Transcript
WEBVTT
1
00:00:06.360 --> 00:00:10.390
So at this stage really comes down
to the team right. This is the
2
00:00:10.509 --> 00:00:14.910
biggest variable and I think a lot
of people just say, you know,
3
00:00:14.990 --> 00:00:18.070
I like that team, or sometimes
it's there's a lot of bias. Now
4
00:00:18.070 --> 00:00:20.269
I like that guy, he's kind
of like me, or something like that.
5
00:00:20.429 --> 00:00:24.980
We we really try to dig into
what makes a great team. Welcome
6
00:00:25.100 --> 00:00:29.940
to the Revenue Series on BTB growth. I'm your host, John Grispin,
7
00:00:30.260 --> 00:00:35.299
founder and sales coach at early revenue. So let's get going. Today I
8
00:00:35.420 --> 00:00:41.689
am here with Victor Gutwine, founder
and managing partner at m twenty five.
9
00:00:42.170 --> 00:00:46.369
Welcome, thanks for having me on
the show, John. So let's level
10
00:00:46.409 --> 00:00:52.520
set. Our guests are venture firms
like yourself. We also have revenue leaders
11
00:00:52.560 --> 00:00:58.240
and CEOS, and our purpose is
to provide early stage tech founders and their
12
00:00:58.320 --> 00:01:03.079
sales leaders insights and best practices on
two topics that are top of mine for
13
00:01:03.159 --> 00:01:10.069
everybody, how to grow early stage
sales and fundraising. So thanks again for
14
00:01:10.230 --> 00:01:12.269
being here today, Victor. Why
don't you start off by telling us a
15
00:01:12.349 --> 00:01:15.909
little bit about yourself in your background? Yeah, well, I'm excited to
16
00:01:17.349 --> 00:01:23.260
talk about meeting sales and iner price
sales here today. We are a early
17
00:01:23.340 --> 00:01:26.019
stage and intuer firm. I founded
it in two thousand and fifteen, five
18
00:01:26.019 --> 00:01:32.180
years ago. We have since and
in best seen out of three different funds
19
00:01:32.219 --> 00:01:38.530
across the Midwest region into early stage
tech companies. Now we invest pretty broadly.
20
00:01:38.890 --> 00:01:44.129
BBB and BBC, Sassycommerce in digital
market places our biggest categories, but
21
00:01:44.489 --> 00:01:49.799
have a majority of our portfolios made
up of bb software and we have a
22
00:01:49.879 --> 00:01:53.200
lot of experience and investing at the
earliest stages and then helping our companies grow.
23
00:01:53.719 --> 00:01:59.560
We are based in Chicago and we
invest from Pittsburgh to Minneapolis to Kansas
24
00:01:59.599 --> 00:02:05.390
City and typically in companies with lesson
million and revenue, you know, occasionally
25
00:02:05.670 --> 00:02:09.509
prerevenue. The companies are typically raising
five hundred eight free million. We can
26
00:02:09.550 --> 00:02:15.300
lead or Colead or just participating around
and we really like to be augmenting a
27
00:02:15.419 --> 00:02:21.659
founder's growth. As say, probably
have some of the basic skills and some
28
00:02:22.099 --> 00:02:24.740
compelling experience in industry knowledge and we
just want to be able to augment that
29
00:02:24.900 --> 00:02:31.090
with connections and network and whether it's
capital or talent or even just other advisors
30
00:02:31.129 --> 00:02:35.169
and friends that they can go to. So that's kind of us in a
31
00:02:35.169 --> 00:02:38.810
nutshell. We have been called the
most active investor in the region and are
32
00:02:39.370 --> 00:02:43.849
really excited to be on the show
today that kind of share a little more
33
00:02:43.849 --> 00:02:46.719
of what we learn, what we've
seen across our portfolio and across our investing
34
00:02:46.840 --> 00:02:52.520
experience. Great, great background,
great introduction. You know, I also
35
00:02:52.520 --> 00:02:55.639
want to mention you all have been
named by by CB inside say as part
36
00:02:55.680 --> 00:03:00.229
of the United States of venture capital. You're one of the most active investors
37
00:03:00.270 --> 00:03:05.189
in multiple states. I think that's
that's a that's a unique quality to have
38
00:03:05.349 --> 00:03:09.030
them. Now we have invested in
twenty four different cities across eleven states.
