The Lucky Titan

How Silicon Valley's Top Investors Pick Startups With Steve Hoffman

October 28, 2021 Josh Tapp
The Lucky Titan
How Silicon Valley's Top Investors Pick Startups With Steve Hoffman
Show Notes Transcript

Steve Hoffman (Captain Hoff) is the Captain & CEO of Founders Space, one of the world’s leading startup accelerators. Founders Space was ranked the #1 incubator for overseas startups by Forbes and Entrepreneur Magazines.

Hoffman is also a venture investor, serial entrepreneur, and author of several award-winning books. These include “Make Elephants Fly” (published by Hachette), “Surviving a Startup” (published by HarperCollins), and “The Five Forces” (published by BenBella).

Hoffman was founder and Chairman of the Producers Guild Silicon Valley Chapter, served on the Board of Governors of the New Media Council, and was a founding member of the Academy of Television’s Interactive Media Group.

While in Hollywood, Hoffman worked as a TV development executive at Fries Entertainment, known for producing over a hundred TV shows, acquired by MGM. He went on to pioneer interactive television with his venture-funded startup Spiderdance, which produced interactive TV shows with NBC, MTV, Turner, Warner Brothers, History Channel, Game Show Network, and others.

Founders Space:  https://FoundersSpace.com
Make Elephants Fly: https://MakeElephantsFly.com
Surviving A Startup: https://SurvivingAStartup.com

Josh:  What is up, everybody, Josh Tapp here again and welcome back to the lucky Titan and we're here today with Steve Hoffman and this interview is one I've been looking forward to for quite some time, this is an awesome, awesome guy and if you haven't heard his name, I would be surprised, especially if you're from the Asian countries, this guy apparently is 10 times as famous in China as he is in the United States but he has such an amazing just history of working with so many companies, you know, he's running one of the number one, he's running the number one startup incubator, and it's worked with so many different companies built many of his own, but has really come to be, in my opinion, one of the best opinions on scaling a company quickly, especially with marketing and building a community so Steve, say what's up to everybody, we'll hop in.

Steve: What's up, everybody, I'm happy to be here.

Josh: excited to have you here. So, Steve, I'm just going to hop right into it because in our pre, in our pre interview, here, we were talking about your expansion into China and for a lot of people listening to this, they might start to glaze over for a second but I want I want to just kind of tease this a little bit that almost most of you who listen to this, don't realize this, except for those of you who are from Asia, but a heavy percentage of my audience is actually from Japan and a lot of people are sitting here going, well, how why whatever, right. But it's really interesting that they are adopting some of these services and technologies that we adopted years ago, they just haven't been provided these opportunities so I want to be thinking about that, as we kind of dive into these questions here with Steve, so Steve, first off, tell us kind of the story of how you got out there to China, I mean, of all places, right?

Steve: So I've been running my startup incubator in Silicon Valley, I had done three venture funded startups and to bootstrap startups in Silicon Valley so I knew Silicon Valley and I, you know, we have lots of entrepreneurs coming into our incubator from Silicon Valley but we saw an opportunity and this is, you know, if you're going to scale your business, if you're going to grow your business, I always say, look for those opportunities, they they're like, sometimes are right in front of your face, and you just ignore them. You don't see them happening, we saw an opportunity and that was that lots of entrepreneurs from overseas from all over the world, were coming to Silicon Valley, this is over 10 years ago, when we launch founder space and they needed a place to land they needed somebody to help them get going in Silicon Valley so we positioned founder space as their Launchpad their gateway into Silicon Valley so we had all these entrepreneurs from Europe and Asia coming there, we started to form relationships, somebody invited me to go to China and give a talk and I was like, Oh, well, this is interesting, I could go to it's a free trip to try it out. Why not? So I, you know, this eight years ago, and so I hopped on a plane, went to China and I was there, it gave a talk and it was everybody was really nice and then I came back and then I got another invite. Oh, come back to China. Wow. Maybe I should I went back to China, the second time I went back, I started to realize there is an opportunity here, there's an opportunity so for all of you out there, you're consultants, you run a service business, you know, the US market is great and if you got a lot of traction here, that's fantastic. We had a lot of traction in the US, but then I saw there's, you know, 1.5 billion people in China, and it's growing huge middle class and at this time, it was years ago, the internet thing, boom, was just getting going, it was just gaining steam and we were very unique there so I'm from Silicon Valley, run this incubator, been in the field, teaching entrepreneurs coaching funding, there wasn't a lot of competition there, it was basically blue ocean and when I say in a lot of competition, there was a lot of local competition but they were all Chinese, there was not a lot of people from Silicon Valley like me who were in China. So I'm there and I'm meeting people and people are literally coming out of the woodwork offering me deals like do this do that, we want to do this with you and I would just say no to them all because I wasn't thinking of coming to China, then I started, well, what if I did a deal here? Now I don't want to do a big deal because it's very risky. You're going into a market you don't know you don't under I don't speak Chinese. I don't know what the heck is going on there so I decided, and this is a strategy for everybody else out there, like if you're entering a foreign market in Asia market, do small deals, do simple deals. So I do little deals like let's do an event together, you can have me you can, you know, I'll charge this much blah, blah, blah and I started to do all these little deals across China and then I made some connections and I found out Oh, that they'll fund everything for opening our own incubator, they're like they'll pay for everything. Wow, great. 

