I have a tendency to over-react. I will give you an example. On or about December 20th of 2017, instead of the up till then normal 30 applicants a month (about 1 a day) for Goto Angel, I started getting more like 30 per day. That's a 30x increase in applicants literally over night (I checked in the morning to find 30 applicants that were not there the night before). My first reaction was suspicion that someone had done me a "favor" and started to advertise on my behalf. I immediately contacted the usual suspects and asked them to please stop it if they had done it. But none identified responsibility, and the next day I had the same level of applicants again. Something had gone terribly wrong!
We should all be so lucky? Not!
Angel to Exit was never intended to be a venture type business. It was designed to be a lifestyle business. I have been plodding away at it for about 2 years now (the first article on A2E.co was put out about 24 months ago), with the idea of setting up my retirement so that I would always have a dozen companies or so taking a few hours a month of my time and paying me handsomely for helping them succeed. That's good money and some potential for more money on exits and working perhaps 40 hours a month - 10 hours a week. Nice retirement concept. Keep my head in the game while still being able to do whatever I want with my time.
My first reaction (who did this to me without my permission?) then turned to light panic as I realized I would potentially have to read through and act on 30 things a day just to deal with the influx of applicants to A2E. And what if this kept getting bigger? This is not an automated process - I actually read these things! So I decided I needed to put more resources on it. But between Dec 20 and Jan 2 there aren't a lot of potential workers out there ready to help out, be trained, and start to go on something that might end the next day. As my panic grew, I woke up earlier in the morning by an hour or so to add the time needed to review the applications on a daily basis (I used to look every few days). Of course by reviewing them sooner I then generated more invitations sooner, which led to more acceptances sooner, so then I added another presentation day to January.
But if I need more presentation days, that means I need more advisors/angels to participate on the calls, or for the existing ones to be on more calls. I don't like asking people for their time without paying them, and asking more people for more time on the bet they will find something interesting to justify the time becomes even harder. So my next panicked response was to reach out to my network of advisors and ask if they could commit another several hours a month to look at more companies.
The list goes on, but you get the idea. I actually thought about scaling the business a year ago and build a lot of automation to help reduce the effort for more companies and make it scale-able. So I had a plan, but even with a plan, I tend to over-react.
Why is this "over"
Many reasonable folks would say that I didn't over-react, but reacted reasonably. But on the other hand, who knew why I got all these applicants right away? I certainly didn't. It could have been an accidental email blast by someone. It could be that people finally read some of the emails and noticed. I had been posting for years. Maybe it was a side effect of some other thing I recently did - starting an incubator. Perhaps it was one of my helpers not telling me they were about to do me a favor. Maybe there was an article I was unaware of.
The point of all this speculation (another panic response) is that if I started spending more money to adapt to the increased volume and the increase turned out to be temporary, I could end up burning more cash and run into a cash flow problem when the applicants didn't turn into clients over time. Goto Angel is already a loss leader for the advisory board service, as is the free content on the Web site. I don't mind investing to find good people to work with. But something about a loss leader is that if you produce too many leads, you can lose a lot! One of my clients in the last few years ended up with a few million dollars of "oops" because volumes exceeded budgets and fulfillment became infeasible or problematic for another reason.
So I tried to find out
Here's the thing. I am willing to scale up by a factor of 30 overnight. I have done it before (from 8 to 250 employees in less than 90 days in the late 1980s), and I may do it again. But doing it on speculation is not something I am willing to do again. I have seen this movie and it does not end as well as you might think.
The unanswered question is "Why?". Why did I all the sudden get all these applications? The "why" can lead to several outstanding outcomes. Most importantly, it can lead to BOTH the prediction of what happens in the next few days, weeks, and months, AND the ability to generate more business under my control by doing more or less of whatever the cause was that produced the effect.
Existing metrics tell me some things:
The change in volume is apparently global, not local to part of the world.
The change is apparently uncorrelated to the type of business, product, or service offering involved.
There is no obvious correlation to the initials of the CEO, email address, name of business, etc. that might indicate an automated mechanism going after parts of lists or any such thing.
Each application is entered by the individuals involved. Our questions are unique and the forms are being filled out by actual companies/people taking the time to address the questions. It's not just cut and paste or automated form filling.
I haven't sent out anything that would tend to induce such a change or otherwise created an obvious potential cause for this observed effect.
