Sliding into Diem

This episode focuses on the journey of Emma Bates in establishing and funding her startup, DM, a social search platform tailored for women.

1. Emma Bates' journey from an internet influencer to tech startup founder highlights the diverse pathways to entrepreneurship.
2. DM's creation was inspired by Bates' struggle to find relatable information online, leading to the concept of a female-focused social search engine.
3. Fundraising challenges for women are significant, with Bates sharing strategies like leveraging FOMO and understanding investor concerns to successfully secure capital.
4. The importance of community in business, especially for platforms like DM, which are built on community insights and shared experiences to provide more relevant search results.
5. The role of mentorship and support networks, as seen in Bates' experiences with Techstars and her continued relationship with mentors like Jenny Fielding.

1: Introduction

Overview of the podcast's theme of 'Give First' and its implications in the startup ecosystem. Primary topics include the importance of helping without expecting immediate returns. David Cohen: "In the startup world, give first means simply trying to help anyone, especially entrepreneurs, without any expectation of getting anything back."

2: Emma Bates' Background

Discussion on Bates' career trajectory, from blogging during university to her roles in consumer tech and her eventual founding of DM. Emma Bates: "My background almost sits entirely within go-to-market partnerships, marketing... I'm completely obsessed with all things consumer psychology."

3: Concept and Vision of DM

Exploration of DM's inception and its function as a social search engine tailored to women's needs, filling a gap in existing search tools. Emma Bates: "Why isn't search community ranked? If millions of people are searching the same thing at the same time, why don't we bump into each other?"

4: Fundraising as a Female Founder

Insight into the specific challenges faced by female entrepreneurs in venture capital and strategies that helped Bates secure funding. Emma Bates: "Understanding that FOMO drives a lot of things, and also understanding that information is your superpower."

5: Closing Thoughts

Reflections on the Techstars experience, the growth of DM, and the broader impact of the platform on its users. David Cohen: "Great talking to you. Great catching up, and congrats on all the success with DM."

1. Engage with mentorship programs like Techstars to gain insights and support from experienced entrepreneurs.
2. Cultivate FOMO (Fear of Missing Out) among potential investors by strategically sharing company updates and milestones.
3. Prepare to reframe investor questions to highlight the positive aspects of your business, especially in pitch situations.
4. Build a supportive community around your business, leveraging shared experiences and insights to enhance product relevance and user trust.
5. Understand your audience deeply, especially if your product serves a specific demographic, to tailor your services effectively.

Emma Bates, co-founder of Diem, is reshaping the way women search the internet. Diem is a social search engine designed to provide women with trustworthy, community-driven results. In this episode of Give First, Emma talks about her journey building Diem, starting with her experience in the Techstars accelerator and the inspiration behind her women-centric approach to search.

Emma dives into the challenges of fundraising as a female founder, sharing hard-earned insights on overcoming bias in venture capital. “Fundraising is a game,” Bates explains in her strategies for navigating investor interactions and the importance of staying focused amidst a sometimes discouraging landscape.

Listeners will also hear the inside story of Diem's $3.7 million funding round, and the details behind a challenging experience that highlights the gender disparities that still exist in the VC world. Emma's candid discussion with David Cohen offers valuable guidance for any entrepreneur seeking investment.

Follow David Cohen on Twitter @davidcohen

Follow Emma Bates on Instagram @emmashbates

People

David Cohen, Brad Feld, Emma Bates

Companies

Techstars, DM

Books

None

Guest Name(s):

Emma Bates

Content Warnings:

None

David Cohen

My guest on the Give first podcast today is Emma Bates of DM. It's a social search company that is doing great, has raised $3.7 million to date, defining some of the odds raising money as a female founded company. We're going to hear how Emma did it, fundraising tactics and strategies for women, as well as learn about why some of the search tools in the market today don't do a good job for women. That's coming up now on Give first.

