Our guests on our latest GeekWire radio show are Dave McClure, the founding partner of 500 Startups, and Brady Forrest, vice president of the Highway1 hardware incubator. They’re the stars of the new reality TV show Bazillion Dollar Club, which premiered last night on Syfy. They’re also two of the featured speakers at next week’s GeekWire Summit.
If you missed the show or just prefer text, continue reading for an edited transcript.
Todd Bishop: I’m going to put you guys on the spot. Give us your 30-second pitch for Bazillion Dollar Club. Dave, do you want to take a stab at this?
Dave McClure: [laughs] My elevator pitch for the show, right?
John Cook: You better be good.
Dave McClure: All right. Bazillion Dollar Club follows six struggling startups trying to get their products together. We kick their ass into shape, we put them in front of a room full of 500 investors and they try and raise a billion bucks.
John Cook: You did it and we didn’t even throw any exercise balls at you or anything.
Todd Bishop: That’s right, one of the features of the show is all the distractions at you throw the way at the startups in your accelerator. Brady, what’s it like to work with Dave and what’s it been like to put together this show?
Brady Forrest: Dave and I have been friends for a decade. We’ve worked together on a bunch of things, events, I helped out with 500 Startups when it first got started, so continuing the collaboration into TV seemed natural. Dave first called me about two years ago when he was working with ZPZ, the production company, and Syfy. It was right as I was starting Highway1. ZPZ came in and filmed us the very first week. Syfy proposed that Dave and I do the show together. I think it’s going to be interesting to show the differences between what a hardware company looks like at an early stage versus what a software company looks like at an early stage.
Dave’s accelerator really focuses on user traction, growth, really teaching the companies how to get more users and the metrics. In my case, I’m working with teams that are trying to turn prototypes into products. They’re often just trying to make one of their devices during the time that they’re with me. They’re just starting to think about what it looks like when it goes to manufacturing, to retail, and how they’ll get to 10,000 customers.
John Cook: There’s so many reality TV shows out there, and especially those relate to the entrepreneurial experience. Shark Tank comes to mind first and foremost. How do you think Bazillion Dollar club is different or unique from those?
Dave McClure: I think Shark Tank is targeting companies that are really trying to raise their very first dollar. A lot of them aren’t really tech focused. We’re definitely going after companies that are building real technology, either software or hardware, they probably have raised a couple hundred thousand already. We’re trying to get them their next million dollars. It’s also a little bit longer look at those companies. We take a 16-week view of them as they go through our programs, as they build their products, they go after customers, and get ready to get in front of investors.
John Cook: Tell me more about the story arc, it is quite different. You’re following one startup in each of the first episodes, is that the idea? Are you going to somehow circle back and tell what happens to each of these? Give us a preview of what’s to come.
Dave McClure: Each episode focuses on just one of the teams. We have six teams, three hardware, three software. It shows them coming into the programs, it will show them at Demo Day, and usually beyond. We’ll do follow ups on YouTube and online to see where they are. These startups are still ongoing, they’re still getting customers, Ivee is launching their crowdfunding campaign right now.
Todd Bishop: Good timing for them.
Dave McClure: There’s a story arc. Each team is trying to raise money, they’re trying to get their pitch down, and they’re trying to deal with the fact that they don’t have money, all while trying to build a product. They all have their own challenges, either trying to keep employees, or trying to figure out what is the actual device they should ship.
Todd Bishop: You mentioned Ivee. They are essentially, in shorthand, an Amazon Echo competitor. They are making a talking and listening home assistant. I want to know, did they ever figure out how to get the thing to actually listen to the people who are talking to it? That was the big challenge in the show.
Dave McClure: You guys are going to have to tune in to find out. It might have just crashed and burned.
Todd Bishop: Okay, exactly. Leave the teaser there. I will say it’s a great episode. There’s a little bit of a cliffhanger as well.
John Cook: What have you guys learned in following these entrepreneurs in a format where it’s being recorded and it’s for TV? You hear so much about reality TV, are you actually in the trenches helping them? Is it a distraction having the film crew there? Talk about that.
Brady Forrest: Well, this is what we do. There were another 10 teams in my accelerator during the filming, and Dave had another 25 or so in his. We just had the camera crew show up every day, or most days. At first, it was pretty awkward, we’d have to have certain meetings for them, and schedule certain events around when the camera crew could be there. Otherwise, it’s what happens. Serenity had challenges building the robot. Spin has their machine back in Amsterdam and are trying to deal with a team that’s across geographies. These are all the challenges that they had, it was just captured on camera this time.
