Troy Pospisil has been on both sides of the table. Both investing in companies, and more recently raising $250M for his own startup.
On the Dealmakers Show Pospisil shared how he prepared himself to take the leap as a serious entrepreneur, the two economic factors to test to see if you have a real business, the fundraising process, and the difference between good products, good businesses, and good investments.
Listen to the full podcast episode and review the full transcript here.
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Hustling Out Of The Gate
Troy Pospisil says he feels fortunate for both having been born in sunny Southern California, and into a family in which his parents are still together all of these years later.
He was inspired to work from an early age. That started out in the form of working at a local surf clothing shop. Which essentially meant refolding the clothes after customers rummaged through them and made a mess.
Next he thought he wanted to see what a more professional working environment looked like. He ended up in the file room of a law firm. Running back and forth filing and then retrieving papers when information was requested.
The outcome of these early work experiences was resolving that he needed to get good grades, so that he could get into college, and could land in something which was more stimulating and interesting than these repetitive jobs.
In the meantime he started his own entrepreneurial side hustles. The first was finding a source for fake Louis Vuitton bags in China. He invested $1,400 of his savings into these bags, and went around selling them at local law offices, accounting and consulting firms. He could make a few thousand dollars in an hour like this. At just 14 years old. Unfortunately, this enterprise was cut short when he was caught up in a sting operation by a LVMH private security team.
Among his other youthful hustles was a deal to sell Phat Phat clothing. He could get the inventory at 25% of the list price. Then take it to the local swap shop market on the weekends. Again, at 15 years old he was again making a few thousand dollars in a weekend. It also taught him about pricing. What the impacts would be and how margins would change if he offered discounts, and so on.
For college Troy found himself heading to NY. While his classmates were getting jobs waiting tables or in coffee shops, he figured he could learn on his previous hustling skills to make more per hour.
He landed a gig as a rep for a pet food company. They needed him to go door to door to sell their product to get it on the shelves of local retail stores. Troy says he visited every one of the 115 stores in Manhattan, on foot.
It was certainly a bootcamp in sales. Learning to have the courage to walk in and pitch. How to read the room and adjust the script. Whether it was a high end boutique, or an owner more worried about protecting his store from robbers with a shotgun in hand.
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Good Products, Good Businesses & Good Investments
After NYU, Pospisil followed the advice of his professors and went into consulting and private equity. The goal being to both build a high quality network, and to see how large, successful companies operate.
Working in the space offered paid training. He got paid to see the inside of many companies, with different business models, and various types of problems, technology and integration and implementation at scale. This included Nike, Toyota, Toshiba, and others.
It also meant practice in Excel, analyzing data, and presenting to stakeholders. All great preparation for a startup founder. Including all of the long hours, and flying around the world.
A big part of this work was of course financing businesses. That required being able to learn to differentiate between good ideas, good products, good businesses, and what makes good investments.
Troy says that while a good idea and product is necessary, it alone isn’t sufficient for building a good business.
In order to create a good business he says there are two key economic factors. Those are the margins on your product, and your customer acquisition costs relative to the lifetime value of each customer.
Then you have to ensure there is sustainability in that business. Something which he points out has recently eluded many tech businesses. Especially with changes to data sharing, and the economics and advertising abilities on platforms like Facebook. A fact that may be sinking many who can no longer make their math work.
Then there is the investment piece. Evern with all of the above solved, there can be a big difference between a good business and a good investment. If you overpay for a good business, you can be making a bad investment. In contrast, you can invest in a subpar business at a better price, and make money.
Taking The Leap
Troy craved going back to being an entrepreneur. He had gotten the education, and had built the network.
He had developed his skills to the point where he felt confident enough that he could try doing it himself. He was aware of the challenges that would come, but was ready to embrace them.
Troy also says that he had been very frugal. He had saved and saved, with this moment in mind. So, when the opportunity arose he would have the financial freedom to do it. This would enable him to dive in and take a chance for a while, and not have to worry about taking a salary.
He had no mortgage or kids, and together he and his wife agreed to give it a shot, with her continuing working to bring in some income.
There seemed there would be no better time to do it, and he said he knew he would regret not taking the chance.
Personally and professionally Troy had experienced the challenges, headaches and costs of managing high volumes of contracts.
Not only did they need to be created and negotiated, but stored and remembered. Something which gets increasingly complicated and time consuming with various NDA, non-competes, and non-solicitation agreements.
Solving this became the basis for his own startup, Ontra. Which has already raised $250M, including from friends and family and institutional investors like Blackstone. They have a global team, which is 250 strong, and are actively hiring.
Storytelling in fundraising or M&A is everything which is something that Troy was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Listen in to the full podcast episode to find out more, including:
- How Ontra is solving this big problem
- Troy’s top advice before starting a company
- Why consulting or private equity gives you an edge in entrepreneurship