Launch Academy

Date: July 14, 2016

Name: Launch Talk with Dennis Pilarinos – Success outside of Silicon Valley

Presenter: Dennis Pilarinos

Silicon Valley is known as the hub for brightest talent in technology industry. However, many entrepreneurs do not know that there are many hidden technology talents outside of Silicon Valley that are successful in technology industry. Launch Academy invites Dennis Pilarinos, the Founder of Buddybuild, to discuss his successful journey when he left Silicon Valley to purse his startup. In this presentation, Dennis Pilarinos will reveal his experience in assembling team, establishing credibility, and connecting customers. Moreover, entrepreneurs will receive his insight on his process of fundraising from top venture capitalist.

Dennis Pilarinos is the Founder of Buddybuild. Pilarinos was in a top product and engineering leadership role in Amazon. He involved in Windows Workflow and Azure Platform in Microsoft. Eventually, he moved up to become one of the top Directors in Microsoft Canada. Furthermore, he was the Co-Founder of InvestorSense and the Advisor of Skyscrpr.

Dennis Pilarinos wanted to create a simple platform for end users to create their own mobile applications. He came up the idea of BuddyBuild. He mentions the idea evolves around the statement of “Instagram for driver”. The product aims for simplicity, but the backend is complex. The key is to engage end users to their business problems. Pilarinos shares his model.

• Push code
• Easy to deliver result
• Develop feedback

Pilarinos emphasizes he does not optimize by money. He believes the impact comes first and money will follow. Everything Pilarinos aims for is achieve personal happiness. During his journey, he realized the fastest way to pinpoint the global problem was to ask everyone he knows.

He utilized the internet channel to ask people problems they are having. His understanding revolved around these 3 questions.

• Is it a pain point?
• How critical?
• Is it skeptical?

“If you never experience it, you cannot suspend it”

Pilarinos shares a memorable personal experience in his journey. When he started his journey, he did not know about the size of the market. He needed to experience it. He knew he needed to make it work; otherwise, he would need to get a job. He flew down on one of the Sunday night to pitch to the board first thing next morning, the pitch round went on for 8 hours. He managed to turn from “oh crap” to “great”. He believes sometimes entrepreneurs would spend months to develop solution, but without a good pitch strategy, all could go down the drain.

Pilarinos believes stress management is a top problem for entrepreneurs to get to the next level. Pilarinos will run or exercise to reduce his stress level.

In his first pitch to the board, Pilarinos built a simple prototype to increase his chance. He asked for $100,000 and eventually went up to $1 million. Pilarinos believes relationship matters. Before his pitch, he spent 8-9 months living at San Francisco. He met many incredible people and had many intimate conversations.

However, Pilarinos could not see himself living in San Francisco. He mentions he was always surrounded with people who are asking the same questions.

• Who are you?
• Where you come from?
• How can you help me?

Pilarinos relocated to Vancouver because he knew San Francisco would not lead to his happiness. He discovered Vancouver has a balanced lifestyle culture. When Amazon recruited him, he insisted staying in Vancouver. However, Vancouver was still lacking marketing comparing with San Francisco. Pilarinos mentions he might open a satellite office in San Francisco in the future.

In Pilarinos’s view, Vancouver has many challenges. Even though Vancouver has many hidden talents, but the business function is weaker than San Francisco. There is more friction in Vancouver than San Francisco. Canadians are more risk-adverse and Americans are more risk takers.

Pilarinos is now focusing more on continue improvement for his business. He wants entrepreneurs to remember to focus on people who love the product, and not those who hate it.

“It is always day 1 and there is always room for improvement”

There is a difference in the valuation in US and Canada. Canadian tends to want higher equity and Pilarinos could not rationalize it. United States is much more flexible. Investors have their own tastes. When entrepreneurs receive too much over the valuation, it will be a risk for the next round because investors are expecting more from them. Overall, because of competitive from investors, Pilarinos believes United States gives better valuation than Canada.

Background can play a significant factor. Pilarinos believes the more track records can give more execution. Investors mostly look for these 3 questions in the first round.

• Is it a big market?
• Is it the right people?
• What is the term of the deal?

Usually, the term they are expecting is around 15-20%. Many entrepreneurs might not able to answer to investors when the development tool do not make money. Pilarinos suggests entrepreneurs to use other similar successful companies in the counter. In his first round, Pilarinos came in with confidence that he knew the problem exists in the market and by solving it, it would open up better market opportunities.

Pilarinos believes the first round does not mean it will have the best help to the team. After the first round, Pilarinos would send monthly updates to investors. He wanted to be transparent and he was also searching for guidance from them to help him through the process. The network was unbelievable and the knowledge was extremely helpful.

In his opinion, US investors are all selfless. They want to make impact on others lives, but he still feels like they expect for return. On the other hand, Canadian investors will help as much as they can.

“The next industrialization is technology”

He suggests entrepreneurs to make introduction first before asking for money. In his business, he utilizes the internet. Anyone who presses the “submit” button is his client. His early adopter was an accountant from downtown. During that moment, he hoped his process can help the accountant.

In the Series A round, most investors will ask for 20 to 30%. Based on calculation, that amount is the average expected return they need to get their money back. Pilarinos believes more traction is not always the best. Sometimes hard number can go against entrepreneurs. Pilarinos advices entrepreneurs to know their audience. After the first round, investors will only care about statistic.

Entrepreneurs need to do research on investors. They need to look at their background to find the best fit for their approach.

Pilarinos shares his strategy approach in his first round.

• What do we do
• Customer needs
• The problem (pain point)
• Examples (Story telling)
• Solution
• Demo
• Why now (trend)
• Competition
• Product round map
• Business model
• Marketing plan
• Founding team
• Detail financials
• Ask (committed angels)
• Canadian consideration

Pilarinos also shares his strategy approach in his Series A round.

• Common software development series in development team (Create, share, feedback) and users (Share, test, feedback)
• System and workflow
• Ecosystem solution
• Details (example)
• Demo
• Feedback
• Who is clients
• Market trend / size plan
• Market / customer segment
• Financial model
• Experienced team
• What to do next

Pilarinos thinks the process comes into 3 steps: know associate, meet partners, create partnership. Pilarinos recommends entrepreneurs not to send the deck before the money comes in. It will take 24 hours to finalize and sign the term sheet. It will take another 32 days to receive the money from investors. Entrepreneurs are suggested to send monthly statements to investors. They will tell them the best time for second round.

Pilarinos believes CEO has 3 tasks: get money in the bank, build the right thing, and get the right people in. Lastly, Pilarinos does not worry about patent because he believes if anyone can out build them, they deserve it.