Smash Notes
Dave Schappell on raising venture capital as a repeat entrepreneur
Dave Schappell of My Perfect Color (https://www.myperfectcolor.com) talks about raising seed and VC funding as a repeat entrepreneur, and what metrics he uses to help get investors excited about his startup.
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Notes
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TeachStreet got acquired by Amazon, and although the deal was the smallest on paper at the time of acquisition, Amazon stock grew 10x, making the outcome very favorable for Dave and Co.
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Once upon a time, Dave Schappell was an accountant. Instead of complaining about the life that he hated, Dave did a Wharton MBA, got an internship at Amazon, and the rest as they say is history!
Dave stayed at Amazon from 1998 to 2004, working along side Jeff Bezos and a handful of key early hires. Then, he left to pursue other interests, first working with his Wharton friends at Jib-Jab, then founding his own startup called TeachStreet, and now once again working with a classmate, at MyPerfectColor.
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Jeff Bezos is willing to invest in big ideas for the long run. Amazon as a company is not concerned with immediate revenue, and instead looks at the total size of an opportunity. According to Dave Schappell, Jeff Bezos is an unstoppable Terminator.
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MyPerfectColor.com is in the business of serving B2B consumer with exact match paint colors for enterprise.
Their customers already include: Yeti Coolers, Tiffany's, Hulu, IDEO, and other companies who need perfect brand-identity color, unavailable in a traditional store.
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MyPerfectColor.com does not have any competitors because they are building an entirely new category of business.
Dave jokes that even if a Y Combinator company were to get into this business tomorrow, Jason (the founder of MyPerfectColor) has so much experience he has gathered over 30 years working on this, it will keep them differentiated for ages.
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Expensive equipment and a lengthy process to match and create these colors is already a big enough reason to consider it twice, but then there is also a matter of scale.
Large manufacturers cannot be bothered with custom orders, while small paint shops, or even stores like Home Depot, don't have the knowledge and equipment to manufacture and package custom colors.
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Documentation. While Jason and the company are based in New Jersey, Dave lives in New Hampshire. They have to keep all the documentation synced up, and right now they are drowning in Google Docs.
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Dave wrote down what he wanted to work on, being brutally honest about it with himself. Dave wanted to work on a real product, with real margins and real customers. Working with a friend was a plus too. Jason's company fit in the criteria.
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As an angel investor himself Dave believes that Jason could have avoided a lot of pain by reaching out to investors earlier than he did.
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Dave Schappell, founder of MyPerfectColor, tells Scott at Kruze Consulting that the easiest slide in a recent investor deck was gross margin, climbing from 50 percent to 63 percent as the company shifted from consumers toward business customers. Venture capitalists like that margin, he says, and they like repeat orders even more. Many MyPerfectColor customers buy 6 to 20 times a year. Schappell told his colleague Jason they should pull that figure, because once an order repeats, investors ask about lifetime value. The catalog of nearly 250,000 colors, including Sherwin-Williams and Pantone matches, is what brings those buyers back through search.
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Once TED conference ordered a matching paint for their branded red color, MyPerfectColor folks created a " Ted Red " which is now driving them customers looking for a similar color.
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