My colleague Christina Chan and I recently had the opportunity to interview Dave Parker of the Founder Institute. You can read our interview of Dave below. If you haven’t heard of the Founder Institute, it has been helping entrepreneurs in Seattle since 2009, and recently was the subject of a New York Times article. You can also find out more about Founder Institute at its website: fi.co.
If you have any questions for Dave, don’t hesitate to email him at: firstname.lastname@example.org. You can also read his highly informative and entertaining blog at http://www.foresttreesbark.com/.
Who Should Apply?
Joe: Dave, from a high level perspective, who should think about applying to the Founder Institute?
Dave:The Founder Institute is perfect for people who are at big companies but have that itch to start a company. People who have that exit velocity who are thinking to themselves, “I really want to start a company.”
Joe: What type of people do you see applying?
Dave: We tend to draw people from all age groups, and about 25% of our participants are women. If you look at the last semester, our ethnic demographics was wildly diverse, and the oldest person was 61 and the youngest person was a senior in college.
Christina:What are you doing differently from other groups that’s getting you these diverse demographics?
Dave: I think a lot of things. A lot of tech programs are very focused on engineers that are geeky in tech. So they tend to be a little bit more homogeneous. I think our program continues to gain attention, and that helps broaden our mix as well.
Joe:So, single founders, they’re good folks to come?
Dave:We’ll take single founders and we’ll take people with a day job. One thing we encourage people to do before they leave their jobs is validate their idea. I was at Startup Riot yesterday and met a guy. He had three ideas and they were all great, but I told him, before you leave Big Co. let’s go validate your idea and make sure that people would actually pay for your product. Before you leave you day job, consider that you have a mortgage and kids; seems like a sensible thing to do.
What’s Different About Founders Institute?
Christina: So, what else distinguishes The Founder Institute from other boot camps or universities that other programs are offering around here?
Dave: One of the great things lately is we were written up in the New York Times and they, in the typical New York Times’ fashion, had to compare us to something. So they compared us to Babson, at $120,000 versus $1,000 for the semester. It was kind of a strange comparison. There are a lot of support organizations in town for entrepreneurs. We meet with our participants once a week with three mentors and we have deliverables for our participants every week. If you’re in a working group and someone is not pulling their weight, that person might get scored down. If they score down by their peers, they get warned and they’re out.
Christina: So there’s a lot of accountability?
Dave: Yes, and it’s very visible. Even the mentors get rated each week. When we invite mentors in for the program, they’re there to deliver good content and they’re there to deliver it well. If you’re a good speaker and you deliver mediocre content, you’ll score okay. If you’re a mediocre speaker, but the content’s awesome, you’ll score okay. But if you’re a great speaker and you have great content from a “here’s the war wounds” and the wounds have healed but the scars are still there, those folks rank real high. The Founder’s Institute today is in about 27 cities worldwide but not a majority in the US, actually. Singapore, Berlin, Brussels, as well as San Francisco/San Jose, Chicago, Seattle, and New York. The goal is to be in about 35 cities. So when you look at that, what you see is there’s this massive mentor base of somewhere north of 600 mentors who have all been there, founders and CEOs or founders of companies. There are no service providers who speak, it’s exclusively founders, with the exception of legal. From a legal standpoint, we need to get good legal advice and that doesn’t necessarily come with founders and CEOs; it comes with having good lawyers involved. That’s the only outside service providers that come in and speak. The program compresses that two year process of wandering around the Seattle ecosystem into a 15 week program.
Joe: How many mentors do you have in the Seattle program?
Dave: In Seattle, we have about just north of 70 active mentors who have participated since the 2009. I was a mentor first in 2009 and then got invited back to come run the program in 2010.
Joe: Can you tell me how many mentors you’ve culled out, over the period?