Todd Bishop: Many people may know Brady from his time in Seattle. He was, among many other roles, one of the co-founders of the very popular Ignite technology talk series. Brady, you’re now with Highway1. For people who aren’t familiar with that, catch us up on what you’ve been doing.
Brady Forrest: I started Highway1 about two years ago. It’s part of PCH International, it’s a large supply-chain management company. We try to help hardware startups. Starting a hardware company is still really hard. You just don’t know that much about manufacturing and retail. Though it’s easy to prototype, it’s not easy to take it to scale. We bring in companies at the prototype stage, we give them some money, we give them engineering resources, we help them with design and get them in front of customers. At the end we try to match them up with investors who are willing to roll with the dream. Companies that have gone through our program are Ringly, Navdy is a heads up display for cars, Cue does at-home medical diagnostics, and one of our more recent successes is ModBot, which is a modular industrial robotics platform.
Todd Bishop: You’ve gotten lots of traction in the hardware space, and then Dave comes at it from the software world. Dave, for people that aren’t familiar with 500 Startups, you guys are legendary for your demo days, and you in fact are pretty legendary in the startup world. Tell us about 500 Startups for people who aren’t familiar.
Dave McClure: A legend in my own mind, for sure. We got started about five years ago, I guess I’ve been in the Valley about 25 years. So I’m kind of an old dog. The fund got started five years ago and our accelerator got started four years ago. We’ve had probably close to 500 companies go through our challenger at this point. Some of the more notable ones are probably TalkDesk and Intercom, both those companies raised big financial grounds recently. More recently a company called Mayvenn that does hair weaves for the African American market also raised money from Andreessen Horowitz just recently.
Todd Bishop: Dave, your approach is different than a lot of venture capitalists. Some would call it maybe the shotgun approach. You have more than 1,000 companies in your portfolio. How is that working for you versus a more targeted approach, for more traditional VCs?
Dave McClure: I won’t say that shotgun is the word I’d prefer to use, but we certainly do a lot of investments. That approach is working really well for us. We actually think that we’re building a little bit more mathematical way to go about venture capital investing. We do a lot of investments, we’ve made over 1,000 investments in the last five years, we’ve probably made over 300 investments in this year alone. We think we find big unicorns or startups about 2% of the time. We think we find big wins that might not as big as unicorns about 5-10% of the time.
For normal VCs, if you only find a big win 2-5% of the time, and you’re only doing maybe 20-30 companies at a time, you may end up with zero big wins. We think our approach is scalable, we think it’s a little more scientific, not necessarily shotgun. We think we’re generating results.
John Cook: You’re also legendary for going everywhere to find these investments. Talk a little bit about why you have a global approach instead of just sticking around in Silicon Valley.
Dave McClure: That’s true, we actually have a team that’s global, and our investments are too. About one third of our staff is spread across 17 or 18 countries. We’re in every continent except Antarctica.
John Cook: I know there are hot startups down there. That would be great, that should be a goal of yours …
Dave McClure: It’s not quite as hot an environment as Silicon Valley. The reason we invest globally is because we think that’s where a lot of the growth is happening around the world. We’ve made over 300 investments in places like Asia, China and India, Southeast Asia, Latin America, and even now the Middle East and Africa.
Todd Bishop: Dave, one of the characteristics that you have is that you really prepare your startups for demo day. One of the things that you have them do is power moves. Tell us about the power moves.
Dave McClure: I don’t think I’m the first person to notice this. There’s actually a TED Talk that has gotten a lot of attention where people raise their arms up and expand their body position and kind of do a couple of moves that boost their testosterone levels. That’s not just for guys, that works for both women and men. It’s a simple little exercise that allows you to get ready for a public performance, whether you’re speaking or presenting. It boosts people’s confidence, and helps them get ready for a pretty stressful moment, particularly when they’re presenting on stage.
John Cook: We’ll have to do a couple power moves at the GeekWire Summit on Oct. 1 when we have you guys on stage. Maybe we’ll start out the talk that way.
Todd Bishop: Maybe Dave could lead us in a few.
John Cook: Yeah, Dave, we could have you lead everybody in the crowd with some power moves. It’ll be at the end of the day so we’ll get everyone fired up.
Dave McClure: Oh, great, let’s do it.
Todd Bishop: It’s not quite a Hulk Hogan but it’s somewhere in that realm, in terms of what you do.
John Cook: It’s like a Tom Cruise on Oprah moment.
Dave McClure: I’ll try not to stand on the couch.
Todd Bishop: Demo Day is really the final moment for many of these companies that they’re building up to for weeks and months. What is Demo Day like for people that haven’t been there?
