It’s not everyday that a woman writes a ‘Dear John’ letter to the venture capital community—“Dear VCs, I’m Breaking up with Some Of You”—call the old boy’s club for what it is, crony capitalism, and not only live to tell about it, but thrive. Not bad for a budding, female entrepreneur who aims to launch a men’s grooming and lifestyle brand.
Sure there was a backlash from a few VCs who reacted emotionally, negatively, and indignantly to Sindhya Valloppillil’s blog. But they must have been the VCs which her 5-part assessment on the industry’s status quo targeted and rubbed the wrong way.
What’s inspiring about Valloppillil’s blog posts? She isn’t alone in her conclusion. Legendary entrepreneur and Stanford University lecturer, Steve Blank, in a recent blog, stated, “VCs should be startup CEOs” first. Investors need to be in the shoes that entrepreneurs walk in to gain better insights on what startups are all about before dismissing entrepreneurs’ ideas and hard work as not a “good fit.”
Besides the initial reaction, some unintended (good) consequences have happened to Ms. Valloppillil.
Her blog posts, which went viral, won her a fresh round of meetings with angel investors and a few VCs. They initiated meetings with her, probably because she showed more “balls”—a theme word in her blog—than most of the venture capitalists she dealt with. Some are investing in her company, HELIX, which will launch its first line of products next month.
But why did it take an unflinching post about the state of the investment community for her to finally get serious dialogue going? Are connections the only way to do business?
The startup investment paradigm has shifted. Crowdfunding sites and angel groups have eroded early investments that venture capital used to do.
Mobile technology has also played a role: The traditional IPO process is no longer the planned route for an exit. M&A will be difficult to come by, too, as many of the legacy companies, which have been buying startups, are trying to adjust their core business models to digital.
AngelList and Gust are platforms for entrepreneurs to upload their business plans, pro forma financials, executive summaries, and videos. But do entrepreneurs really want to put all of their IP and strategy online for the entire world to see? No way. They and crowdfunding sites became a turnoff for Valloppillil.
The Five Issues with VC Ecosystem
In her blog, Sindhya identified the five primary issues with the old VC system:
- Treatment of non-crony founders
- Obvious lack of guidance cronies (or diligence)
- Herd mentality
- Lack of domain expertise
- Flawed method of assessing consumer startups.
The first three are common complaints. Going with the ‘herd’ gives a false sense of security with a ’safety in numbers’ to making an investment. There are many startups that have gone bust based not on well thought out business plans and models, but connections. Will that change anything? Probably not.
Regarding the “lack of domain expertise,” unless the investor has been a founder of a startup or holds deep knowledge in a specific industry, this complaint is true.
On the last issue, with the social media craze fading in the rise of mobility—look at Facebook’s 180 on trying to re-position its self as a “mobile first” company—failing to understand “consumer” startups by investors holds water. But in taking the investor side, can a consumer startup scale big enough to deliver robust ROI in three to five years?
Ms. Valloppillil believes so.
The DNA of HELIX MAN
Sindhya Valloppillil has deep domain experience in marketing, branding, innovation, product development and copywriting in the beauty and fashion industry and men’s grooming sector. She also grew up with a couple of brothers so a man’s view was never far away.
HELIX, the name for her company, is a reference to evolution. The name represents the competitive nature of the HELIX MAN and his desire to evolve. In fact, HELIX’s tagline: Choose Evolution Over Entropy.
The HELIX MAN is a man with drive. He doesn’t give up. He has bravado.
“Our goal is to create affordable luxuries that help our HELIX MAN actualize his maximum potential. The HELIX brand picks up where his DNA and drive leave off,” she explained at an interview in Soho. “I want to create an iconic global lifestyle brand, using our own proprietary products, formulas that are made at FDA-approved labs, and fragrances that are designed in-house.”
HELIX will be sold to the consumer online as well as at leading department stores, specialty stores, hotel gift shops, Duty-Free and Zoom Systems.
“It’s an industry I am familiar with,” Valloppillil said. “How do I scale this business? First, HELIX has very distinct positioning and packaging which pops. HELIX is more than just products. We’ve built it to be an iconic brand with meaning and global appeal. Second, we plan to get aggressive online with social and mobile. HELIX’s personality is great for developing content and making the brand engaging and sticky. With retail partnerships, we will have the advantage of co-op advertising as well as exposure to the retailers’ mailing lists. We are currently in advanced discussions with a distribution partner who has perfected relationships with all relevant retail channels. It’s about relationships.”
“Why do a startup now?” I asked.
Confident, laser focused with a worldly air of sophistication, she replied, “I paid my dues learning and working at the Goliath beauty corporations. After being a cog in the wheel, I left the corporate world in 2007 to join ZIRH, a 7-person startup where I reported directly to the CEO. Since the company (not the brand) was in its first stages of operations, I didn’t know what to expect, but I knew it would be exciting. ZIRH was one of the first men’s prestige grooming brands to aggressively launch online in ‘07. I learned a lot there. I got to create and launch brands. I experienced the challenge of creating innovating products and marketing strategies for a brand with constrained resources. At ZIRH, I learned the difference between Goliath corporations and corporations run like startups. It was my first taste of the startup world.”
After P&G’s acquisition of ZIRH in 2009, Ms. Valloppillil had an epiphany: “I realized marketing and innovations drive business in my industry, and that’s what I love to do! It was time for me to create my own brand. That’s when HELIX was born. ”
As she applied an ageless cream to my palm, instantly erasing wrinkles and years off my hand (pretty cool), she explained that HELIX also has a cause/social impact.
The cause is called “BALL SUPPORT” (told you it was a theme). It’s the male equivalent of the Pink Ribbon Foundation, which is consistent with HELIX’s ideals of making a positive impact on the world. “A portion of our profits will benefit testicular and prostate cancer charities; it is a co-venture with Michael Milken’s Prostate Cancer Foundation & the Sean Kimerling Testicular Cancer Foundation.”
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In a follow up, Sindhya mentioned that HELIX has already raised some money and is launching in March. She said, “We will raise more money, but on my terms without compromising the brand. I ’m planning to use YouTube instead of AngelList or the crowdfunding sites to introduce HELIX to everyone.”
Turning the startup capital-raising pipeline upside-down is something that Sindhya Valloppillil is good at.
