Modsy’s Shanna Tellerman shares 4 fundamental lessons for founders pursing venture funding
As someone who has worked on both sides of the business of venture, Shanna Tellerman occupies a unique space in the startup world. She experienced early success as an entrepreneur, when her first company Sim Ops Studio, which grew out of her graduate work in entertainment technology at Carnegie Mellon, was acquired by Autodesk. When the opportunity to join Google Ventures as a partner presented itself, Shanna jumped at the chance to learn the other side of the funding equation.
Given Shanna’s perspective as both a founder and a VC, her advice for entrepreneurs is doubly valuable. She even applied some of it herself — along with her expertise in the 3D engineering and design space — while creating her new company, Modsy, which uses augmented reality to enable people to customize the design of their homes right from a web browser so they can try furnishings before they buy them.
When we sat down to discuss her unexpected path to a creative career for my podcast, Making Ways, I asked Shanna about what she learned in the VC game, the advice she most often gives founders, and what’s driven her journey through the ups and downs of startup life. Read on for her four most important lessons for any entrepreneur who thinks that now is the time to take on investment and begin building the next billion-dollar company.
1. The field of players is vast.
One thing that became immediately apparent to Shanna was just how many startups are out there, all with founders who are pounding the pavement and working to the bone to make their dreams reality. She told me, “I gained a new appreciation for just how many companies there are, the stages of companies, and what those companies that are breakout successes look and feel like.” From her vantage point, she also got a firsthand view of the players who weren’t quite ready for the big league and learned some of their characteristics as well. That perspective really put the entrepreneurial journey in context for Shanna. She explained, “Seeing a spectrum of companies at those different stages is just a reminder that it’s a really hard business. There are a lot of people putting their whole lives and their whole efforts into their companies. They may not be creating the best company for venture capital, but they’re still great people, and they’re working really hard.”
2. Lifestyle business isn’t a four-letter word.
When I asked Shanna about the advice she would give to those companies that she felt just weren’t going to breakthrough at the level that a VC looks for in an investment, she shared, “I would often encourage entrepreneurs, especially those that I thought were building more lifestyle-oriented businesses, to figure out how to make money and forget the investors, because investors are a pain in the butt and once they’re in your company, you have one mental model, and there’s one goal, and they’re going to push you as fast as you can go to the exit point. And that could crush your business. Not every business needs to be built that way. And so I would really try to direct many companies away from even thinking about themselves as venture-backed businesses.”
3. Sometimes it’s not you, it’s the partners.
Looking behind the curtain at the inner workings of a VC firm also helped Shanna understand the bigger picture of venture funding. She said, “So the other big thing I learned was how important the partner dynamics are behind the scenes, which actually is a big relief as an entrepreneur.” As a result, she is able to offer comfort to founders who might otherwise blame themselves when things don’t go the right way. As in any relationship, it takes two parties to tango, but venture funding has a myriad of challenges and nuances that are opaque to the entrepreneur. Shanna recounted, “You, the startup founder, are actually only half of the equation of getting a deal done. And you could be doing an awesome job; you could have a great business and are going to be super successful, and you go pitch somebody, and they may think you’re great too, but when they bring it into their partners,. . .for one reason or another it doesn’t go forward. That was a great reminder that you shouldn’t take each of those potential rejections very personally. There’s a lot that goes on behind the scenes.”
4. Successful VC-backed startups share three standout traits.
As Shanna gained experience as a venture capitalist, she honed the list of qualities she expected of founders and companies to three standout traits.
- They are going after a big market. “Is the company going after something that is actually a big enough industry to make it worthwhile from a venture perspective? For VCs, this usually means your company has the potential to become a billion dollar business.” But Shanna would often relay that just because something doesn’t fit that mold, fit the range of what a VC would invest in, doesn’t mean it’s not a business worth pursuing and building. In these cases, she would suggest to founders that venture money might not be needed for their businesses after all.
- The person knows and cares about the problem they are trying to solve. “Do the founders have experience or a unique passion for the problem they are tackling?. . .Only these people will have the most important insights into the problem, and they’re also going to be the ones who wake up on the hardest days when everything is broken and keep going. It’s easy to give up if you don’t care about much.”
- They have a unique perspective on what’s going on in that industry. “I looked for people who had deep backgrounds in the industry or significant time spent in school researching an element of the industry. . . .They have an ability to predict where things will converge that the outsider just walking in wouldn’t see.”
As Shanna shifted gears from Google Ventures to her new startup Modsy — born from a personal frustration at the decorating and furnishing process with her husband at their new home — she realized that all the elements she looked for in other successful startup founders were reflected in her own work. After all, she had a deep knowledge in 3D design and virtual and augmented reality and a passion to solve a problem from a personal perspective as well. As Shanna explained, “That was kind of my final ‘Aha’ moment, which was like, ‘Oh yeah, that’s me.’”
Listen to the full episode below to hear more of Shanna’s story and the lessons she has learned as an entrepreneur and founder.
Tune in to Making Ways podcast on iTunes, SoundCloud, or Overcast, and be sure to subscribe too. To learn more about the incredible magic that Modsy can perform on your living space, visit www.Modsy.com. And for show notes and more, check out www.MakingWays.co.