39
00:03:09.629 --> 00:03:14.419
Now a third of our investments are
in kind of our home state of Illinois,
40
00:03:14.460 --> 00:03:17.500
and Chicago is the the biggest area
there. So with the most act
41
00:03:17.500 --> 00:03:22.099
investor in Illinois, we're also the
most act investor in Nebraska and there's probably
42
00:03:22.219 --> 00:03:25.300
ten different cities or investment three,
four or five or more different times in
43
00:03:25.340 --> 00:03:30.169
different company is actually just did a
pretty major milestone within our firm. Five
44
00:03:30.210 --> 00:03:36.090
years we've now invested in our a
hundred company, which is a really exciting
45
00:03:37.129 --> 00:03:39.250
that really exciting piece of news for
us. You know, we're not stopping
46
00:03:39.289 --> 00:03:44.800
there. We have we haven't set
down on our checks checkbooks yet we are.
47
00:03:44.960 --> 00:03:50.159
We're still active and still sourcing,
still investing and really excited for for
48
00:03:50.240 --> 00:03:54.599
the next two hundred so that's exciting. So do you have folks outside of
49
00:03:54.639 --> 00:03:59.150
the Midwest knocking on your doors?
We get a lot of deal foo from
50
00:03:59.150 --> 00:04:01.270
all over. We are very intentionally
focus on this region. We think there
51
00:04:01.310 --> 00:04:06.270
are some unique advantages and attributes of
companies here. We also feel like we
52
00:04:06.349 --> 00:04:13.020
have an advantage and source seeing and
in helping the companies that have specific problems
53
00:04:13.060 --> 00:04:15.459
here. Capital access has been along
a problem for companies in the middle of
54
00:04:15.459 --> 00:04:19.620
the country, as well as talent, experienced tech talent. We just don't
55
00:04:19.660 --> 00:04:23.699
have as much as the coast does. So we're trying to fill some of
56
00:04:23.779 --> 00:04:28.569
those gaps and also bring together a
community of our of founders, so people
57
00:04:28.610 --> 00:04:32.569
that are are similar in some ways, happening different problems, maybe similar industry,
58
00:04:32.689 --> 00:04:39.120
different problem or maybe just suffering from
how do I scale up this point?
59
00:04:39.240 --> 00:04:42.839
They don't have founders just at every
doorstep like they do, and so
60
00:04:42.920 --> 00:04:46.959
it can valley and so we are
trying to bring that community and are our
61
00:04:46.000 --> 00:04:49.040
founder community is called club and twenty
five. If we've invested in you,
62
00:04:49.120 --> 00:04:54.430
you're in the club. So you
know, that's that's something that people get
63
00:04:54.430 --> 00:04:58.589
a lot of value out of.
Secret Password, the whole thing and handshake.
64
00:04:59.230 --> 00:05:00.470
All you got it, you got
to have it. Go to word.
65
00:05:00.550 --> 00:05:08.300
So what are the so with this
group of a hundred investments? What
66
00:05:08.459 --> 00:05:11.980
are the characteristics? I'm sure there's
been some trends that you've noticed over time.
67
00:05:12.259 --> 00:05:14.500
What are the characteristics of an ideal
start up for it? I mean,
68
00:05:14.939 --> 00:05:17.699
so at this stage really comes down
to the team. Right. This
69
00:05:17.860 --> 00:05:23.329
is the biggest variable and I think
a lot of people just say, you
70
00:05:23.449 --> 00:05:26.410
know, I like that team,
or sometimes it's there's a lot of bias
71
00:05:26.490 --> 00:05:28.689
and now I like that guy,
he's kind of like me, or something
72
00:05:28.730 --> 00:05:30.490
like that. We we really try
to dig into what makes a great team.