Hi everyone, this is David Cohen and I'm here with my amazing co host, Brad Feld. Hey Brad. And this is the Give first podcast. And in the startup world, give first means simply trying to help anyone, especially entrepreneurs, without any expectation of getting anything back. So we'll be talking to mentors and founders about what give first looks like in action and how it makes great entrepreneurship possible.

We polled everyone and they said consistently that their favorite part of the show was the legal mumbo jumbo. So here it is. The following discussion is an expression of personal opinion and does not represent the opinion of Techstars or any company. We discuss our conversations for informational purposes only, including any mention of securities or funds. This is not legal, business, investment or tax advice and is not intended for use by any investor.

Certain of Txstar's funds own or may own in the future. Securities and some of the companies discussed in this podcast got it.

Emma, excited to have you on the Give first podcast today. Thanks for joining us. Thank you for having me. I'm excited to be here. Well, I want to give people a little context.

You went through techstars, I think, in 2020, but talk about you before Techstars, a little bit about your career and just leading up to that moment and deciding to build a new company. Yeah, of course, my background almost sits entirely within go to market partnerships, marketing. I'm completely obsessed with all things consumer psychology and everything that goes into influencing someone's purchasing decision or choice that they might make online. Became interested in it actually pretty early on in my career while I was still at university. I was studying war studies at King's College and basically needed a creative outlet and created a blog while I was at school and that grew to hundreds of thousands of readers.

Emma Bates

This was like twelve years ago, so very, very early, I guess Internet influencer days, and from that basically learned how to build an audience, learned about brand partnerships, all of those sorts of things. And upon graduating quickly decided that career path was not something I wanted to go down. But I was super interested in doing this type of work for other people. So I joined a consumer tech company called Wailer. They're now one of the largest creator networks in the world.

I think I was their third hire, fourth hire, something like that. I then was approached by the co founders of away, and I joined away when there were ten people and did all sorts of things within the marketing realm there, from international crazy hotel pop ups through to partnerships with leading brands and celebrities. And it was an insane three years, but it was actually there, while I was at away, that I had to take the morning off to pill for the first time. And that sparked the idea for DM. And DM, I think, is sort of a play on DM, like what you do with your friends, right?

David Cohen

And so what is DM? It started around 2020, I guess. And you went through the tech starters program in New York. Tell us what DM's all about. Yeah.

Emma Bates

So diem, the inspiration behind it, as I just mentioned, really came after I had to take this morning after pill. And before I was about to take it, I entered into one of those classic Internet doom spirals trying to figure out what was going to happen. And I just couldn't find anyone's story when I was searching. And it just felt so at odds to the real world search experience that I know exists amongst female communities, amongst my group chats. And I was like, why can't I find anyone's story?

I know millions of people have taken this thing. Surely there's a way that we can index this better. And so the vision really started there, and myself and my co founder, Divya, came together to explore what that could look like. We were asking questions like, why isn't search community ranked? If millions of people are searching the same thing at the same time, why don't we bump into each other?

And we sort of quickly recognized a couple of things, one being that community insights are crucial to trust and validation, and communities are also shortcuts to the right information. So all that goes to say diem is a new kind of search engine. It is one where you can discover perspectives as well as facts. We call it a social search engine. For an analogy.

For those out there, if this makes it easier, think Reddit meets perplexity. AI. But for female centric content. And our vision in the future is really to build sort of the front door to what we call girl Internet, which is what our users describe us as. Do you think that the current search tools on the Internet, I mean, obviously Google or social networks, whether that's on fax or Instagram, whatever, do you think they're biased in some way that don't really bring the right types of conversations, the right type of results to women.

David Cohen

Is that part of the problem? Yeah, a big part of the problem is, I mean, the tool itself. So when you use Google, a lot of the time, you don't get perspectives that you don't get community answers. And that is like, so 95% of women state dissatisfaction with search results, and a big piece of their dissatisfaction comes from their lack of access to community stories. And a big part of the lack of access to community stories is there's not many of them online, like Reddit is, I think, 75% male in terms of their active user base.

