Help is my Due Diligence
Angel Investor Will Bunker talks to AngelStory about a startup’s biggest competition, how not to burn your runway and why loneliness made him millions
“Have honest conversations with investors, listen to them. If what you’re doing isn’t appropriate for them, don’t go for it. Most people will tell you before the meeting. Ask ahead of time! Don’t just try to get the meeting and dazzle them! I don’t buy the old school sales culture of not taking no for an answer — it’s completely inefficient as a startup. Spending time hustling people to do something they aren’t interested in will burn your runway. My fund is a startup now, so I won’t waste my time or somebody else’s time if they’re not going to be interested.”
Will Bunker, one of the most straight-shooting, honest and open investors you will ever meet implores startups to not waste their precious time or resources on investors — or markets — that simply aren’t buying what they’re selling. Will is a Founding Partner of GrowthX, an early stage fund.
Will, who was a successful entrepreneur in the most tumultuous of times, practices what he preaches. Born in Lake Village, Arkansas on a large family farm, his early “seeding” days were spent driving a tractor, but he was drawn to technology from an early age. In his youth he’d frequent the John Deere shop where they printed out news and he would watch, fascinated by this early predecessor of the internet. His interest in machines continued and he went on to study Industrial Engineering at Mississippi State University.
Mining for Prospective Investments
After graduating, Will went to work for the Hunt family (The original inspiration for the Ewing family on the series Dallas). In addition to oil, they were prospecting gold mines all over the world. In 1992, just after the fall of the Berlin Wall, Will was being sent to Indonesia to analyze companies for the family when instead, they decided to send him to Russia with only 3 weeks warning. Instead of the balmy beaches of Bali, he spent 2 years in extreme cold, mainly Siberia, looking at gold mining companies.
A project that was about to move forward in Kyrgyzstan was abruptly halted because of a political suicide. Will spent 2 years talking the family out of doing business there.
“I was the only one of my friends out there that hadn’t been hit by the mob. Very tough environment. I grew up conservative in the South, we griped about lawyers — suddenly when there weren’t any lawyers they don’t look so bad!”
It was in Russia, however, that he discovered the Internet (then Usenet in Russia) and fell in love with the possibilities. He would spend hours logged on to a computer with a modem, reading threaded conversations from around the world. He was as enraptured as he had been so long ago at the John Deere shop and knew it was going to be big.
“VR makes me feel that now — it’s so much more emotionally engaging than anything else. It’s kind of like those early early internet days — it’s still a bit early — will companies last long enough? The 90s were filled with carcassses of too-early companies…”
The next project was running a gold mine in Nicaragua where he slept with $250K worth of gold under his bed before transferring it to be flown back to the US. After such a stressful early career, Bunker’s risk tolerance was set high! Suddenly starting an internet company seemed like a cakewalk!
Capitalizing on Loneliness
After his international forays, Will was working as an engineer for an insurance company when he met Dave Kennedy, who would soon become his co-founder. The two iterated on ideas and then came up with a big pain to solve — loneliness, which led them to think of dating on the internet. It was 1995 when they founded One and Only (O&O) and after raising $90K decided to aggressively take on their only real competition at the time, Match.com, who had raised $10M a year ahead of them.
As opposed to Match’s strong focus on branding, Will and Dave focused on selling and distribution. Match.com had revenues of $7M and were declining — O&O had $14M and were growing 30% month over month. At the end of 1999, OneAndOnly was sold to Ticketmaster/CitySearch for $47.5M, split 3 ways between all founders. TMCS also bought Match.com and their last job was to move what was left of the Match brand and data to Dallas, effectively rebranding O&O as Match.com.
The Power Law of Investing in Startups
After a successful exit, Will decided that he needed a way to give back and help more people, so he became an investor. His first investment, a whopping $50K, was in his brother and sister’s security scanning company (which sold in 2015 returning him over $1M from that investment) and in the same year, he put $1M into 3 deals and lost all but the $50K of the first investment.
“I was pissed — I didn’t want to run out of money and it wasn’t fun. From these failed investments I learned the power law of investing in startups. I put too much into several early startups that failed and that led to me not investing for long time. I’d encourage new investors to write small checks to give yourself time to learn. You need over 50 deals to get a decent rate of return.”
In the meantime, Will kept working with his brother on the scanning company, writing software for them as well as working with his father in Catfish supply and along the way, came up with another few failed startups.
