Need to recover from ‘startup overreach’?
Ty Danco’s ludicrously improbable but riveting tale definitely belongs in the history books, alongside AirBnB‘s legendary ‘survive by literally eating your own marketing material’ yarn
TY Danco had been an Olympic athlete (he was quite huge on the luge in 1980) but went to business school (Wharton) in order to (wait for it) fulfil his dream of becoming something cool like a sports agent (huh?) by (wait for it again) getting good enough to get a job at a consumer products company, because he figured (wait for it again) that if you could learn to sell cornflakes, you could sell Michael Jordan.
If you think his judgement all sounds crazily off-center, remember, that improbable roadmap to career success was all about Ty’s dream and his intended trajectory toward achieving it, it wasn’t the way things actually worked out, which in some ways was a whole lot crazier still, but ultimately manages to comprehensively annihilate any doubts about his judgement.
How to start a business worth hundreds of millions with nothing more than some non-existent software and a pizza delivery boy
His startup story begins with a piece of fake software that was never actually intended to deceive anyone into believing it was real.
One day, he was putting together a presentation in which he was just trying to explain a specialised financial transaction that he’d been working on.
He decided to make the transaction easier to understand by laying everything out so that it looked like the transaction had been done on a computer. It hadn’t, but this fact didn’t matter to him in the context of the presentation, he was just trying to get the idea across.
He even freely gave away the presentation materials to a consultant who asked for them and thought nothing more of it.
But not long after that, out of the blue, one of the largest financial organisations in the world (CalPers) suddenly rang him up, asking if they could ‘buy his software’.
Taken aback, he told them his software wasn’t for sale.
Still very keen, the guy from CalPers (the California Public Employee’s Retirement System) offered a joint venture.
Danco said he could get back to them in 7 weeks.
They asked him for a company name.
He didn’t have a company name, but he gave them one anyway.
He had just ‘hooked a shark’, even though, as far as he was concerned, he hadn’t gone fishing and he certainly didn’t put out anything he had considered to be bait.
How was he going to reel it in?
He decided that the only way to do it was to ‘look big’.
He then asked himself “what can I do to look big? I know, I’m going to get a board of advisers”.
This video is not called “leveraging your advisory board” for no reason.
Danco then proceeds to rustle up the most impressive advisory board that any startup (let alone one selling a non-existent piece of financial software) has ever rustled (with an emphasis on the word rustle).
Talk about nerve, all Danco actually had was his own enthusiasm plus the help of an intern he’d been working with (yep, the pizza delivery guy).
Professor Markowitz told Danco, ‘It’s a really interesting idea, but I’m sorry, I’m not taking many jobs, I’d have to have travel expenses’. Danco just could not believe his luck.
“Harry, your done”, Danco told him, and that is how the greatest advisory board in the history of non-existent startups began.
Danco could now proceed to use Markowitz’s name to start netting loads more big fish onto his advisory board.
First was the executive who was just retiring from the United States Federal Reserve, followed by similar senior figures from the Bank of England, the European Central Bank, the Depository Trust, and the United States Securities and Exchange Commission.
Seven weeks to somehow amass those illustrious notables?
Nope. Ty Danco manages it in three weeks.
There’s a bit more to the story (it’s all in the video, just watch it) but the bottom line is that in the end the business sold for several hundred million dollars.
If you’re looking for the ‘pivot’ in this story, I suppose you could say that it’s probably a kind of pivoting thing if you go from not actually having any software to actually successfully securing a joint venture proposal with a giant customer in the same conversation.
But I think it was ‘the advisory board pivot’ (or pirouette?) that got most of the audience giggling.
Hilarious, mind-blowingly audacious, yet astonishingly real.
Hats off to Ty Danco: I believe he does startup mentoring these days, a pursuit whose true value will probably go up in your estimation with every passing minute of the video that you watch.
The talk was given at an event called the SVB (Silicon Valley Bank) Accelerator CEO Summit East, which was held at the Microsoft New England Research and Development Center on November the 18th, 2011