We are inviting applicants in about the same ratio today as we were before and for the same reasons, so the quality of submissions relative to our evaluation criteria is unchanged.
There is no obvious threshold of epidemic we have reached that might somehow have created a positive feedback in the overall system resulting in rapid growth.
Over time, something like 85% of the companies who have started our application process never completed it. Our application is unchanged and this ratio appears to also be unchanged, so applicants are not apparently getting over this action threshold more easily.
The percentage of companies accepting our invitations to present remain about the same so far, indicating that we will need to change our process to accept 30x the presenters and advisory boards or otherwise adapt to be more picky. Of course we could increase the price, but we are trying hard not to do that.
Our application process was set to expire at the end of 2017. I actually updated it to Dec 31 2018 several weeks earlier, but that apparently didn't take. It might be the urgency of the deadline that drove some part of the process. Perhaps we need to create more artificial deadlines to generate more applications (perceived urgency causes increased action).
After all the speculation, I decided to measure. So I asked a few applicants "How did you find out about us?". Here's what I found out:
Gust (the provider in this case) apparently sent out a communication about us to some or all of their audience. So they advertised on our behalf - without telling us. Here's what one of our applicants told us [WITHHELD FOR PRIVACY]:
For a bit of clarity, here is the email we received from [NAME] suggesting we apply to your organization by 12/31. We had created a profile on Gust.com to submit to an angel investment fund and received this email later that evening...
Subject: Upcoming Application Deadline: Go To Angel Ongoing
Looking for mentorship and growth opportunities for [YOUR COMPANY]? This accelerator program is currently accepting startups in your industry. If you're interested, check out the details on Gust:
You can apply to Go To Angel Ongoing via Gust. Just make sure to submit your application before the deadline on December 31.
Customer Success Manager
So I asked further ...
The mystery deepens. Other than the fact that my application process was set to close at the end of December, why did all these folks get this one email from Gust, a company that has gobs of other accelerators? And how did this magically happen all of a sudden on or about Dec 21?
I asked these questions, or rather I tried to, by emailing to the email address that sent out the message. Of course I got a "Delivery Status Notification (Failure)" containing: "Hello email@example.com, We're writing to let you know that the group you tried to contact (acceleratorapps) may not exist, or ..."
The texting application built into the site hasn't responded to my request from the 22nd, (or from 2016 for that matter), so I decided to find the contact information for something that might work, working my way up the stack to the ultimate "info@" email address for generic contacts.
Here is what they replied:
This is our Accelerator Newsletter, which is sent every Thursday. Founders get notified about programs they might be a good fit for. Since you have a link to your Gust application on your main site, you are eligible to appear in the newsletter to help promote your program.
As well, as your deadline approaches, we send reminder emails to incomplete applicants which tend to push a large number of applications through close to the deadline.
So now I knew enough. I stopped the process to hire new folks to keep up, readjusted my models to reflect the updated reality, and engaged the provider in a discussion of how to optimize my ingest performance. I also decided to set an expiration date of every month so as to produce a cleaner monthly cycle of business for potential applicants (but I did not act on this decision at that time). I finally managed to control my overreaction (in this case).
But the story didn't end there.
Of course the investigative process had its side effects. The only person who ever appears to be interacting with anyone at Gust is the person who got my inquiry and decided to "look into" my incubator. He told me that if I acted to change the application process to reflect the monthly nature of accepting applicants, it would be a violation of the terms of services and he would cut me off. So I naturally responded by clarifying that in the technical sense I have a cadre of companies every month, and that now that he notified me of the requirement, I would have to change it to meet the terms of service - but that if I did change it, he had already told me that he would terminate my account. So what was I to do?
Of course his response was to tell me that he investigated my site and determined that Angel to Exit is not an "accelerator" indicating:
After reviewing your site and program, I believe the core problem here is that Gust for Accelerators is the wrong platform for your organization. Our platform is designed for accelerators to manage, collect, promote, and evaluate applications across multiple cohorts.
As each cohort arises an accelerator will create a new program on Gust, with its own application, team of reviewers, and pipeline. We've designed the platform this way deliberately because accelerator programs tend to need flexible applications, the ability to keep records of which companies have applied under multiple cohorts, and volunteer evaluators that can change from program to program.
Go To Angel Ongoing seems to be using Gust's Accelerator Platform as a continuously running acquisition source for leads for companies raising capital. Although your objectives and best-case outcomes are parallel to a well intentioned accelerator program's, Go To Angel and Angel2Exit operate more along the lines of what Gust considers third party service providers than as incubators or accelerators.
