mini groups. So this is cocoon and the idea is you might just have your family unit in there. You know might just be like your nuclear family or however you think about it and it has some behind the scenes, you can see you know if Dave’s in Dewitt today. I’m not traveling anywhere, so I’m staying home staying safe, but in a normal time I would be in San Francisco or you know who knows where Panama and this app would just let everybody know, here’s where Dave is, here’s the steps he took today. You can share pictures in there, what’s the temp, what’s the weather like where he’s at. There’s ways to stay connected. Those are the two things that come to mind right off the top of my head.
Julie: And for those of you joining us Dave is answering Stephanie’s question here about what startups or specific startups or genres of startups where we could be watching right now to see emerging coming out of this as startups to really be focused on and perhaps supporting right now. Dave thinks it’s really interesting too along the lines of you were talking about telehealth. I think services related to mental health are going to be big. I was talking with a client on Monday, we actually featured her a few weeks ago talking about some of the mental health aspects of dealing with the COVID-19 pandemic and we were talking about the various ways that mental health professionals are connecting through telehealth with their clients of course, but all of the things that we’re learning about ourselves right now about humans in general and how we connect and what isolation does and you know she kind of made the comment about you know we haven’t had a pandemic before and so there’s a lot of learning going on and I you know it might be interesting we’ve of course got apps like calm, which I love helps me obviously get to sleep especially when I’m dealing with anxiety or insomnia, but I wonder what kind of positive affirmation apps people might you know look through, things that give them you know those gentle reminders or maybe their kick in the butt reminders when they need some motivation, but so that might be something cool. Things focusing on mental health for sure and I mean let’s not forget all of us who are working from home and the technologies that and even gaps and technologies that we’re seeing. You know we talked about how zoom of course has had you know a huge increase. Business is booming at zoom. Technology even like this platform that I use for these Facebook lives. There’s actually a message on my screen right now that says wow Wednesdays and Thursdays are so busy, note some overloads are expected. So clearly these platforms are seeing a big spike in users and that’s great for these technologies. So perhaps with some startups we might see them maybe start to change their focus or change their delivery models and how they’re going to get their products or services out in you know into the hands of people. Maybe right now we’re discovering gaps and technologies that exist or places where we would like some improvement as we’re communicating with our teams from home. So I think you know just to add to what you’ve said I think all of these might be areas where there’s opportunity and we know there are a lot of challenges related to COVID but it’s also great to look at the opportunities that are out there as well for startups.
Dave: Yeah I think it’s really accelerating trends that were already happening. So you know we were already moving in the direction of health and communication technologies have all been huge for a long time you know like Facebook’s a big example of that and then the third one I didn’t think of at the time but I thought about after we started talking what you’re talking about is you know at home delivery. Last year I saw a chart for a meal delivery company that was looking at starting and they brought up a chart of you know restaurant declines essentially compared with you know increases in at home delivery and so I think a lot this crisis is really accelerating a lot of trends, accelerating the work from home, and those kinds of things. Maybe to look where we’re going, look where we were going and we’re just going to get there faster.
Julie: That great point. That’s really interesting to look at. Okay I’m going to look at some of our comments. I want to make sure, if you have questions for Dave please feel free and use the comment box. I’m just going to back up a little bit here because I’m a little behind. Seth Barnhill of course you know families working from home. Seth says the power of we yes is always important. Nevermore so than now. absolutely. And that’s referring back to when Dave was talking about his team and all of the people that are working on these series. Christi says my mom’s an emergency physician. So Thank You, Christi, to your mom and the work that she does. Your mom always says an ounce of prevention is worth a pound of cure, prevention is key. Aren’t we all learning that right. Christi that’s awesome. Thank you for sharing your mom’s insights. So Dave, I want to ask you one more question as we talk about you know startups and really focusing on that community. You know I think once you know right now you and I have talked about, right now we’re in the crisis mode. We are in this is happening now; we need to respond now. So the immediate plans. I think a lot of businesses and startups are looking at what I am doing today. Perhaps they’re starting to think about okay what am I doing tomorrow, but it’s really kind of like that yesterday, today, and tomorrow kind of planning mode. Soon hopefully sooner than later we’re going to get in to moving towards recovery and what does that look like and so I know you and some of these others that you work with you know in your advisory role, are looking at how can we be there on the other side of this to really help startups and give them the boost to get you know to move through recovery? So from your perspective what does that start to look like for you? What is it let’s talk maybe about the Greater Lansing region which is where I know you are based, what does it start to look like in Lansing? What do you think is needed in order to help startups as we start to approach the recovery phase?