Brady Forrest: It’s a day where we get as many investors in the room as possible, who are looking for early-stage startups and then we have our startups get up one after the other. They do a very streamlined pitch that, if you already have a product, shows your traction. If you don’t have a product just yet, which is the case for most Highway One companies, shows what your product will be, tells your story. Afterward, everyone mingles, the startups are all at booths, and the investors start to figure out which ones they’re interested in. A lot of meetings come out of it. Sometimes fundings happen that day. We’ve had four demo days so far. Our last one was our biggest with folks like Joe Montana there. It’s usually a multi-hour affair.
John Cook: What is it like right now in Silicon Valley? That’s a question for both of you in terms of just the investment climate. Obviously there’s a lot of talk about a tech bubble going on, you guys are in the trenches there. What are you seeing?
Dave McClure: There’s a lot of concerns that there might be too much investment going on, there’s some comparisons to mostly previous financial crises in 2008 and 2001. You know of course I’m gonna have my take and this time it’s different.
Todd Bishop: You learned your lessons.
Dave McClure: What we think is different is there’s big companies making a lot of money. There’s a lot of people online and pretty much everybody has some kind of Internet capable device, and some people have more than one. We don’t really think that enthusiasm about building technology products and services is oversold. We might even say that there’s a long boom ahead of us for the next 20 years or more where the rest of the planet is going to be getting access to the Internet and all those devices too.
Todd Bishop: What about from the hardware side?
Dave McClure: The services you see being piloted from in U.S. and other major cities will end up serving people around the world.
Todd Bishop: So Brady for you from the hardware side at Highway1, do you have concerns about some kind of bubble or issues with the economy more broadly?
Brady Forrest: Hardware takes a lot longer to do, it costs a lot more. Companies actually use it to front the money for tooling and to get their sourcing. If there ever was a bubble I think we’d start to see it in hardware very quickly. We’re lucky in that it has become a lot easier to boost small-scale manufacturing. It’s become easier to get money directly from your customers. If there’s people with great ideas and great teams, they’ll be able to go to crowd funding sites to get the money to make small batches of the product and then slowly build. It’ll just take them a lot longer.
Todd Bishop: Why did you guys decide to take part in a TV show? How did this come together?
Dave McClure: Actually this has been in the works for quite a while. We met the guys who run ZPZ productions, that’s the production house that works with Syfy, they do the Anthony Bourdain show. We felt like they were really experienced with putting on a TV show, we trusted what they were doing. It still took us a year to put together the concept, a year to pitch the networks and get the show, and then I think almost a year to put the material together and do all the filming. It was not a short journey to get here.
John Cook: Just as Anthony Bourdain travels around, do you guys have any plans to travel around to other tech hubs to do the show? We’d love to have you do one in Seattle.
Dave McClure: I think we’re coming up there for a visit and who knows? Maybe we’ll find some companies there for the next season.
John Cook: That’d be great.
Todd Bishop: What do you both hope people will take away from the show after it makes its first run here?
Brady Forrest: I want to show people that this is how technology is often made. It’s the long nights, it’s stressful situations, it’s not a lot of money, and it’s people who just want to create something. These are all people that could go work at other large companies, and that would probably be a better financial choice. But they want to own their own destinies, and that’s what you’re going to see in this show.
Todd Bishop: How about you Dave? How do you think people are going to react to you?
Dave McClure: Oh my gosh, that’s going to be a complete show I’m pretty sure. I think I’m an acquired taste, I’m sure there will be haters out there, I’m sure there will be people who enjoy what they see. We’re not going to roll any punches, what you see is what you get. We’re a little bit out of the box but I think we generate results. People might be surprised, might even be offended, but I think we can get a chance to see what people are really doing in the trenches when they’re building startup companies. See the hard work, might see some arguments, might even see a few founders break up, but hopefully they’ll see a few wins where people really do get that million dollar pay day.
Todd Bishop: This is great. It would not be an interview with Dave McClure unless you had to bleep something. Let me just say that.
John Cook: We almost made it through.
Dave McClure: I’m not sure what your viewers were expecting.
Todd Bishop: That’s great. We’ve been talking this week with Silicon Valley investor Dave McClure and Brady Forrest, the Vice President of the Highway One Hardware Incubator. Their new show Bazillion Dollar Club premiers September 22 on SyFy. Hey guys, thanks very much for being on.
Dave McClure: Thanks a lot.
Brady Forrest: Thanks for having us.
Todd Bishop: Absolutely. You can hear and see both of them on October 1 at the GeekWire Summit coming up in Seattle.
Also listen to the conversation on the show, starting at 9:18 in the audio player below.