Josh: They're gonna better free money 

Steve: Yeah, free money and and so we you know, we opened an incubator in Shanghai. First of all, now we have incubators all across China, Shenzhen, ChiOn, Wuhan, all these cities, but we opened one When in Shanghai at the time, think it's just started to, you know, when you hit a market, and there's a real demand there, you don't even have to work like it just sucks you in. So I say like, if you're struggling here, or if your revenue has plateaued, there are probably other markets out there, where your services and in particular, you like what you have to offer, because you're from the US because maybe certain relationships you have, because certain insights you have are very unique so it wasn't just in China, we just started to explode in China literally explode then it also in South Korea, we became really well known became super famous in Taiwan, like we were doing stuff in Taiwan, all these, you know, got invited to Malaysia got to meet the Prime Minister, like we suddenly became huge and in Asia, much future, you know, we've been working for years and years and years in the US and, you know, we're growing nicely, we had a good reputation but in Asia, it literally happened overnight. Like, I got invited by Tencent, you know, the big company to give a talk, and I thought it was just a talk so I gave the talk and went away. Two weeks later, I was in China, people were coming up to me, so you're super famous like, no, I'm not I just, you know, gave another talk. No, you are like everybody, and then it literally happened and I, I strategically did a number of things so I decided I would write and publish a book at the same time, because I thought, well, I have a huge amount of knowledge and you know, now I'm becoming very famous in China. What if I have this book, so I wrote this book, it was called make elephants fly, it's a book all about how startups innovate. So I wrote this book strategically, and it exploded across Asia, like, like incorrect so you kind of add fuel to the fire. And then, you know, now I have a series of books that are all out in Asia and the West and that, what I tell people is, you know, any market where you can offer a unique value, where you can be really special, can be super lucrative and it wasn't just all the speaking engagements, the book are incubators, but huge corporation started to come to us like Huawei with lots of money, like for consulting so these things build on each other and you can build a very nice, super profitable business.

Josh: See, and just opening so many doors in everybody's minds, I'm sure but even in mine of, of the how, how do I enter that market, when I don't speak the language for example.

Steve: I didn't speak, I don't speak Chinese, I don't speak. No, I because I'm so busy. I in Chinese is hard. Like, let's say, you have to study Chinese, like you, literally and I'm not like the most language minded person, it's not my thing and then South Korea, I didn't, you know, I spend a lot I spend a lot of time in all these countries, I didn't I don't speak you know, I speak a smattering of each of these really, it's not the language thereafter, because Oh, most of the business people, they can speak some English, like English is the international business language so the language isn't a barrier, in fact, your name if you're, if you're famous, or if you're well known, like if you can get to that point, doesn't matter at all right, you know, they just want to do business with you, because they literally want to do business with you and they always in every company, like if you're consulting with them, some of the chairman and the older people, they don't speak English, right but then you end up working with their VPs and stuff and directors who do speak English so it's fine.

Josh: Right? Yeah. And I love that because, you know, you're kind of joking. Oh, I haven't learned it yet. But I mean, it's just a testament to you don't have to speak your language, right because you've become so successful for that and you mentioned in your story, that it didn't matter, if there was even really a new concept. I mean, you weren't really doing anything super new. It was an it was an incubator, right, there's a lot of.

Steve: I was taking everything I already did in Silicon Valley, which wasn't new and literally just transplanting it to an environment where it felt new and it felt it felt different. We were adding a different value, we're giving the Silicon Valley perspective, other people weren't on the ground, we were on the ground, suddenly, like when you build relationships, they, you know, one relationship leads to another, we got very high level relationships so in relationships that, you know, you wouldn't get so quickly, anywhere else, like super high level that the CEOs, like literally the you know, the CEO of Baidu, the CEO of all these amazing people, you know, Li chi foo, and all these just, you know, the top tier people of China that we wouldn't, you know, you'd never expect to get access to and then all the doors open.