73
00:05:31.170 --> 00:05:35.959
Sometimes it's experience at a startup,
sometimes it's not knowledge of the industry
74
00:05:36.519 --> 00:05:41.839
and as it's a diversity of skill
sets and backgrounds and networks that they can
75
00:05:41.879 --> 00:05:45.319
tap into. And so that is, you know, we look at all
76
00:05:45.439 --> 00:05:46.879
that. We look at the board
of the advisors to look at the founders,
77
00:05:46.920 --> 00:05:50.629
we look at the early hires.
Those are all those are all key
78
00:05:50.870 --> 00:05:56.029
aspects. there. The other kind
of big component is are you starting to
79
00:05:56.230 --> 00:05:59.269
you you know, those initial steps
in the market. That's your initial product.
80
00:05:59.269 --> 00:06:02.310
Are you eating some interesting traction?
Customers really liking you, or they
81
00:06:02.470 --> 00:06:06.500
engaging or they are they use staying, you know, as a usage?
82
00:06:06.540 --> 00:06:11.300
There's or tension there. It's not
always perfect data because these companies are pretty
83
00:06:11.339 --> 00:06:14.180
new. They may only have a
couple months of revenue data, but we're
84
00:06:14.220 --> 00:06:16.019
trying to dig into that. We
talked to the customers and that can be
85
00:06:16.300 --> 00:06:19.490
something that, you know, along
with having, you know, quality team,
86
00:06:19.689 --> 00:06:23.930
can be a huge factor and trying
to determine that company's going to be
87
00:06:23.970 --> 00:06:29.050
successful. So those are the two
probably big components that we're looking at painting
88
00:06:29.089 --> 00:06:33.000
particular metrics that you seek when you're
evaluating, aside from looking at team and
89
00:06:33.079 --> 00:06:39.360
and how they approach, the more
I think you know metrics within you know,
90
00:06:39.800 --> 00:06:45.120
what is the metrics that a company
is starting to see early on?
91
00:06:45.680 --> 00:06:48.509
We're looking at, you know,
and depends on the industry, right,
92
00:06:48.629 --> 00:06:54.470
but month over month and revenue growth
is is probably the biggest, the biggest
93
00:06:54.550 --> 00:06:59.750
one that we can see. We
also are really interested not just in the
94
00:06:59.870 --> 00:07:04.620
total size of revenue but really the
speed of acquisition and is it how that
95
00:07:04.779 --> 00:07:09.699
we're sufied as that customer base right? Is it one customer that you grew
96
00:07:09.819 --> 00:07:15.699
from zero to five hundred K of
Arr or is that a couple dozen customers?
97
00:07:15.569 --> 00:07:18.329
How big are your I think it
is really big and we'll talk about
98
00:07:18.689 --> 00:07:24.410
with enterprise sales is. What's your
inter what's your initial ACV? What is
99
00:07:24.490 --> 00:07:28.810
your you know, what's your contract, and does it grow? And how
100
00:07:28.850 --> 00:07:32.480
are you pricing that? How are
you able to actually get the value that
101
00:07:32.560 --> 00:07:35.959
you're telling us? We're pitched on
our market size right, and we're pushing
102
00:07:35.959 --> 00:07:41.360
on our markin size. We're expecting
in a certain willingness and interest to pay
103
00:07:41.519 --> 00:07:44.949
and by your key customers. And
so if you have a really big customer
104
00:07:45.470 --> 00:07:47.470
and they're paying you a small amount, that's going to be tough. Right.
105
00:07:47.509 --> 00:07:49.790
You have to show why. That's
just a pilot, that's just the
106
00:07:49.829 --> 00:07:55.269
initial around land and expand. Show
that, because if you give them too
107
00:07:55.350 --> 00:08:00.060
much for too little on return,
that could be that could be an issue.
