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Episode Recap: Vango
Will Ethan be able to sell his dream, an iTunes for art, into 1.5 million dollars worth of investment?
Welcome to the Bazillion Dollar Club, where six budding companies face an intense 16-week startup bootcamp, with the hope of transforming innovative ideas and products into a fully funded - business. At the helm is Dave McClure, a self-described "greedy bloodsucking venture capitalist" and founder of 500 Startups, a software accelerator. With him is Brady Forrest, founder of hardware accelerator Highway 1.
The first company up at bat is lead by Ethan Appleby, the 31-year old Founder and CEO of Vango, a service that seeks to connect independent artists with buyers looking for original art. Vango provides affordable pricing and innovative preview functionality (letting you see what art will look like on your wall). Overall, it offers an inviting entry into the otherwise stuffy art market.
At Ethan's side are 35-year old Win Raguini, Vango's CTO and chief engineer; Stephanie Long, their 22-year old Marketing Lead and youngest member of their team; and the multi-talented Monique "Mo" Ritter, a 25-year old self-described "Jill of all trades", who's taking a big risk by joining Vango.
The Vango team sits down with Brady, Dave, and the team at 500 Startups for their Week 1 Onboard Meeting. Here, they demonstrate the product in action, including its slick live preview functionality by using your smartphone or tablet's camera.
With only $150,000 in the bank right now, Ethan hopes to raise 1.5 million on or after their Demo Day in just 16 weeks. Vango's initial sales and month-over-month growth numbers don't impress Dave - but that's exactly what he and Brady are here to accelerate. Brady thinks Vango's biggest challenge will be convincing investors that art is a big market and, more importantly, a market that Vango can own.
During their Week 2 Pitch Practice, Ethan struggles. Dave thinks that Ethan just can't let go of his script or get out of his own head. While still struggling to really nail his pitch delivery, Ethan takes an unconventional approach to bolster his pitch presentation skills by taking an improv class. While Dave applauds Ethan's noble effort, he remains skeptical about the value of improv until he sees investor checks rolling in.
To help drum up growth numbers through app downloads, Vango creates a pop-up art gallery featuring artists from their site as part of the First Thursday Art Walk in San Francisco. The more people download their app, the more they can grow their user base, a key component of their pitch strategy. While their event attracts downloads, the conversion rate from download to purchase is much lower than anticipated.
Meanwhile, Mo shares that she has invested a lot of time and personal sacrifice into the company as Vango's main point of client relations for artist outreach. She's taken a huge pay cut to work for Ethan and his team in hopes of getting a big payout come Demo Day and beyond. With mounting real-world expenses, Mo is faced with the question of whether or not to stay or leave Vango if she doesn't get a raise. Mo broaches the topic with Ethan and while it's a brave conversation, he just can't give Mo the increase she deserves right now due to a serious lack of funding. Ethan convinces Mo to stick it out until Demo Day.
By Week 6 and waning growth numbers, Vango will stop at nothing to build their user and purchaser base. Ethan and Win seek out a celebrity investment. It turns out Win's stylist is officiating a wedding at Tom Franco's gallery. That's right... the brother to the very famous actor, James Franco (and sort of famous Dave Franco). When his stylist doesn't pick up her phone, Win is forced to leave the world's most awkward voicemail. Unfortunately, the opportunity doesn't pan out.
At their Midway Meeting during Week 8, Vango has a poor showing in both growth and traction. With 0% growth, there's no way Vango will be able to raise $1.5 million by Demo Day. Dave and Brady are not impressed by Vango's backwards momentum.
With so little cash flow, Vango hasn't engaged in much paid acquisition (that is, paying for online ads) in an attempt to up their growth numbers. They think that video content might be the way to go, but they're still in testing. Dave tells them it's time to figure it out already. To help accelerate their growth, Brady introduces Ethan to Jane Hu, Head of Business and Creative Operations at YouTube Originals. She offers Ethan sage advice on how to utilize video to grow their user base and tell the Vango story.
It's six weeks until Demo Day. A late-night Pitch Practice session gets interesting when Dave ups the ante by handing Ethan a cup (yes, a cup - not a shot) of tequila and asks him to do the pitch while drinking. Even with (or perhaps because of) the alcohol, Ethan still struggles to tell the Vango story. It's enough to bore Dave to sleep.
Vango gets a very lucky break from the Apple App Store when it is selected as a featured app of the day. Celebrations are cut short as the massive influx of traffic shuts down the website and app. Ethan and Stephanie try to spin the site downtime with something wittier than the default "Application Down For Maintenance" message users are seeing now. Ethan's trying to keep his cool in front of his team to mitigate panic. Win is the only one on their team who can fix the problem. He heads home to focus on fixing the site, and vows to stay up until up and running. Thankfully, it doesn't take long and everything gets back online. With a functional site and Apple's feature that day. they can barely keep up with the purchases.
With a month to go until Demo Day, Ethan still can't get it together during Pitch Practices: his head is just too focused on the script. The Vango team is visibly nervous about Ethan's ability to successfully impress investors on Demo Day. To put it mildly, Dave is pissed about Ethan's performance, "You are not f#$king Steve Jobs. Do not try and make this a long story."
One day before Demo Day, Dave drills Ethan on focusing on the primary points of his pitch: turning "losers" into "winners:" some losers are artists who don't make any money and some losers are people who don't know how to buy art. The message to drive home to investors is that this is how Vango makes those groups "not losers."
On Demo Day, Vango competes for the attention of dozens of investors in a group of 33 other startups. It's up to Ethan to make Vango stand out from the group. Despite weeks of shaky practice sessions, Ethan does a fantastic job with his pitch, painting an exciting picture of Vango's story and why the market matters. Ethan and his team are more than relieved to finally have their pitch behind them. After their pitch session, the Vango team meets with a number of potential investors.
Just five days after Demo Day, Vango was able to raise $1.6 million in seed funding. And, as an added bonus, Vango increased their fundraising total to a whopping $2.1 million after shooting concluded. Looks like Mo will get that raise after all!
Get an update on Ethan and the gang, in our Where Are They Now? series.