Josh: Yeah. And how incredible is that because if you're thinking about, you know, I actually heard that Neil Patel, if you're familiar with him, you know, he was talking about this not too long ago, probably about six months ago, about how some of the biggest growth in his company was when he decided to just go down to Brazil and be like, Oh, well, there's no money in Brazil and all this other stuff. You know, all this just shenanigans, it's just not true, he brought it down there. I think he said it quadrupled the size of his business in like six months by just bringing it to Brazil. 

Steve: That's what I'm telling all these entrepreneurs out there, if you have a business, look at a market, where what you have your perspective, your neat your relationships, like relationships, like in South Korea, have, we made incredible relationships with all the top people there too and they wanted to get into Silicon Valley, they wanted to know the people we knew in Silicon Valley. So relationships that other people in Silicon Valley would think are, those are good, but they're not exceptional, because there's a lot of people in Silicon Valley who have the equivalent relationships, but you're in this other country, they don't have them, that's golden so if you have relationships with certain corporations, or whatever, if you can transplant those to a new market that's hungry for that, and hungry for your perspective, and how you do things, then you really have an edge and I tell you, gaining traction, having an edge is so important. Like if you're like everybody else, why should somebody there's just no, you know, you're just like everybody else and with your podcast, like in Japan, like it took off like because your dad was there promoting, you know, I'm sure your dad did something, but the fact that you are different, and he just happened to be on the ground there, get the ball rolling, it doesn't take a lot.

Josh: Right and and it's such a such a unique thing, because and I see this a lot with you know, we've worked with quite a few different Asian companies, and they look at it, oh, I just got to get my business over to the US and yes, it's a great market but they'd probably see five times six times the results by just going to Brazil or Mexico or one of these other countries, they have money, that people are have the money, they just need you to be different. You know, I lived in Mexico for two years, they think Asians are the smartest people on the planet, no matter who you are.

Steve: It's so true. You know, and they thought everybody from Silicon Valley was super smart, and really let me know, I changed their mind but but seriously, you know, you can, you can ride on people's perceptions so you know, where you're from what you're from, you can package what you have, and it takes it becomes much more marketable in another market, things that here are just commonplace become golden, they're in your right. You know, it's you don't have to go to China, you don't have to go to South Korea, you South America, huge market, like there's these countries now that have capital that are booming that if you come in at the right time, timing is really important to with the right thing and you identify it, boom, you can just go, you know, Africa to I talked to a lot of people moving into Nigeria and markets like that, they're big opportunities.

Josh: and I think a lot of people, the fear is like a cultural fear and I know even for me, I get my MBA program, we did whole studies on how to take and there's entire courses on how to take a company, International but the reality is, especially in the digital space, you don't have to worry about the government regulations and all these other things when you're going over there digitally, because it's internet based, I mean, there are some little news,

Steve: Yes, if you offer your services online, and then they can just access them. Great. You know, we never even set up our own corporation in China, because I didn't want to hire employees there, I didn't want to deal with all the regulations. I don't know anything about I didn't also want to break laws like right, so we found local partners, who would set up a local chapter of what we're doing and then we would share revenue with them but we wouldn't have to be on the ground, it was basically them taking the risk, and then providing the capital and then running it and we've replicated that model around the world. So you can do deals like in Brazil, with your online service, for example, or other countries, where Indonesia, for example, 100 million people with smartphones, you know, huge market, you can go into these countries, and you don't you a lot of times, especially you know, you don't want to you don't know if it's going to work first of all, and I say like one of the strategy who uses put off anything that could slow you down, or tie you up as long as possible, if you can figure out a way to make money like with your US Corporation, digitally, like you're saying online, get people so we would do licensing deals where they would license our content, we would do deals where they use our platform, which is international online, we do deals where we license our brand to them so they can use our brand. All of these things, allowing people on the ground to actually hire the employees manage the employees figure out all the government we don't want to deal with that we you know, we just wanted to collect our check. 

Josh: right, which is so awesome because it all came from one talk, I mean, isn't that the craziest thing you know, you you going over there seeing an opportunity and you said hey, let's try it out. And then it just blows up? 