Emma Bates

A lot of these conversations happen over dinner tables, in private group chats. They're not searchable. They're not indexed in a way that is useful when you're using something like Google. I think the tools themselves just don't combine the facts with the perspectives. But then on the other side of things, there is a vast gender data gap.

And so the actual data itself that is searchable doesn't exist. And that data does exist within human experiences that we share with each other. And so being able to piece these all together in one sort of, like, very seamless product is kind of the goal. So you talked about the morning after pill as an example. I don't know if there are other sort of canonical examples in the community, but help someone understand who's listing the difference between what they might discover on DM versus on another way of searching.

David Cohen

Like real world example. Yeah. So one of our most popular searches is around navigating friendship dynamics. So an example of that could be like, how do I deal with a friend breakup? And if you were to Google that, you might get a few blog posts from media outlets, but you wouldn't find much else in diem.

Emma Bates

If you were to ask the question like, how do I break up with a friend? Or how do I cope with a friend breakup? You would get DMai's summary. DMAI is trained off of women's conversations that have existed in the DM platform. You would then get community sources as your search results so you could dive into previous conversations, view other people's responses to historical conversations on that same topic, and that could be great.

And you're like, cool, I've got my answer now. Or if you're like, I still want more, you can choose to socialize your search and post it to a feed, and more people can weigh in live. And so you get that added piece of validation on top of your initial. Result, let's talk a bit about the accelerator program in New York. Just briefly, what was that experience like in 2020 in New York City?

David Cohen

I think I know Jenny Fielding was involved in the program, but tell us more broadly, why do techstars and what do you feel like you got out of it? Yeah, so techstars, huge fan of Jenny. She was actually our first ever tech in DM via techstars. And we still talk very, very frequently. I think that is one of the biggest things that I still value from the experience is just how much of a believer and helper Jenny has been in.

Emma Bates

Company trajectory. I think also, like both myself and my co founder had never started a company before. And this was like midst of the, in the midst of the pandemic, no one was in person. We were like, why are we starting a company now? Not quite sure.

Why not? Why not? Nothing else to do. And so, yeah, we really took a lot from the tech stars, the foundation of the course, and everything that you learn from it, because of the fact that we've never started a company before. We learned how to fundraise, we learned, like, the fundamentals of all the things that we needed to know.

And it was a really good sort of, like, launching pad to what we wanted to go on to create. Awesome. So four years into that journey and tell us a bit about where you are today as a company and how things are going. Yeah, so we've actually had, we just closed our best quarter ever. We grew 300% month over month from a user based perspective, and we are really, really excited about the rest of the year now that we have so many people that are trying to use diem and what that means from a database perspective and what that means for what we can go on to create for them in terms of, I guess, like, where else we're at from a fundraising standpoint, we've raised just around 3.7 million, and we have built out an amazing team with that.

And we're really just like, so excited for this year. Well, congrats. That's awesome. And it's been fun to sort of watch the progress. And I don't know, you know, hopefully this podcast will show up as a resource for people.

David Cohen

Because what I want to talk about is something for women is, you know, you defied the odds. You know, most women really struggle to raise venture capital or seed capital. 3.7 million is a significant raise. I think something like 2% of venture capital is going to women. And so you, I imagine there's people listening that would like to understand more about how you accomplished that.

So maybe you could talk a bit about the story of raising that capital and maybe some of the takeaways or lessons that others could benefit from. Yeah, I will be the first to say that it was definitely not easy. I think that a lot of the media stories that you see around people fundraising is like, oh, we started conversations and six days later we had $10 million. And that just like, I've never known that to happen to a female founder. I'm sure it's happened to many male founders.