Dave: Well, of the 70 active mentors, there are some we don’t invite back because either they didn’t score well or their content wasn’t particularly good, or they weren’t particularly well-prepared. They just don’t get invited back for the next semester. We also have a really interesting incentive plan. The program costs are three-fold: participants pay $1,000 for the course fee. We feed them every week and there are office hours every week with both me and guest mentors, there’s the topic every week, and there’s everything else that goes with that for a $1,000. They then put 3.5% of their company into a pool that is divided three ways. One point of the 3.5 goes to the mentors and it goes disproportionately based on how well the mentors score. So, if you’re a rock star mentor, like a Dan Shapiro or TA McCann, you have a disproportionate share of that 1% pool. One percent goes to their graduating class. So if there are 10 folks in that group, they split that percentage. I think we had 16 last time. They actually have a co-working group that they’re accountable to because they own part of each other’s company. And then a point and a half goes to the Institute. The scoring of the mentors matters because it has to do with their compensation. But even though it’s a small percentage, what we’ve really done is align compensation so that if somebody calls one of the mentors, and they’re a graduate of one of the semesters, the mentor knows they actually have an equity – it may be a small equity stake – but they actually have an equity stake in that company.
Joe: If you’re a single founder, do you expect that you will, over the course of the semester, wind up being teamed with someone as a co-founder?
Dave: The math on the process is interesting. We had over a 100 companies apply last semester. We’ll take at most 40 and only about 20 will graduate. Of those who fall out, there is a cut at week 4 when you come in and pitch your idea to mentors. So I may come and if I like you I may score you higher but the mentors who come in and score are going to give you their opinion on a 1 to 5 basis and we don’t let mentors use number 3 because 3 is right down the middle and it doesn’t really help you. So 1 is I hate the idea; 2 is I don’t like the idea; 4 is I like it; and 5 is I love it. If you score below a 2.5, you’re out and you can come back next semester for free. That’s our encouragement to say go find a big idea that you’re passionate about. There are two risk factors. One is we push you to a bigger idea that you’re not passionate about which means you won’t really go after it. Or two, you’re going after it – you’re passionate about an idea that’s just too small or is a hobby. Or it’s not really a big business, so you end up working on a small business. Those folks, for example, if they’re going to start a services business, they don’t need to be in our program.
Joe: One thing I think start-up folks sometimes do is hold on to a dream that maybe they haven’t tested or gone out in the marketplace and tried to validate. But they have this idea and are really passionate and they just build it. People show up and use it. And then what happens is you hear great stories of that happening. To play devil’s advocate for a minute, do you think you’re maybe doing people a disservice by steering them away from that kind of thinking?
Dave: Sure. One of the things I tell folks when we go through this process is I remind people I’m not the arbiter ultimately of the idea. But I am the arbiter of whether you can communicate the idea. For example, would I have invested in Twitter? No! I wasn’t presented with the option so I can’t really know for sure. But would I have? Probably not. So yesterday I was doing office hours and one of the office hours guys says he has this really cool app. I ask him to show it to me and I ask what does it do and who’s going to use it? He says everybody. Well no, that’s not a market right? Everybody is not a market. The thing that I always remind people of is, if you have a fatal flaw in your idea would you rather find out in 30 days or in three years? And if there’s not a fatal flaw, cool, that’s awesome. But if there is one, when would you rather find out? And that’s tough – it can be tough but at the same time it could save people from investing three years of their life in an idea that wasn’t well thought out in the first place.
Joe: Are people applying right now?
Dave: Yes, applications are open right now.
Joe: How long will the application period be open?
Dave: The early admission deadline is September 2 and the late admission deadline is September 23rd.
Joe: How many people who miss that September 2 deadline will actually get in, do you think?
Dave: You’re not prejudiced if you miss the earlier deadline. The early deadline just saves you $50 in the application process.
Dave Parker is the CEO at Bundled and the CEO of DKParker, a software and technology business consulting company. He was previously the CEO of 9Spaces, an offshore development provider. Additionally, he is the co-founder of OneAccord, and a board member/trustee for several companies. Previously, Dave has the worked as the CEO/president of License Online, director of sales at Excell Data, and Regional Manager at Nextel Communications. Dave received his B.A. in speech communication from the University of Washington, where he was an Evan’s scholar. His interests include entrepreneurship, ventures, and international business.