Jack’s first piece of advice is to make sure you have something to show investors:
“First and foremost, I always want to go to anyone that I want to work with with something to show.”
At Twitter, they made sure they had people using the service at some scale before pitching investors. And at Square, they had 7 merchants and a working prototype that people were actually using.
As Jack explains:
“If people can’t see it and feel it, it’s very hard to sell. And I don’t want to just go and tell people this is going to be the biggest thing ever. I want to be able to show that and have them feel it and walk away feeling that as well.”
Jack’s second piece of advice is to make sure you really like the person you’re raising money from because ultimately investors are like employees you can’t fire.
Ask yourself:
“Do we really want to work with this person? Is this going to to be someone that really pushes us in the way we need to be pushed?”
Jack recounts pitching Square early on and getting several term sheets from VCs that asked zero questions:
“I said, I don’t want a term sheet—especially if you’re not asking any questions. That means if they’re on our board that they’re actually not going to be all that constructive in terms of really asking the tough questions. That is the role of the board. It’s to look outside and bring all their insight and wisdom to us and help guide the company.”
With Square, Jack decided to work with Vinod Khosla who asked tough questions and after he invested would email Jack once a week asking things like: “Have you thought about this?”, “Are you doing this?”, “I know this person, can I make an introduction here?”
When people ask Jack which firms they should go pitch, Jack responds:
“It’s not just about money or the firm. It’s about the individual that you’re ultimately going to work with… Find the people you really want to work with in those firms. And if there’s someone that just really resonates with you and you love the idea of working with them, focus on them. You have to treat it as adding this person to your team.”