Emma Bates

Certainly none of the female founders in my network has that happened to. So I think in the earliest days of raising money for diem, when you're raising money where the company itself is tailored to a female audience and you as a team are majority female, you're kind of in a little bit of a difficult spot in. I guess the data points in how you might successfully raise are not in your favor. But a few things that were really crucial to us being successful at fundraising were actually a lot of the things that we learned during our time at Techstars. So things like understanding the power of FOMO and how to sort of cultivate FOMO around your round, whether that be back channels, whether that be constant updates of what's going on in the process of meeting with an investor, all of those sorts of things.

Things. And really using every piece of news that your company has to your advantage to push a raise forward, also learning how to structure a conversation with an investor. So even on your first call, never leave the call without knowing what their sticking points are, knowing what their process is, knowing what their check size is. Because if you don't know any of those things, you can't use any of those pieces of information to your advantage to push the race forward. So a question I always ask towards the end of a conversation is literally, what would it take for you to invest in diem?

What are your sticking points? And they usually always tell you, so you at that point, know what it is that you can help to, like, unstick for them in the next, the course of the next week or two. So, yeah, I would say those are the two things. Understanding that it's FOMO drives a lot of things, and also understanding like that information is your superpower. And to you to let on pieces of information at certain, at crucial points in the raise is really important.

And basically, all of that goes to say that fundraising is a game. So learn to love the game. Yeah, I saw an ink article where it was talking about, you treated it like a game. And I like to say that in my fundraising talk that there is a strategy to it, there is a game to it, and people use different approaches to do it. But one of the games you're playing is to try to get oversubscribed, for example, to not have the ask be more, more than you end up raising, because that doesn't end well, both economically.

David Cohen

Sometimes it just doesn't happen. But I want to jump into, I scribbled some notes about what you were talking about. First. Let's talk about that fomo, the fear of missing out. I know a lot of investors will say, oh, I have JoMo, the joy of missing out.

They don't want to be in the hot deal, but it's not really true. Right. We know that. And I see it, too, when we raise capital for our funds and things like that. So I do think one of the challenges of FOMO that maybe is a little bit misunderstood is that people try to generate it, sometimes too early or before it's at all real.

And so the flip side of that problem is you say, we're closing next week, you better get in now, and then you don't close next week. So how do you sort of make it real for people versus just a threat that is empty? I think that a lot of it is. It goes back to that sort of point around. Information is your, there's a lot of, like, really your only power in arrays.

Emma Bates

Like when you give pieces of information about your business, when you give updates, if you don't have a fundraising update, give a company update. Like, be like, we just closed this partner and our ARR is now x dollars or whatever. Or we've just launched this cool thing, like, check out this new feature. And so I think that it's like less, like, obviously wanting to make sure that the momentum is still going. But, like, from a fundraiser perspective.

So they think that you're still in active conversations. But, like, if your company is doing really, really well, other investors are going to be interested in you. So it's, it kind of, it's like, don't just use the fundraise as the update, but rather like pieces of information about your business. Like maybe you're like, hey, we just pulled together this FAQ stock for, like, other funds sharing it with you as you consider the business. Like, there's so many things that you can do to, like, tease out information.

Think of it as a marketer, like a marketing funnel. Like you're trying to get someone from top to bottom as quickly as possible. What are the different things they need to see to social? Proof the deal and insert that as much as you can, as frequently as you can. Yeah, I think I've seen it backfire, but what you're talking about is just using positive information in a drumbeat.

David Cohen

When I've seen it backfire, it's because there really wasn't anything going on and it was positioning. And the worst kind of marketing is when it's just not authentic and it's just totally positioning. Right. And people can see through that. But when you have good news and you have a rhythm, I think sharing it in that way is really smart.

You know, it's a classic now, but Mark Sister used to talk about, you know, investors invest in lines, not dots. Right. That they need to see, you know, steady progress towards improvement and getting somewhere. And I think when you show them that every week, they can really add up over time. Did you ever save a story or two?