108
00:08:00.100 --> 00:08:05.100
We know we really need to see
market potential here. So velocity is
109
00:08:05.139 --> 00:08:11.339
important, repeat sales are important and
what percentage of those that are in the
110
00:08:11.939 --> 00:08:18.569
the evaluation cycle per son of those
are founders that are participating in the sales
111
00:08:18.610 --> 00:08:20.290
like a founder led set. So
we're pretty early, right, we are
112
00:08:22.209 --> 00:08:26.959
something as I mentioned. Sometimes pre
revenue is one invest but generally I'd say
113
00:08:28.040 --> 00:08:31.120
eighty percent of our companies are between
FIVEZERO dollars a month, that Fiftyzero a
114
00:08:31.159 --> 00:08:35.039
month and revenue. So if you
look at that, most of that is
115
00:08:35.080 --> 00:08:39.600
still founder led sales, especially on
the earlier side of them. And and
116
00:08:39.720 --> 00:08:43.549
that's not all bad, right,
you know, that's that. That means
117
00:08:43.990 --> 00:08:48.950
the team from the very beginning is
going to have strong in our action with
118
00:08:48.070 --> 00:08:52.669
the customers at the at the top
of a leadership, at that CEO position.
119
00:08:54.029 --> 00:08:56.220
And and that's great because that's going
to help with the product, the
120
00:08:56.220 --> 00:09:01.820
initial product, with the initial features
that they're prioritizing. You're getting that straight
121
00:09:01.940 --> 00:09:05.500
back and it's not, you know, it's not coming through a sales team
122
00:09:05.779 --> 00:09:09.820
to the product team and having having
some communication gaps. Of course that's not
123
00:09:09.980 --> 00:09:15.450
going to scale. Ultimately. Most
of our companies either either. Sometimes before
124
00:09:15.490 --> 00:09:20.450
we invest and usually shortly after we
invest, are switching to where they're hiring
125
00:09:20.529 --> 00:09:24.759
their first sales leaders in the organization. They a lot of them maybe had
126
00:09:24.159 --> 00:09:30.399
bedr with to, you know,
setting up some SDR setting up leads,
127
00:09:30.559 --> 00:09:33.440
you know, maybe doing some or
on the other end on the customer success
128
00:09:33.519 --> 00:09:37.879
path. They may be hired that
before US getting involved, but now they're
129
00:09:37.879 --> 00:09:41.590
trying to get that, you know, a vpis sales or a couple of
130
00:09:41.950 --> 00:09:46.269
account executives and handing off at least
some of the more repeatable and smaller ACB
131
00:09:46.389 --> 00:09:52.100
opportunities to be led within that as
it is a big struggle. So one
132
00:09:52.139 --> 00:09:56.980
of the questions I always got is
which is better to bring on a couple
133
00:09:56.019 --> 00:10:01.980
of AE types to go and just
chase down those sales, or do you
134
00:10:03.059 --> 00:10:05.899
bring in someone that's more of a
leader for to have? You're going to
135
00:10:05.980 --> 00:10:11.370
have two different answers from everyone.
Everybody's going to get you into tough one.
136
00:10:11.409 --> 00:10:15.649
It's like it's a nuance answer,
I think. I think John like
137
00:10:16.529 --> 00:10:24.279
if the founder is from more of
a sales background with head degree, versus
138
00:10:24.360 --> 00:10:30.120
maybe be more product oriented, then
maybe they can set the tone of the
139
00:10:30.159 --> 00:10:33.919
sales organization a lot better in bringing
what you might have had if you brought
140
00:10:33.960 --> 00:10:39.470
into vps sales and they can instead
go for, you know, somebody more
141
00:10:39.549 --> 00:10:45.509
than middle count of the executive level
or something that might be preferred and initially
142
00:10:46.070 --> 00:10:50.820
because the founder retains a lot of
control and knowledge of the sale cycle is
143
00:10:50.860 --> 00:10:54.100
not reliant on an expensive person.
was sometimes long ramp up periods. I
144
00:10:54.139 --> 00:10:58.820
mean that can be hard for VP
sales to come into a pretty new thing.
145
00:10:58.139 --> 00:11:01.059
Not a lot of not a lot
of existing infrastructure. You know,
146
00:11:01.100 --> 00:11:05.450
you're talking about twenty, thirty,
forty k a month and revenue that's not
147
00:11:05.570 --> 00:11:09.210
allowed to go off sometimes, and
so that can be hard for somebody that's
148
00:11:09.610 --> 00:11:15.090
coming in at the top. That
being said, they may need that leadership.