Unfortunately this is prohibited under Gust's terms of service. Gust is designed to connect principal founders with principal investors or programs - not any kind of third parties or advisors. This issue is exacerbated by the fact that we have previously received complaints against team members in the Go To Angel Ongoing program.
For these reasons, myself, and higher-ups at Gust regretfully feel that your organization is just not a good fit, and as such we have removed your accelerator and programs from the platform.
Of course this is pure BS. No complaints had ever been identified to me via Gust, and when I identified that to them, I got the usual no response. And what does it mean "against team members"? We don't have any that I am aware of. But then the terms of service don't identify anything regarding the definition of an "incubator", "accelerator", or anything else. And by the way, every "accelerator" is a 3rd party to Gust, and we are a "principal funder" and "principal program".
But let's get to the real point. I pissed them off by trying to figure out what they did. So the person on the other end decided to be a pain. And of course my "program" was still there!? Perhaps I was suffering from their inefficiency again.
Now here is where others would probably leave well enough alone. Actually, most would have done so far earlier. But then what is this article about? Gust has a phone number (if you look hard enough for it) at 1+212-228-8770 - the corporate headquarters. So naturally, I decided to call to gain clarity around the situation. After all, when you have nothing, you have nothing to lose. Of course I downloaded all the data from my account first. I may be foolish, but I am not stupid...
The support process:
So I called between 9 and 5 Eastern time on the following Monday, and found that I could either dial by name or ... no other options. So I looked up the CEO's first name (David) and dialed the numbers for "dave" and managed to get an actual human (the CEO probably doesn't take his own calls like I do, but then I'm not running a company with millions of people communicating, but I figured at least I could leave a message). I had a pleasant enough communication with her, and I got the email address of a support person (not the person I had been communicating with), and emailed a history of the relevant emails asking in particular:
I called HQ after getting a series of communications that increasingly led to the following decision. I am trying to understand a few things:
1) Who are the people I am working with who have had previous complaints, what were those complaints, and how come I never heard about them?
2) Is there a process by which I can contact the "higher ups" to understand the rational behind their decision?
3) What term of service did I violate (as far as I am aware I violated none)?
4) When I first applied to enter the program, I checked to see if this was one that would be acceptable and was told to proceed - now I am being told that I did something wrong. I feel as if this is not my fault and that I am actually being removed because your support people didn't like my communications style.
5) The lack of transparency here is staggering and I think it would be in the best interest of Gust to bring clarity as to specifics.
Like I said, I thought I was following the rules and I feel as if I am being punished for asking completely legitimate questions. It's very easy for me to adapt my program(s) to meet whatever specifics you might have - and I suspect that in fact I already meet them. But the fact that I cannot get any clarity around what exactly you think is or is not in the line of your program seems to me to indicate an issue at Gust that could be presented in a more clarifying manner to those of us who don't quite get it based on what the Web site and emails say. FC
I was told that they usually get back the same day, so I sent at 2018-01-08 @ 0825 ...
On 2018-01-11 @ 0626 (after 9AM in New York where Gust is), I tried calling again, having heard no response. I got voice mail which I left, and did a resend. "Trying again after no response since Monday." ...
In the meanwhile, I tried to engage with Proseeder and Angel.co to generate leads that way. Angel.co, after some online messing around, managed to allow me to set up some questions but not the ones I wanted and all open answers instead of multiple choice (in some cases this halps me a lot). Proseeder set up a call with a representative for 2018-01-09 to discuss the concept - but that morning before the call, they cancelled the call and told me to schedule again for next week. I did that of course...
I will not bore you
Here's the bottom line:
At the end of the day, a successful entity needs to be able to control its processes and in the larger sense, itself. More is not always better, and scaling too fast can be a big problem. Ready, fire, aim is generally problematic.
Measuring things is important to business maturity, and getting self control in times of change, while it may lose you some business, is more likely to save you time, money, and improve your business.
I am a big fan of good luck. But "luck favors the prepared (mind)" ["Luck favors the prepared" - Edna (The Incredibles) based on a far older expression: "Chance favors only the prepared mind." - Louis Pasteur Lecture, University of Lille (7 December 1854)]. Be prepared!
Copyright(c) Fred Cohen, 2018 - All Rights Reserved