Dave: I think it’s a lot about mindset. about hope. Realizing that we’re strong. Looking for those partnerships, you know making sure that we’re going to get through it and doing our best to help as many people as we can get through it and then really come out you know come out with momentum. Come out strong and swinging. So right now what I’m doing is you know working with people, I’m on the phone maybe I don’t know two to ten hours a day. I’m on the phone a lot now and building those relationships. I’m on email and instant messenger and all these things and building those relationships and like you said Julie I’m really focused on mostly what’s today, what’s tomorrow. It’s much harder for me to plan and think about what’s going on for the year like I was prior to COVID because things are changing so fast. So I don’t think it’s useful for me to say what I might be doing two months from now or three months from now? So I’m thinking about who I want to be doing it with? What are we doing right now and how can we position ourselves so that will come out of this with momentum and when things are back to normal that we can you know kick it into high gear and accelerate what we built during this downturn. So survival first and then working with people and coming up with momentum, are the things I’m working on.
Julie: Momentum awesome and I was wrong I do have one more question because I know I got to sneak in one more. Startups okay what should they be doing right now especially if they were just about to launch or they were just about you know there’s so many, you do a lot of work I know at the fledge in Lansing and I know some great people there, we’re just about to launch or had just launched and we’re really you know trying to ramp up momentum and of course my heart goes out to them because like you say all the time in your in your webinars that you’re doing like it is hard enough to be a founder but now suddenly founders guess what you’re in a pandemic. So for those that were ready to get going and are now on hold, what should they be doing right now?
Dave: I advise them to think right now how can they get money coming in that’s going to you know put them at breakeven? You know when I was a founder I used to think about how much money do I spend per month and so they’re like that’s what I want to make every month and I know I’m okay forever. You know if I spend 2,000 a month and I make 2,000 months I’m okay forever. If I spend 6,000 month I make 6,000-month okay forever. If I spend more than I make at some point I will run out of money and so I advise founders right now you know try to figure out how to make money from customers right now and look at what you’ve been doing and has that been working and think about is that the best way that I could be spending my time right now, you know is this going to work? Founders are adaptable and they’re strong, but can also be really stubborn and I think that can be dangerous. Where founders can put themselves into a bad spot. I talked to some on the phone yesterday I think who put themselves into a bad situation at one point with $100,000 in credit card debt because they thought you know if I just pump up another ten thousand in this just another ten thousand of this I’ll get there and I don’t know how they did it but somehow they paid off that hundred thousand in three years, but know that that’s a tough spot and some people may have a really hard time recovering from that. So I think founders should try to get sales now and make sure that they’re taken care of today.
Julie: Dave Smith thank you so much for joining us and sharing your insights today. How can people connect with you and get plugged into this series that you’re offering?
Dave: The best way to do that is to go to dsdoes.com and there’s a link to the coping with COVID series there.
Julie: We will throw that in the chatbox too so people can see that, Dsdoes.com and who’s coming up next on you in your webinar series?
Dave: Tomorrow we’ve got Eric bond and so I talked about you know make any money from customers and no matter how many times I tell that founders always the money that they want to get is from investors. Founders have this dream that it’s easy to get money from investors, they’ll just talk with you Julie five minutes right the check bingo-bango done. Doesn’t work like that, it’s more like you know six months to a multi-year process to get money from investors, unless your startup is exploding. So people always want to talk with investors and so tomorrow we have a Silicon Valley fund manager Eric bond coming on and he’s going to talk about how to get investment right now in this crisis.
Julie: Alright so if you are a start-up and you are looking for funding right now, make sure to go to dsdoes.com connect with Dave and get signed up for that webinar. Dave again thank you so much for joining us today and really appreciate your time.
Dave: Thanks, Julie.
Julie: Alright guys so we have one more interview left for you today at 3 o’clock. So about an hour and a half from now Tanesha Ash-Shakoor she is the founder of voices of color it’s a nonprofit in the Greater Lansing area. She is going to talk with us about how the pandemic is impacting shelters and then profits that help deal with domestic violence. That’s coming up today at 3 o’clock. We will see you then. That’s coming up today at 3 o’clock. We will see you then.