Like, you know, we got three customers this week, but I'm only going to tell you about one in case I need it next week. Yes, I do that the whole time. Give away all your secrets. But I love that you can't give everything away. No, it's not a trademark.

We didn't talk about it ahead of time. I've seen people do that really successfully. I actually coach that to where you don't have to give all the good news the minute it happens. By the way, giving a little bad news is good, too, because it builds trust. In my experience.

You talked about sticking points. I love that. One of the questions I always encourage people to ask at the end is, on a scale of one to ten, how excited are you to invest? But you're taking it one step further, which is, what specifically are you stuck on? Do you find that sometimes people don't give you the truth or they give you homework when you ask that question?

Or are they pretty straightforward with you? 80% of the time they're pretty straightforward. You can kind of, you can even tell with the sticking points whether the likelihood of them converting as well. Like some of this, if they're bringing up sticking points around, like monetization, for example, and your consumer Internet company, then the chances of them getting over that hurdle before you have more proof points around monetization is like, they're probably just not a consumer Internet investor. That's just not what they know.

Emma Bates

It's not what they're comfortable with. It also then is like, okay, well, that's how much effort I'm going to put into following up consistently until you give me a yes or a no. Based off of what I assess your sticking point is. So it kind of helps if you were to look at a partnerships pipeline and you're like 10%, 70%, whatever it is, to conversion, you can use sticking points to try and help you with that. Sometimes you might be wrong.

So it's always good to obviously keep the conversation going as much as you can. But yeah, I think I would say if they're lying about the sticking points, they're very good liars, and the sticky points they bring up would be quite valid. So I think they're usually truthful. I like asking it that way because where I find investors like to buy time, right? And time is comfort and safety and you have fear and so you want more time, right?

David Cohen

You want to know that you're doing something smart and you get more information tomorrow. So you try to wait. And I think when you ask it like that, what are the sticking points? It's different than saying what else do you need to know? Because when you say, what else do you need to know, right.

It's like, well, I'd like to see your customer list and your roadmap and talk to your CTO, and it goes on forever. Right? But you're like, what specifically are you stuck on to move forward? And then you sort of work towards solving that or, you know, because it's probably a legitimate concern in most cases, I would imagine, with your business. What was it that consumer like, you know, how are you going to attract so many people to this sort of question?

Emma Bates

It's more, yeah, I guess because we have, like, now our traction and like product led growth kind of solves for that customer acquisition question that we had in previous rounds. And now it's very much like, well, when are you going to monetize? And I'm like, well, we did actually just sign our first b two B partner as a consumer social company that is very early in a company history to do so. So there are things that I've tried to actively set up for company success prior to the raise, so that we do start to de risk some of those questions that we know most consumer Internet companies get, which is around monetization and then obviously like retention and whatnot, that our metrics on that front are certainly best in class for the most part. So I can let them speak for themselves.

David Cohen

Always helps, right, when the business is actually doing well. And it's not just the story. I'm not having to like make it up. That's right. Always helpful.

Look, there's been a lot of research. I'm sure you've run into it on some level. Susan CoHEN, no relation to me, great researcher, you know, talked about how in venture capital processes, women tend to get questions about the downside, and men tend to get questions about the opportunity and the upside. That's just from studying a lot of conversations that happened in pitch meetings. Did you face that?

Do you feel like people were sort of more focused on, well, what could go wrong, and how did you deal with that? Constantly. Still hasn't ended what I try and do, which I think it's kind of annoying because it eats into your time that you have with an investor. And I would say, I would say I probably get, like, I think they're called, like, preventative questions or something. I can't remember what her phrasing was, but I would say I'd get those types of questions maybe 60% to 70% of the time.

Emma Bates

And a big thing that I've had to learn to do as a founder, which actually, Jenny gave really good advice on this, like, very early on, is like, reposition the question. So if they're asking, oh, well, like, what's your cost of acquisition? And like, how are you going to ever scale? If your cost of acquisition is x? Then you'll just reposition the question and be like, oh, so you're interested in how we're going to grow beyond our current stage.