149
00:11:15.450 --> 00:11:20.559
If they are not at that CEO
or somebody on the founding team is
150
00:11:20.679 --> 00:11:24.080
not super sales ing, it doesn't
have a huge history with that, they
151
00:11:24.159 --> 00:11:28.759
may need to bring in somebody.
If they haven't in their early, you
152
00:11:28.840 --> 00:11:31.720
know, founding team. They may
need to bring somebody in after that first
153
00:11:31.759 --> 00:11:35.029
round. We've seen that work,
you know, the varying theories of success
154
00:11:35.070 --> 00:11:37.990
to I think it is a step
right because there's a lot for that sales
155
00:11:39.029 --> 00:11:41.909
leader to set up. They have
to be properly inson advised, probably with
156
00:11:41.990 --> 00:11:45.950
a decent equity package, because you
want them to you know, want them
157
00:11:45.950 --> 00:11:48.539
to be kind of like thinking as
a founder would at that early station.
158
00:11:50.019 --> 00:11:54.419
So and what percent to those.
You see, whether it's investments or not,
159
00:11:54.700 --> 00:12:00.019
how many of them have a sales
background versus they're focused on product and
160
00:12:00.299 --> 00:12:03.129
and the Vision for the company?
On the founders? Yeah, you know,
161
00:12:03.250 --> 00:12:07.210
we this is why we like diversity
in the founding team. Right,
162
00:12:07.250 --> 00:12:09.570
we like that diversity of skills.
If you want, you almost want they
163
00:12:09.610 --> 00:12:15.129
call a hacker and hustling. Right, you kind of want one of each,
164
00:12:15.490 --> 00:12:20.200
right. Usually the seeos one more
the sales background usually, and there's
165
00:12:20.200 --> 00:12:24.759
a the CTEO with more the product
and development background in sometimes you have three
166
00:12:24.799 --> 00:12:30.230
persons findings as well. That the
if there isn't and we've invested in,
167
00:12:30.429 --> 00:12:33.669
you know, I'll calm product or
tech heavy teams. It can. It's
168
00:12:33.149 --> 00:12:35.350
you know, that is one of
the main questions. How are they going
169
00:12:35.350 --> 00:12:39.029
to get you know, the sales
leadership? I mean it's it's a big
170
00:12:39.070 --> 00:12:41.990
factor of risk. Of course,
if they're having a lot of success selling
171
00:12:43.070 --> 00:12:46.059
or if they've proven out other factors
that we look at when making an investment,
172
00:12:46.299 --> 00:12:50.340
that's a risk we're willing to take. But you know, if that's
173
00:12:50.220 --> 00:12:54.700
if they aren't having sales traction,
you know, if they aren't, if
174
00:12:54.700 --> 00:12:58.929
they have other gaps and they don't
have experience and that's going to be hard
175
00:12:58.970 --> 00:13:03.129
because they only get so long burning
money until you have to raise again,
176
00:13:03.289 --> 00:13:07.049
improve it again to a new set
of investors, hopefully at a hire valuation.
177
00:13:09.409 --> 00:13:15.440
It's hard to get those product oriented
founders to sell, but some figure
178
00:13:15.440 --> 00:13:20.000
it out. Some examples. Yeah, I mean we've seen no, you
179
00:13:20.080 --> 00:13:24.080
know, not specifically the husband wife
team we invested in the they were both
180
00:13:24.639 --> 00:13:31.909
really strong engineers. Initially they taught
themselves to sell are the husband did,
181
00:13:31.389 --> 00:13:35.789
and if he has, he's definitely
well with it. He's like we're you
182
00:13:35.870 --> 00:13:39.230
know that. That's a huge commitment
and it took it took a couple of
183
00:13:39.309 --> 00:13:43.100
years for him to really get ramped
up, but you know it bring has
184
00:13:43.139 --> 00:13:48.539
some advisors. He reading and setting
up the things like you know process.