Steve: Yeah, I'm just open. I'm always trying to be open to new things and then I just we've gone around the world and done this over and over and over different markets, you know, some markets, we gain traction, it depends who you meet how things go. You can't just guarantee Oh, I'm gonna go over there and give a talk and it will happen but once you see it happening, like if you can start to plant the seeds and then you see it start to take off, that's when I say focus like put all your energy into whatever has traction so whatever, if other parts of your business are really slow growth, or they're kind of a slog, you know you're pushing, but it's not really you know, it's not really happening, look elsewhere and as soon as you gain something, then just go all in on that because it is it's kind of magic, like some of these things, they, it these a lot of these opportunities to gain traction, like I saw a lot of people come over to China, they gained some traction, but they didn't follow up on it so it just went away and then they went back to whatever they were doing. So they could have had the opportunity, but they didn't take it but once you identify that either in the US market or other markets, go for it, like just laser focus on that thing that's actually working.

Josh: Yeah, I love that. Well, and you discuss a lot of these topics like this in your book, Surviving a startup and and I was I was really intrigued by, you know, obviously the title of it, but, but the fact that you have applied these concepts multiple times, it wasn't just, oh, hey, I got lucky thing. You know, a lot of people look at some of these big success stories like the apples or Amazon's or whatever, like, oh, they, they just got lucky, you know, but you're you're living proof that it's duplicatable, it's replicatable and that innovation is replicatable so could you kind of give us a little bit about what the book is about and then, as well, some of the main stories in there?

Steve: Sure. Yeah. In surviving a startup, I go deep on all, all the strategies you use to really grow business and survive, because most startups, the majority actually don't so we know that. And even the ones that do, a lot of them are very slow growth and, you know, we want fast growth, especially where I'm from Silicon Valley, like, how do you accelerate the growth, how do you? How do you scale these companies. So when I work with entrepreneurs, so I see entrepreneurs out there, in the mistakes they're making, the things they're not doing, right. And I'll give you a few pieces of critical advice that I mistakes entrepreneurs make, one mistake, almost lots of entrepreneurs make that hampers their growth, and can even kill them is they stick with the same thing too long, when it isn't working. Like, honestly, if you've been doing something six months, and it's not taking off, I can almost guarantee you, it will not take off, you can stick with it six more years if you want but it's it's just gonna keep going like it's going this rule plays out over and over and over again, like once you have identified your target customer, once you know exactly who they are, and you have presented what you have to them in a decent way doesn't have to be the best way possible. If they don't, if they aren't, like if they turn to you, and they're like, Oh, that's nice, hat's great. You know, you're just like, anybody who says that's nice, nice products don't succeed, nice services don't succeed. You know, when you download an app on your phone, you're like, Oh, that's nice, a week later, you forgot it. Right? You know, a month later you've deleted it. If you go to a service, and you're like, you look at that service, as opposed to like 10 Other services you're considering, oh, that's nice. You'll never go back that people have two people, if you don't get the reaction, oh, my God, that's exactly what I need, like, I need that, then you don't have anything so the question for entrepreneurs is how do I get that reaction? Like you have to experiment like you have there are a couple things I like to say. First of all, there's always demand out there, there's lots of demand, some of the demand is diffuse it spread out, you know, in a wide market, everybody's offering the same thing. But there are pockets of demand, that are building, building a pent-up pockets of demand that aren't being met and they aren't being met, it can be geography based, like we were talking about, it could be demographic based, there are all these different areas and that is because the world is constantly shifting, you know, every markets are evolving, markets are changing trends are changing new technologies emerging so what you want to do is really great entrepreneurs, they don't like build a product or service just big and then go out and try to market it, really smart entrepreneurs go hunting for demand, the they're like oil wildcatters where they're sticking in, you know, as quickly and cheaply as possible, you know, they're drilling into the ground, seeing if they can unleash this gusher of demand because if you can identify that gusher, everything you can develop whatever product or service you need to sustain that the hard part is finding that Gusher and there are really two ways. Two fundamental ways you find a Gusher. One is number one, you use usually technology but it could be a business model innovation, design, innovation, something to make your product or service exponentially better than what competitors are offering and it could be a process thing like they there people are just fed up like they're not getting what they need from the competition. It can't be marginally better, incrementally better, you never get anywhere with that. It has to be that like, oh my God moment, like this thing is actually what I was looking for so if you can do that, that's one way so if you can go to all your customers now, even in the US market and just really take the time to engage them, listen to them, where what headaches are they having? They will tell you where the demand is, like, you know, you have this exists, all these relationships go into the market are we could we, you know, what are things that we aren't doing for you that you really need, what are things that we could do better? How could we do them better critical questions like that, and then build on base, number two, is things that they that literally don't exist, they aren't you they are the they have this need that's been generated, you know, when social media first came out, people needed a lot of things, you know, they needed social media marketing tools, they needed, you know, social media strategy they need every because social media was new, so created all these pockets of demand and certain companies like HootSuite and buffer and all these other ones went out there met this demand so there, whenever you see something evolving like that, where there are new products, new things that people want to do, that they aren't able to do, you can jump in there and deliver a product that creates a core value for your customer that they aren't getting anywhere else boom, both of those are golden, you do that you're on you're, you're you're you're really positioning yourself to when you go to customers, for them to give you that reaction, you need that extreme need.