Here's our current marketing plan. Or you just sort of, that's not fully repossessioning, but try as hard as you can to get them onto a path that is not a black hole of cost of acquisition, for example. And, yeah, so a lot of the time, it's like, actively repositioning and, like, re asking them the question before answering yourself. And I learned that the hard way. I didn't realize I was answering those types of questions very early on in fundraising.

And now I'm like, okay, I've heard it. I'm repositioning it, and then I'm answering it. Yeah. And I think everyone gets them. Women tend to get them a lot more based on what I read about.

David Cohen

And I think, yeah, the trick is that for what she talked about in the article is sort of like, how do I answer it in the light of something that's more exciting, more positive, more up and to the right. So customer acquisition maybe is like, yes, it's going down. You could be defensive around and be like, yeah, it's going down, but that's what they're worried about. But the real thing is, like, how do we show them how exciting the opportunity is independent of that acquisition cost, for example? Right?

So, yeah, yeah. Awesome. And I'll toss this one in there and we'll edit it out. If you have no great answer idea, don't want to share. But, you know, people always ask me this question, what's the.

What's the craziest thing that happened to you, you know, raising the money? What's the most biased, obvious thing that occurred to you? Anything like that, that you would be willing to share? Oh, my God, yes. So many.

I'm just like, let me count the number. Like, let me count how many rude people I've spoken to. My worst to date was during our last fundraiser where a man showed up not only twelve minutes late, but then spoke for the majority of the call about himself. As I tried to introduce myself and diem, he cut me off, like, maybe midway through my first sentence about Diem and was like, I don't care about that. Let's talk about the numbers.

Emma Bates

And I was like, well, the metrics are related to the business, so if you don't know what the business is, why do you care about the metrics? And as I was literally presenting from amplitude, I was reading very legit. I wasn't making these numbers up. And he was like, you're telling me that your company is stickier than Facebook? And I was like, no.

I mean, if our numbers are better than Facebook in our very small beta community, then yes, but no. Then he basically started shouting at me about how I was lying about our metrics, and I was like, how am I lying about this dashboard? Like, I truly could not be. And so I then was like, okay, you're not getting this. I think this is a waste of both of our times.

Thanks for the 15 minutes. I don't think this is going to be a fit. And then he started panicking, and he goes, he goes, wait, wait, wait, wait. Can I introduce you to my. To my friend, whatever her name was.

She loves investing in female founders. And I was like, oh, don't you. And then hung up.

David Cohen

Well, that's a definitive end. So I'm imagining that relationship didn't really. Continue, but I didn't ever email him ever again. Part of it, right, is cut your losses. And I think a big part of the numbers game that we all hear about, you got to talk to a lot of investors, is focusing your energy on the ones that get it and understand and are leaning in versus the ones that are wasting your time.

Emma Bates

Yeah, I got someone significantly more powerful than him to email his boss about how he'd behave. So I don't know if he still. Has a job, we'll leave that person. But you know, as you know, Techsorce has a nice little database of all these interactions and it's shared between all the alumni and founders. So yeah, there's always a way to look that up in the community and share.

David Cohen

The communities are great, aren't they? They're so good. Well, Emma, thanks so much. Great talking to you. Great catching up, and congrats on on all the success with DM.

It's super exciting. I know people are listening, are going to go try it out, but hopefully they also get a little benefit from understanding your journey and sort of what you learned along the way. And we'll continue to watch and see what else you learn as you go. Yeah. Thank you so much.

Emma Bates

It was great to chat with you. Thanks a lot for listening to the show today. We'd love to hear your feedback, ideas or who you'd like to hear next on give first. And please leave a rating and review, ideally a good one, and reach out anytime to podcasts, echstars.com or on twitter. I'm avidcohan.

David Cohen

See you next time. Don't forget, give first.