3 Day Startup’s Maia Donohue took the time to catch up with 3DS alum Greg Floyd, founder of Shower Stream. Greg’s startup journey began with the desire to solve the problem of water waste, so he invented a motion-activated shower head adapter that saves water, energy, and money. Greg has raised two funding rounds for Shower Stream, and the company is valued at $3 million.
Maia: Greg, you’ve been raising money, so let’s start with this. Early-stage founders always think they are closer than they really are to fundraising. They think they have a great idea so investors will want to give them money.
Greg: Yeah, I agree. I gave a talk at the Tarmac accelerator recently on what it takes to raise money. The starting point is that when you’re talking to people, ask for objections. Talk to family and friends first, and ask them, “what’s wrong with our business model?” If they have no objections, ask them for money.
After friends and family, you’d be surprised what connections are in your personal network. You’re doing this ever-expanding validation network. No objections? Ask for time/money or introductions. Friends and family – Customers – Mentors – Advisors – your old boss. Ask them to sign a letter of support, try a trial, a demo, ask them, “would you pay for it?” The whole thing is ever-expanding and iterative.
Maia: This idea of seeking objections is kind of the opposite of what most founders do.
Greg: Exactly, and it’s about overcoming those objections. If you go in with stars in your eyes and a big smile and don’t have a product, but just want their input, nobody is going to be a jerk and tell you they would never buy it. You have to say – and this is really hard – “what are your objections? What could go wrong? Would you use this?”
Now that you have objections, and if you agree, then you can fix the product.
The other thing you learn is how you handle Q&A. Most of the money we raised came from 30-minute meetings with investors, and you learn to deal with objections. One example, we would tell investors how our model was to go after hotels as customers. They would say, “why not apartment buildings? Isn’t that market better than hotels?”
Early on I would tell them why this was a bad idea. But if you spend your limited time with an investor explaining why they’re wrong, it’s just not a good use of your time. So I changed the delivery. We anticipated some questions, and then I would say “oh yeah, we think that would be a great market too, but we’re starting with hotels.” it’s kind of like being a standup comedian. You learn to change your delivery based on the audience and their responses.
Maia: You were a participant at 3DS CleanTech ATI. That was super early in your startup journey. What is some advice you would tell your younger self?
Greg: What I would tell my younger self, and this took me forever to figure out, is what a CEO’s job actually is. I knew my job as a software developer, but what is the job description of a CEO? I believe the job is to find and fund the vision. More specifically, you are a triple salesperson. You have to sell 3 things:
- Your product to customers
- Your company to cofounders and employees
- Stock to investors.
Maia: in that order?
Greg: Well, yes, but it changes. In any quarter I’ve basically known my priority. Depends on your stage. Sometimes you’re building the product to sell to customers. Other times, you’re reading Venture Deals to sell stock to investors. It just depends.
Maia: Then once you raised a big round, you need to hire people, so now you need to go back to #2.
Greg: Right. Investors invest in the team. For us, a lot of feedback early on was, “I don’t think you have the right expertise on your team.” So as CEO, my priority at that point was #2, getting the right team. Each market/constituency should inform what your priority is.
Maia: After 3DS you were accepted into the Gener8tor accelerator in Wisconsin. How was that?
Greg: Gener8tor was amazing. Outstanding. I would recommend it. As an accelerator, I would put it in the top tier. One of the best things about Gener8tor is they only take about 5 teams. Other accelerators are kind of diluted because they accept so many teams. At Gener8tor they then put you in front of hundreds of investors in a quarter. They fill your calendar.
Maia: Any advice on getting into an accelerator?
Greg: You have to do the networking. You can’t just apply online. Pick up the phone, try to talk to someone at the accelerator. If you spend 200 hours on your application, spend 30 minutes talking to a program director too.
Maia: In that way, the world hasn’t changed much since the internet came about. Who you know still really matters. Switching gears, what was your biggest learning from 3DS that launched you forward?
Greg: Yes, 3DS Cleantech was transformative for me. That sounds dramatic, but it’s true. I didn’t get the spirit of entrepreneurship beforehand. I had been working on a similar idea for 2 months, and 3DS was the first foray out of the cave.
Maia: Very typical.
Greg: Being a startup founder seemed so unrealistic before 3DS. How the hell are you going to do it? I didn’t know any of the stuff we just talked about. I had no clue. I was afraid of sharing my idea because I thought people would steal it.
Maia: Yeah, I myself was a 3DS participant in 2012, and I was shocked when the facilitator, Joel Hestness said “nobody is going to steal your stupid idea.”
Greg: If you’ve invented the hoverboard, or something that turns water into air, a time machine, sure. Protect that. But then 3DS got into customer discovery, how to pitch to investors, and we met great people, especially in Austin. After 3 days of being force-fed from a firehose, it was unbelievable.
Maia: Greg, this has been incredible. Thanks so much for your time!
Greg: Take care!