Josh: Right? Wow. See, and I hope everybody took notes on now I'm over here scribbling notes as fast as I can off to go back and listen to it. But it's it's so interesting, because that that's the paradigm shift, right and I've never understood how to explain this to people because, you know, we started many different companies and the one that finally like really took off was when we did that, right? It was just listening to somebody finding that pocket of pent up demand, and saying, well, hey, what if I did, like, 50 times better than the next person, what would what would you do? And everybody's like, yes, please, what's the price? Right? It's all they care about? And show us their show cash left and right. It's so interesting that that you were able to do that with the Asian markets, right? That's exactly what you did is you show up, they didn't have a silicon based incubator there, boom, pocket of demand, you You took advantage of it so cool. Um, you know, we're coming up on the end of interview here, Steve, and I wish I could just keep milking it for days, because you've got some great insights on this but what what would be your advice to somebody who's been listening to this interview and is saying, I'm not sure if I am capable of entering a foreign market?

Steve: I would say, I knew no, Chinese. I still don't know Chinese. No, South Korean. I don't. I knew nothing about the cultures. If I can do it, why can't you? Honestly, the world is really small now, really small and, and it's an adventure, like it is fun to go and engage overseas, you learn so much. Like, the advice I would give you is you don't have to jump in and do it, you can do it incrementally. Like when I went to China, and South Korea and Taiwan, I didn't just sign big deals overnight, even though some people approached me with them, but I didn't know who they were, I didn't know if I could trust them so really, we don't say you can't do it, take a step in that direction and then very carefully start to learn, like always be learning and and figure out who you need to know and start small, I always say start with a lot of small deals that lead up to big deals, instead of vice versa, the companies that make a mistake entering foreign markets, they get out their checkbook, and they do some big deal, right and then they don't know what they're doing, and they lose it all so just do really small deals and also start with people you know, here who are from those countries, that they are your conduit to getting there, and you probably don't even have to go there because that might be expensive for you or time consuming, Initially, to start figuring out the market. We're all on Zoom today and that's the beauty of the post COVID world is we're all on Zoom, you can get on Zoom, you can do a lot of these deals, virtually.

Josh: I love that and you know, honestly, I'm just gonna plug podcasting for anybody. If you want to meet people in a foreign market who are successful, invite them on your show,

Steve: exactly that’s a super easy way, although you got to make sure they speak English well enough. 

Josh: That is also true. That is also true but I feel like a lot of them probably do and especially I know a guy who does that. In Brazil, he brings a lot of people on and even though it's not, they're not 100% they know enough English to actually communicate well and it's it's had it's helped him enter into the market so it's really interesting. Well, Steve, I really appreciate you coming on and sharing all this wisdom with us so could you give us first off where can people connect with you and get your book?

Steve: So I'm super easy to find, just go to founderspace.com, founderspace.com, you can contact me from there. You can also go to LinkedIn, I'm on LinkedIn, Steve Hoffman founders face, Captain Hoff is my nickname. Also, if you want to get my book surviving a startup, it's on Amazon or you can go to survivingastartup.com and I want to give a special offer to your listeners, it's a fun one. So there's a special URL that they can go to to get the 10 commandments of raising venture capital and to get it, they just go to founder space slash 10, the number 10, or ten.

Josh: Love it. So everybody, make sure you go check that out and bare minimum co buy this guy's book, I mean, you know how much value he just provided in 20 minutes or so, I mean, imagine what's packed into that book. So the book is surviving a startup, you can check him out at founderspace.com, and its founderspace.com/10, you said?

Steve: 10. Yes. And there's also my podcasts there mentors and masters,

Josh: mentors, a masters go check that that's an easy one for all of you, you know, this go go like is, go subscribe to his podcast and leave me Leave him a five star review for us. So Steve, I want to ask you one final question so if you could give us one final parting piece of guidance, what would it be?

Steve: So my final piece of advice for all of you out there is when you're in business, never accept the status quo so one thing I tell entrepreneurs to do continually is question everything you're doing so in don't do it like once every three years, literally, every month, make a list of key things you're doing and say, is this the best way I could be doing this? Could I be doing it different? Could I get a bigger and then go out and start trying those things on a monthly basis, you that's how you unlock growth in your company.