Post Mortem on the Tachyon Startup Accelerator Experience
Jun 29, 2020
As some of you now know, I left my last start-up to help the company extend its runway and survive. That startup is an alum of Consensys's Tachyon accelerator, and it represented my first experience with a startup accelerator. I've oscillated between a general disdain for venture funding and an admission that many companies just can't exist without it. Startup accelerators, of course, represent venture funding. Just on a smaller scale and with more hands-on coaching.
Before I dive in, a little background. SimpleID was launched as a response to a shared experience my co-founders and I had in building decentralized apps. The onboarding experience was absolute shit. We had built in the Blockstack ecosystem and couldn't get real traction outside the crypto-enthusiast market because of the poor user experience around decentralized key management. So, we started building an open source solution to the Blockstack problem. However, we realized Blockstack's ecosystem was far too small to sustain anything that might turn into a real business. So, we began exploring Ethereum. Ethereum has a much larger developer population, significantly more applications, and, importantly, investment money spread out across protocols, tools, and apps. That was attractive to us, so we pivoted into an onboarding tool for developers building in the Ethereum space. It was with that pitch—give developers the tools to build onboarding experiences in the Web3 space that are as easy as Web2—that we were accepted into the Tachyon accelerator.
We were the third cohort for the blockchain-focused accelerator. This particular cohort was focused on decentralized finance (DeFi), and while we were not specifically a DeFi tool, our software could be leveraged by everyone operating in the decentralized finance space.
Enough Background, Just Tell Me How It Was
If you're reading this, you surely care less about SimpleID than you do the startup accelerator experience itself, so let's get to it. How does a startup accelerator work, what's the day-to-day, how do you balance attendance with...having a life?
I can only speak with confidence on the Tachyon accelerator, but from conversations I've had with other founders and through my own research, other accelerators operate very similarly to Tachyon's. In Tachyon's case, the program was three months. However, those three months were stretched to four months because of the Fall and Winter holidays in which participants got breaks to go home to see family.
The first thing you have to do if you don't already live in the city where the accelerator is being held (almost all accelerators require founders to attend in person), is find living accommodations. Tachyon is based in New York City, and NYC has had a rough history with Airbnb, so my co-founders and I were initially hesitant to consider Airbnb as an option. However, per New York's law at the time, if we considered keeping the rental for the entire duration of the program (breaks included), we would have fallen within the legal requirements and could have used Airbnb. So we began pricing out the rental.
It. Was. A. Lot.
We knew it would be a lot going in, and we knew that meant spending a good chunk of the investment money that came with our accelerator program on living expenses. But Tachyon structured their funding in a way that was designed to help mitigate this as much as possible. The first part of the funding was available to founders right away in a stock purchase deal. That first part was a relatively small portion of the overall amount that could be expected from the program, but that amount was largely designed to ensure companies attending the program had enough funds to survive in NYC for 3-4 months.
My co-founders and I have very different life backgrounds. I have a family, I have a mortgage, bills, etc. They have some of those things, but they have significantly more freedom, so an idea arose. What if they just moved from San Francisco to New York permanently? Instead of spending money on an Airbnb, they could uproot themselves and move the company headquarters to New York. It was an attractive idea in my eyes because New York City is where the vast majority of the action is in the blockchain space. But there was no way I was going to tell my co-founders they should move. I left that decision up to them entirely.
Ultimately, they decided to make the move and got an apartment in Brooklyn.
With them in New York, I had to say goodbye to my wife and kids for the three-month program (not really, I visited them every two weeks). The program started the first week of November. My co-founders and I showed up on day-one unsure what to expect. Standing outside the building where the accelerator would be held, the first team we met was an Italian team building Idle. We didn't know it at the time, but those guys would become our best friends in the program and we would carry that friendship on after the program.
The truth is, the whole experience was a lot like college. You show up with a few friends and a lot of strangers. If all goes well, you walk away with even more friends, more knowledge, and a shit pile of debt.