In retrospect, Will could have had a very different career path, when in 2006, upon moving to Silicon Valley, Facebook recruited him.
“They (Facebook) had just moved to Silicon Valley and I could have gotten involved at the ground floor. It was considered a stupid company, nobody wanted to work for the, Didn’t want to quit my startup. The guy that painted their walls took some of his payment in stock and made $50M!!!”
Will Bunker’s Investment Thesis
Will looks for investments between the FFF round and Series A that are B2B, but he’s open to nearly any industry as long as lifetime value of a customer is high enough to justify salespeople. His fund, GrowthX writes small checks — $50K with a follow on of up to $250K. Sometimes he brings in their LPs, other times they’ll join a round. Though he will respond to cold emails and request a deck, it’s lower on his priority list than through introductions from people he’s already done business with.
Will has very clear guidelines for the companies he will consider investing in:
“In seed investments, there’s not sufficient data to predict the future. If you look at all the Billion dollar companies — there’s not one person that invested in them all and not much overlap, so it’s hard to know what will take off. I ask myself: 1) If I look into the future, will someone have built what they’re talking about? And, are they building a future that I want to live in? 2) Do I really want to work with this person? I’m stuck with them till they fail or succeed.”
Showing initial customer traction is also a prerequisite:
“It’s not that hard. Dave and I got to revenue for One and Only in 3 weeks! There are some viral ideas out there like Facebook — but then they have to have massive traction. (1.5 -2.5M conversations in a week!! That’s viral) I still will encourage them to find a business model. Then you’re unstoppable. Ads are a natural model for viral but you have to be at such scale to sell direct — ad networks leave you with next to nothing. Even Twitter struggles to monetize! Selling advertising to big brands directly takes a long time and large scale.”
One investment Will is particularly proud of is GlamSt, a technology that shows what a face will look like with makeup applied using an app. He met one of the founders, Augstina Sartori, in 2015 when she travelled from Uruguay to Silicon Valley and was wandering around SV trying to find interest in her startup. Will helped her see that pivoting from a consumer app to a white label for B2B business would make it much easier to pitch and grow the business and helped build out a sales process and he invested. The company is now experiencing significant growth with brand name customers like Macy’s and Ulta.
Why Companies Don’t Make it
With over 150 investments, Will has seen his share of failures. He attributes this to several key factors and gives his advice on how to avoid the pitfalls:
1) Lack of Sales Skills: “Most companies fail because they don’t know how to sell or talk to customers. We have an internal sales team. We do this for a subset of our companies — after we witness their behavior after we write a check. If the money is in the bank and they still want our help, we’ll get in there.”
2) Too Many Features — Will says that one of the biggest problems he sees is startups creating and falling in love with too many features that their audience doesn’t really want or need. He suggests that teams ask themselves — ‘How can I iterate through the design space till I get it right?’
3) Too Small a Problem — “Your biggest competition is the indifference of your customers. They’ve led a pretty good life till they met you. They are happy to just keep doing things the way they did before they met you. You have to learn how to talk to them, solving a problem people care about, communicate why your solution makes the problem go away. If they haven’t been trying to solve the problem, it’s not a real problem. I was lucky that loneliness is a problem people were willing to pay to overcome.”
4) Hubris — “Always behave as if they have a low probability to succeed. Illusion and reality are tough to distinguish — it’s a great tool all of a sudden it’s not. To behave as if it’s done till it’s done is insane!”
5) Poor People Skills: “You watch how they act — before you write a check and even after you write a small check. Look how they treat people they’re not trying to raise money from as an indicator of how they’ll treat you when there’s no more money to put in. Help is my due diligence — if you try to help someone, get them a customer, that tells you more about them than anything. If someone’s hard to help — you don’t want to give them money.”
6) Poor Leadership Skills: “Once — I brought in a billionaire to invest in a company, the Founder behaved so badly that I doubt that he’ll ever speak to me again! Ruined my relationship with him. We invested together and watch her live a very indulgent life on Social Media. The business worked, grew it quickly, but employee turnover was so bad because of her poor management skills and that killed her.”
Will’s Best Piece of Advice for Startups
Will sees startups as the survival of the fittest. Adapting to change is imperative. He suggests that startups identify their weaknesses and develop a training program to improve, and measure their improvement.
“People can change — smart ones adapt to feedback. That’s all you can really ask for. No other way you’re going to survive today in a marketplace against your competition — you must adapt.”
If you feel like you’re a good fit for Will, you can reach out to him through