185
00:13:48.580 --> 00:13:52.220
He's like crm and use a lot. Yeah, it's a lot. It's
186
00:13:52.220 --> 00:13:58.850
a different, different mindset, but
I'm we we actually had him lead a
187
00:13:58.370 --> 00:14:01.490
sales conversation on one of our boundary
together because of how, you know,
188
00:14:01.529 --> 00:14:03.649
much he had learned and, you
know, been able to implement. So
189
00:14:03.730 --> 00:14:07.490
it's possess I mean people aren't just
like don't come out of the womb and
190
00:14:07.649 --> 00:14:13.399
you're like a labeled salesworth and it's
true. Still, you know, it
191
00:14:13.559 --> 00:14:20.279
is harder they and they have to
learn it anyway, because raising money is
192
00:14:20.799 --> 00:14:24.669
sort of a sales process. So
you gotta be able to manage it at
193
00:14:24.789 --> 00:14:28.669
some point in when. He is
a sales process. John, a hundred
194
00:14:28.710 --> 00:14:31.750
percent. Yeah, that's that's the
biggest conception on for some founders. He's
195
00:14:31.070 --> 00:14:35.470
you need to set up your fund
raise exactly as you do. You're,
196
00:14:35.110 --> 00:14:39.539
you know, selling into your customers
right, and you just need to have
197
00:14:39.580 --> 00:14:45.019
another pipeline, another funnel, another
you know, tracking that good in lots
198
00:14:45.059 --> 00:14:48.179
of leads, lots of leads.
So, speaking of that, what is
199
00:14:48.220 --> 00:14:54.769
a typical cycle duration like from the
initial conversation to when you get to the
200
00:14:54.850 --> 00:14:58.850
term sheet? It's so the range
is really big and I and we are
201
00:14:58.850 --> 00:15:03.250
actually very involved with helping our founders
at this process for the subsequent rounds.
202
00:15:03.250 --> 00:15:07.240
So we know, after we invest, to help them prepare in to run
203
00:15:07.320 --> 00:15:11.080
a strong process, fundraising process for
around. You know, if we invest
204
00:15:11.120 --> 00:15:15.000
at the sea, maybe the series
a round, and so we see the
205
00:15:15.039 --> 00:15:16.519
whole we see the whole game it. Sometimes you have it where you're just
206
00:15:16.679 --> 00:15:22.309
starting to talk to some investors and
you hit it nail on the head and
207
00:15:22.350 --> 00:15:26.470
you get a term sheet and others
you will run and have hunt over a
208
00:15:26.509 --> 00:15:31.149
hundred conversations, you know, with
week these, and you won't get there.
209
00:15:31.509 --> 00:15:35.899
Ors Take so long. Our process
we you know, when we're looking
210
00:15:35.980 --> 00:15:39.019
in an opportunity, we try to
run it in a in a relatively efficient
211
00:15:39.139 --> 00:15:45.779
screenline manner. We really prioritize transparence
and communication with the founder because we know
212
00:15:45.820 --> 00:15:50.929
how frustrating that can be. And
so you know, we try to check
213
00:15:50.049 --> 00:15:54.210
in on a weekly basis with where
we're at and we are trying to get
214
00:15:54.210 --> 00:15:58.610
up. We're trying to prove trying
to get our process from first contact two.
215
00:15:58.610 --> 00:16:00.769
If we're going to issue a term
shooter, are commit to invest within
216
00:16:00.929 --> 00:16:07.159
four weeks. We've done that.
We've done shorter before to but we want
217
00:16:07.159 --> 00:16:10.679
to average about four weeks because we
know, we know that's we want to
218
00:16:10.679 --> 00:16:12.360
be efficient, want to be quick, we want to be a good parton
219
00:16:12.440 --> 00:16:18.039
to work with and get to conviction
relatively quickly. There's investors that take six
220
00:16:18.120 --> 00:16:23.110
months, right and we that's not
six months to a know. You know
221
00:16:23.350 --> 00:16:27.029
that, which is which is,
yeah, the worst. So that's that's
222
00:16:27.149 --> 00:16:33.419
never that's never a fun time.