I'm joking about that last bit. Venture funding is, generally, in the form of equity or debt, and we did walk away with both debt and shares given out in exchange for funding, but unlike college, we had something tangible to show...money and a business.
But I digress. The experience within the program was structured in a way that allowed us to work as autonomously as possible while still helping us learn. There were just enough interruptions every day that it quickly became clear one of our co-founders, our CTO, could not come into the office and expect to get all the technical work done for our product to succeed. So, he stopped coming, and Tachyon was totally cool with that. They want you to build a successful company. For SimpleID, we were fortunate in that we had three co-founders. My other co-founder and I stuck around, taking the train to SoHo every day and working on the customer development side of the business while attending sessions Tachyon put on for founders.
Let's talk about the sessions.
Again, Tachyon gave founders as much flexibility as possible, but they also wanted you to learn. Now, it's hard to make a program dynamic enough to address the varying levels of experience founders have, and in our cohort's case, 80% of the cohort was from outside the United States, so there were definitely ranges in knowledge around US-based business operations and startups.
The sessions were largely good. One session might be focused on fundraising, the next might be on operational processes and legal structures. These sessions were good, if not always helpful. But the area where Tachyon really shined was their Thursday happy hours.
The happy hour was designed around founder lessons. Tachyon would bring in founders of companies that had raised money, had seen success. These founders would talk about their experiences and then take questions from the cohort. And then, we'd all hang out in the office with the invited founders, drink beers, eat snacks, and talk shop. This is where I learned the most.
In fact, it was in those early Thursday happy hours that I learned the best way to make our business successful was to get out and meet with customers and potential partners in a more casual way than business schools would suggest. This is where NYC did its thing. There was never a shortage of places my co-founders and I could meet customers, partners, and investors.
I had started other companies before this one, but I wouldn't have said I was good at talking to customers before this program. The combined knowledge I gained from the program and the newfound ability to go out and meet people in person combined to up my customer development game significantly.
But I digress again.
This thing is getting long, so let's get to the part you might care about the most.
What About Demo Day And The Money
Tachyon doesn't do a traditional startup demo day. Instead, they have an "Investor Day." In this scenario, the startups do not get up on a stage and pitch to a crowd. Instead, a bunch of investors are brought in and placed into meeting rooms. The teams then get to speed pitch the investors in a round robin format.
This experience was invaluable. I'm not sure I would have predicted that when first told of this process. I think going in, I thought a traditional demo day would be better. But what this structure did was force us all to learn how to properly take investor meetings. The compressed timeframe helped us frame our pitches. The practice we got leading up to the event made it so that when the event day came, we knew every question someone might ask us and had an answer ready.
All that said, I still look back on Investor Day as investor meeting practice. I'm not sure if anyone walked away from that day with investment commitments. But I can promise every single company walked away better equipped to go set their own meetings and execute on those meetings.
Now, the money. As I mentioned, the first part of Tachyon's investment was a stock purchase agreement. The second, larger part, was in the form of a convertible note. I was not as excited about this as I was about an equity arrangement. In fact, my co-founders and I seriously considered rushing our fundraising effort to avoid having to take the convertible note. Having a debt instrument hang over you just felt like it would be unnecessary pressure in an environment where the pressure was already ratcheted up to 1000.
However, to Tachyon's credit, they were very patient with my co-founders and I. They had multiple meetings with us, offered up their legal team for us to grill with questions, and generally gave us room to make a wise decision. Which I think we did in taking the convertible note.
Actually, I don't think it. I know it. See, COVID-19 hit right at the end of our program (a story I didn't realize was a story that I'll tell in another blog post). The world changed. Fundraising changed. Had we not taken that note, SimpleID would not have survived.
Would I Do It All Again
I've asked myself this question a few times since the program ended, and it's important to know my situation is different from most of the startup founders I know. Having a family back home while I was living in New York was really hard. The stress of days that could stretch on to 15, 16, 17 hours was hard—especially since I am very much anti the workaholic culture.
But I learned so much. I built relationships that I expect to have for the rest of my life. I succeeded and failed in ways that I couldn't have had I not done this program. So, would I do it all over again?