Serial entrepreneur and SharkTank reality rock star Charles Michael Yim has an impressive track record in starting up companies and making them successful. And Most of us would probably be happy with a single successful startup. But Charles Michael Yim is definitely not most people. We caught up with the 3x serial entrepreneur from Silicon Valley to try to learn how the SharkTank superstarӳ passion for inventing and building innovation has helped him to become such a successful entrepreneur.
Charles is probably best known to many as a reality TV star on ABC’s Emmy Award-winning show SharkTank where he convinced all 5 celebrity Sharks to invest $1M together into his medical device startup, Breathometer. But let’s face it – Charles himself is something of a perfect storm.
Serial entrepreneurship as a way of life
Even before Breathometer, Charles had an impressive track record as a successful entrepreneur and team player. He played an integral role in business development at Fortify Software, which was later acquired by HP. Charles also founded ProBuddy, where he teamed up with a senior engineer at Facebook to develop a local service provider recommendation engine. He is also the founder and former CEO of Chatterfly, from its inception to acquisition by Plum District, a Kleiner Perkins company. Under Charles’ leadership and vision, Chatterfly was able to become one of the most influential neighborhood reward platforms in the mobile space.
How did you get started?
Early in my career, I always chose small startups over big corporations to optimize my learning curve, and that’s paid off. I also picked mentors and coaching from the PayPal mob and from Groupon. This allowed me to learn from the best and learn fast.
You were a successful serial entrepreneur who founded two other companies before founding Breathometer? What did your experience with your previous companies teach you that made you a better founder and CEO?
Fail, but failing fast! Ultimately I failed quite a bit and I took those lessons with me into my next ventures. As an entrepreneur, you have to learn from failures and apply the lessons to make your next steps better, smarter. That practice teaches you what you need to eventually succeed.
And yes, it was super hard. With my first startup, VCs wouldnӴ take my calls, fundraising was tough, and getting a good team together was almost impossible. But as I started to become successful, things got easier. Some of my investors today wouldnӴ give me the time of day back then. Now everyone gets back to me. Itӳ also much easier to get a prototype off the ground. So yes, it does get easier as you progress.
Other things I learned is that you need to build a network, deepen your knowledge and get your hands dirty. An idea is worth nothing until it’s built. There are a lot of thinkers in the world, but not enough doers. I get companies built.
Another important factor to success is building the right team, a strong team, which includes all types of members. For example, brilliant engineers often tend to be introverts. So someone with that personality needs to look for a co-founder who can balance that out, be good at networking, communicating and inspiring.
Why did you choose crowdfunding for Breathometer over Angel investors?
The automatic thing was to go back to investors, but it wasnӴ that easy. Angel investors don’t really like hardware and they thought the market was small and were looking for validation of the idea. So I tried crowdfunding on Kickstarter, but my idea was rejected because Breathometer is a medical device and they were concerned about liability issues.
So I launched on Indiegogo and that was a big success. The fact that so many people were willing to buy the product raised enough cash to get it off the ground. That validation also caught the VCs’ attention, because it signaled that there was a market for the product and I was able to make good progress with the initial funding.
Why breath analysis of all things?
Breathometer is the worldӳ first breath analysis platform. We started with breath alcohol analysis, but as I learned more I discovered breath analysis can be applied to other areas. There hasn’t been any real innovation in this technology since the 1960s. Hospitals use expensive $250K spectrometers that can detect 300 bio-markers on your breath and have wide health implications. Beyond alcohol, breath analysis can detect problems with oral health, fat burning, asthma, and even cancer.
Breathometer is the first company I’ve founded that is both medically oriented and is built on hardware, which means there were two big, new challenges for me. The key here was to build a very strong team from the beginning. You canӴ do something like this alone, so I recruited the very best experts in the field to join and lead R&D.
Now that weӶe proven the medical viability of the product, more investors want to get in, since they see the huge potential. That includes visionary investors like Mark Cuban, Richard Branson, and Bill Gates, who have all shown an interest in the product.
Breathometer reached 600% in just 30 days on Indiegogo. Do you think the velocity of crowdfunding rounds are a good indicator for how successful the company will be?
Yes and no. Velocity can signal success but only to a certain degree, because crowdfunding has become so common and companies can game the campaigns, which means that a lot of the velocity is artificial and can be seeded with marketing and PR efforts. In fact, companies invest a ton into marketing (the crowdfunding rounds) so that they are essentially spending money to recoup the money. For example, what may look like a great round that raises $1M, if you look behind the scenes you see they spent $500K on marketing. So the velocity has become gamed using PR firms and viral tactics.
When Pebble launched their campaign they used an entire email list and probably spent quite a bit of money on marketing. So sometimes velocity is more a validation of good marketing, not good product. Skully, a very high-end product for motorcycle enthusiasts, is another example. They had a successful (fundraising) round, but that could be most of their market potential, since there are only so many bikers who can belong to an elite inner circle with the money for a $1,399 (introductory price) helmet. So velocity is a very subjective indicator and it’s only good if it’s really organic and authentic. And remember that VCs can see through a campaign that was held up by big marketing budgets.
So if you were to consider equity crowdfunding investing in other companies, would the speed of the campaign influence your evaluation?
No, I wouldnӴ consider velocity a good indicator. A successful crowdfunding campaign is all about the preparation, so if you have access to a huge email list and invest in marketing and press to create velocity, then no, thatӳ not really a good gauge to evaluate that company. It needs to be authentic.
On SharkTank you made a big point of giving credit to your team. How do you build a great team and what elements must it have?
My motto is: hire for what you need. For my first startup, I hired all of my friends. Big mistake. Now for my third startup, I first determined what I needed and then hired the team. So, no friends, do the research, find who is the ideal person for the task at hand, and hunt them down. Our VP of R&D is the number one expert in this field. Become laser-focused, hire for what you need and donӴ settle. This point is so crucial that I plan to cover it at length in my book.
Shark Tank is extremely popular and already in its 7th season. Do you think it gives the audience a realistic picture of what Angel investing is like? Does the audience learn how to invest by watching?
Itӳ very realist, none of it is scripted and the questions asked are typical. Sharks are a little more aggressive while Angels tend to be more docile, but the process is very realistic it’s all in the preparation. Be prepared. I think Shark Tank may be the best thing to ever happen to Angel investing; I believe Shark Tank will continue to be a leading show for at least 10 years and will quickly become popular around the world. Shark Tank is educational; it teaches a lot about entrepreneurship and investing, and families are watching it with their kids!
With several commercially successful products under your belt, you must think of ideas all the time. How do you decide which ones can be turned into a killer business?
I filter my ideas based on opportunity. Is the world ready for this idea? Or is the world changing in a way that it could become ready for the idea? Is there an economic market opportunity, and from a feasibility point-of-view, can I do it? Am I the right person to do it? The overall risk profile has to be good. How much will it cost to get it going? How saturated is the market? For example, in my book, which I’m launching in 10 months, I include my own scorecard, which lets me rate an idea on a score from 1 to 10. Any investment must be over a 7 to be considered.
How important is the potential social impact of a startup to you?
My first and second startups were both tech-driven, but Breathometer, which is dear to my heart, it is medical hardware and a very different kind of startup. As you get older, your motivations and priorities change. The difference with Breathometer is that weӶe developed a product that has the potential to save lives. I want to leave a mark and really make a change in the world. Social impact is important to me and I think its a natural part of my evolution as an entrepreneur.
What lessons have you learned by watching Charles Michael Yim and others on Shark Tank?