That's yeah. So so let's talk about
223
00:16:33.700 --> 00:16:38.700
some of the successes that you've had, whether it's with those portfolio companies that
224
00:16:38.700 --> 00:16:42.539
have seemed to give you growth,
acquisitions, new investments that you've made.
225
00:16:42.580 --> 00:16:45.379
Maybe talk about some of the results
that you're really proud of. Yeah,
226
00:16:45.659 --> 00:16:49.009
we are starting to the point where
we we're having a lot of a lot
227
00:16:49.009 --> 00:16:52.570
of strong companies that have, you
know, the we invested at, you
228
00:16:52.649 --> 00:16:56.769
know, three million, four line, five million for your money, and
229
00:16:56.889 --> 00:16:59.809
now they're over a hundred million.
They're they're starting to get over two hundred
230
00:16:59.850 --> 00:17:03.919
millionar value reached them and you know, it's really great multiples for us in
231
00:17:03.039 --> 00:17:07.680
the teams of those companies that growned
well over a hundred, two hundred people
232
00:17:07.920 --> 00:17:14.880
that Pong on you. So we're
really excited about some of our biggest companies.
233
00:17:15.400 --> 00:17:18.309
To think about something especially more like
in the in the BDB, are
234
00:17:18.349 --> 00:17:23.589
enter price sales. Know, we
have a company called branch and Minneapolis we
235
00:17:23.710 --> 00:17:30.779
invested in they sell into retail,
into warehousing, call centers. They are
236
00:17:30.940 --> 00:17:41.660
basically a flexible payment kind of benefit
for your shift workers. You're you're you
237
00:17:41.740 --> 00:17:45.049
know, lower wage hourly workers sometimes, and so it allows them to get,
238
00:17:45.170 --> 00:17:48.730
you know, for no fee,
like he's kind of placing a paid
239
00:17:48.769 --> 00:17:52.769
a loan, which can be very
punative, and it allows them to get
240
00:17:52.769 --> 00:17:56.650
paid Sanday or next day early access
to the weights they've already earned, which
241
00:17:56.650 --> 00:18:00.759
is valuable, really valuable for people, especially those that have the don't have
242
00:18:00.799 --> 00:18:03.880
a huge amount of savings. That
company has scaled, you know, rapidly.
243
00:18:04.839 --> 00:18:08.240
Actually seen a little bit of iteration
on their product where they first started
244
00:18:08.319 --> 00:18:15.190
as a communications and kind of shift
management platform for these workers and found out
245
00:18:15.230 --> 00:18:21.670
that because of they had access to
payment and or payroll data an hour's work,
246
00:18:21.789 --> 00:18:26.829
they could actually provide this product which
became their primary opportunity now. So
247
00:18:26.950 --> 00:18:30.619
it's an interesting Tory of a pivot
and in some talk about interesting sales cycles
248
00:18:30.660 --> 00:18:37.619
working with some of these really large
corporations like target dominants. The another another
249
00:18:37.700 --> 00:18:44.650
really interesting one that has scaled significantly
as a company called script drop in Columbus,
250
00:18:44.769 --> 00:18:51.970
and this is a sell into pharmacies, so large chains like Albertson's publics
251
00:18:52.609 --> 00:18:55.490
and also they can work with their
interview, with the software that a lot
252
00:18:55.529 --> 00:19:00.000
of smaller chains uses as well.
