Mike Maples Jr. is a co-founding Partner at Floodgate. He has been on the Forbes Midas List eight times in the last decade. Before becoming a full-time investor, Mike was a founder with an exit. Some of his investments include Twitter, Twitch.tv, Okta, Chegg, and Demandforce. Mike also co-authored the book “Pattern Breakers: Why Some Start-Ups Change the Future”.
Key Takeaways
(06:21-14:11) Turning Believers into Co-Conspirators
(14:11-20:43) Unlocking Startup Success
(20:43-28:05) Lighthouse Customers and Founder Future Fit
(28:05-35:02) The Dual Nature of B2B Founders
(35:02-42:43) Founders, Vision, and Strategy in B2B Startups
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From Seed to Success
Mike Maples begins by reminiscing about the early days of his career, explaining how the landscape of startup funding looked very different in 2005. Back then, raising a million dollars was almost impossible, with most startups either getting minimal funds from friends and family or jumping straight to a hefty $5 million Series A. The aftermath of the dot-com crash made it an opportune time for innovation, leading Mike Maples to pioneer the concept of seed investing, providing exactly the funding that entrepreneurs truly needed.
1. Turning Believers into Co-Conspirators
Mike Maples talks about the necessity of clarity in presenting your startup idea. He warns against the pitfalls of creating "Franken-decks"—overly complex pitch decks designed to preempt every possible objection. Instead, he advises focusing on a concise and compelling narrative that clearly conveys the product's unique value. The goal is to attract a subset of investors who genuinely believe in your vision and are ready to support you wholeheartedly.
The conversation shifts to the idea of desperation as a key indicator of product-market fit. Mike Maples suggests that the best customers are those who have already tried and failed to solve the problem your startup addresses. Their desperation indicates a strong need for your solution, making them more likely to become loyal customers.
When I think about product market fit, there's a question I like to ask, which is what can we uniquely offer that people are desperate for? And what you find is that people who are desperate, by definition, have tried to solve the problem already. (Mike Maples)
2. Unlocking Startup Success
The discussion touches on the idea of "insight breakthroughs," where startups must find a unique perspective on the future that isn't immediately obvious to others. This non-consensus approach ensures that the startup stands out and isn't just replicating what has come before.
Mike Maples talks about the "product-market fit breakthrough", where startups need to determine what they can uniquely offer that people are desperate for. He gives the example of Okta, which started with a broader problem-resolution focus but pivoted to identity management based on customer feedback.
The concept of "pivots" is explored, where startups adjust either their implementation or their target audience to find the right fit. Mike Maples uses a basketball metaphor, describing the insight as a pivot foot that stays grounded while the body (implementation or audience focus) moves to find the best position.
The speakers also discuss the growth breakthrough phase, where startups aim for exponential organic growth through word-of-mouth. Successful startups transfer energy from one breakthrough phase to the next, creating momentum that leads to rapid market dominance.
Startup capitalism is a different kind of capitalism. Most companies are concerned, they're persistently compounding, and they have competitive advantages. But startup capitalists have none of those things. They're going from zero to one. (Mike Maples)
3. Lighthouse Customers and Founder Future Fit
Mike Maples starts by sharing an anecdote from his early career at Silicon Graphics (SGI). He describes how SGI targeted the Hollywood special effects industry, specifically Industrial Light & Magic (ILM), to use their computers for creating groundbreaking computer-generated imagery (CGI) in movies like "Jurassic Park" and "Terminator 2". Mike Maples explains that ILM served as a "lighthouse customer"—a pioneering client whose cutting-edge needs and solutions illuminated the path for others in the industry.
The concept of "lighthouse customers" is crucial for startups. These customers live on the cutting edge, encountering and solving problems that will eventually become mainstream. By working with lighthouse customers, startups can better understand the future needs of their broader market. Mike Maples highlights that these customers help startups refine their products and set industry standards, much like how ILM did for CGI.
Mike Maples introduces the idea of "founder future fit", which he describes as the alignment between a founder's background and the future they are trying to create. He gives the example of Justin Kan, who founded Justin.tv (which later became Twitch). Justin's youth and willingness to experiment made him perfectly suited to pioneer the concept of live-streaming, a field that didn't even have a name at the time.
If you're living in a valid future and you have an authentic match to that future, early believers and co-conspirators are more likely to believe you than the next startup. You're going to attract believers more likely and rapidly. You're going to be right in the first place about what to build. And you're going to attract more people who believe in what you've built. That's a pretty important set of variables for success. (Mike Maples)
4. The Dual Nature of B2B Founders
Mike Maples emphasizes that true innovation often requires a contrarian mindset. Quoting George Bernard Shaw, he underscores that progress depends on "unreasonable men" who challenge the status quo and envision radically different futures. This mindset is crucial for startups aiming to create new markets and disrupt existing ones.
Innovators will inevitably face resistance from those invested in maintaining the status quo. Mike Maples stresses the importance of being prepared to break some glass and offend those who oppose change, emphasizing that this resistance is a natural part of driving significant innovation.
My view is that if you want a breakthrough, you have to deny the premise of the rules. You have to say, “It's axiomatic that the way for me to win is for the future to not be an extension of the present, to not forecast, but instead the future to be radically different.” (Mike Maples)
5. Founders, Vision, and Strategy in B2B Startups
Mike Maples talks about the importance of founders maintaining discipline and integrity, especially with early customers. He cites the example of Todd McKinnon from Okta, who refused to integrate with on-prem applications despite the potential immediate financial gain. This discipline ensures that the company's strategy remains focused and aligned with its core vision. Many startups make the mistake of saying yes to customer demands that don't align with their long-term strategy. This can waste valuable resources and attract customers who are not truly aligned with the company's vision, leading to higher churn rates.
Mike Maples introduces the concept of "founder future fit", where the ideal founder embodies the specific future they are trying to create. Different types of founders are suited for different types of innovation. For example, Elon Musk's bold and disruptive approach works for industries like space exploration and electric vehicles, while Todd McKinnon's steady and confident demeanor suits enterprise cloud services.
Successful founders often live in the future they are trying to create. They work with cutting-edge technologies and understand the emerging trends and needs. This deep engagement allows them to build products that are truly innovative and ahead of their time.
What I look for when I fund these startups is the best founder, the best founding team for that specific future that I could ever imagine going after. Because I think that that's a very strong signal. In the early beginnings, products pivot and change a lot. There are a lot of changes and uncertainty. But that founder's future fit gives me a lot of optionality and degrees of freedom for us to be successful no matter what happens. (Mike Maples)
Purchase Mike Maples' book Pattern Breakers with a BOGO discount HERE.
Check the episode's Transcript (AI-generated) HERE.
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