Company has, you know, they are
253
00:19:00.799 --> 00:19:07.559
software for enabling pharmacies to allow same
day, in next day delivery, tapping
254
00:19:07.599 --> 00:19:12.910
into courier services, including things like
we were and postmates and door dance to
255
00:19:12.990 --> 00:19:19.390
deliver those pharmacy prescriptions. So that
is you know, that's an interesting sales
256
00:19:19.430 --> 00:19:25.660
like work with those large pharmacies to
get grated. It's been nice because there's
257
00:19:25.700 --> 00:19:30.819
a lot of poll from the market, especially the response to the pill pack
258
00:19:30.859 --> 00:19:36.420
acquisition by Amazon really kind of cause
a lot of so imagine, you know,
259
00:19:37.259 --> 00:19:41.170
yeah, exactly. So those are
a couple of maybe our highest flying
260
00:19:41.170 --> 00:19:48.529
or or higher valued companies that we
invested. Both of those were very early
261
00:19:48.609 --> 00:19:52.279
revenue. It kind of been pilot
stages and now have tens of millions of
262
00:19:52.319 --> 00:19:56.839
dollars annualized and in lovenue. So, you know, very excited to see
263
00:19:56.920 --> 00:20:00.960
that growth. Those enterprise sale cycles, you know, different, different.
264
00:20:02.279 --> 00:20:04.960
You know, you compared the two
one. You know, branch started with
265
00:20:06.680 --> 00:20:12.190
a product that was a nice to
have almost and a something that was getting
266
00:20:12.309 --> 00:20:17.869
some full but not enough, and
then found it found that what they had
267
00:20:17.910 --> 00:20:21.500
access to and what they had in
ability to provide was a was a really
268
00:20:21.579 --> 00:20:26.779
big value prop and really helpful to
the employees and they had kind of caused
269
00:20:26.819 --> 00:20:30.819
some acceleration, some really big acceleration
of their demand. The other one,
270
00:20:30.339 --> 00:20:34.140
you know, saw that they were
getting from the from the beginning, had
271
00:20:34.140 --> 00:20:37.490
a lot of pull and has just
kind of accelerated through to things like pill
272
00:20:37.529 --> 00:20:42.329
pack you two things like a covid
demand for seeing bay, for scription delivery
273
00:20:42.450 --> 00:20:47.049
versus going to pick it up has
really picked up since then. So it's
274
00:20:47.089 --> 00:20:51.279
just a goodness. Yeah, it's
been an interesting timing for them. Huh,
275
00:20:52.079 --> 00:20:55.799
exactly, exactly. So, anyway, those are those are a couple
276
00:20:55.839 --> 00:20:59.559
of our, you know, kind
of interesting opportunities, right. That right.
277
00:20:59.599 --> 00:21:02.480
They're obviously dig into more. We
have. We have a lot of
278
00:21:02.599 --> 00:21:07.269
companies. Yeah, well, so
you brought up a covid. Now is
279
00:21:07.349 --> 00:21:14.029
that impacted either, the pace of
deals, and how is that impacted?
280
00:21:14.670 --> 00:21:21.140
How the funding approaches? It's been
it's been a roller coaster and first deal
281
00:21:21.220 --> 00:21:26.220
activity march, April even some of
May seem to really dry up as people
282
00:21:26.220 --> 00:21:30.660
were focused on helping their port boil
companies right out this environment plan for the
283
00:21:30.740 --> 00:21:37.250
worst, access PPP or some other
maybe you follow on from loses, etc.
284
00:21:37.170 --> 00:21:44.369
We had the companies that were taking
off in companies that were doing you
285
00:21:44.450 --> 00:21:48.839
know, very poorly, depending on
the industry we're in. We also use
286
00:21:48.920 --> 00:21:52.599
the time to kind of strategically go
out to some companies that we had build
287
00:21:52.640 --> 00:21:56.279
relationships pre covid and maybe hadn't been
able to do a deal for one reason
288
00:21:56.319 --> 00:22:00.480
another. We went out and use
that opportunity to make a deal happen with
289
00:22:00.640 --> 00:22:03.710
a couple of companies that we were
excited about and just kind of, you
290
00:22:03.789 --> 00:22:08.430
know, didn't this kind of made
it so our capital will be first in
291
00:22:08.509 --> 00:22:14.190
line, I guess, but it's
big. Since then the environment has picked
292
00:22:14.470 --> 00:22:17.180
up and so it's a little bit
it. A couple couple things, I
293
00:22:17.299 --> 00:22:18.940
think. The first is a little
bit of there are, you know,
294
00:22:18.980 --> 00:22:23.019
there's a handful of industries that are
just not fundraising because if you're in travel,
295
00:22:23.299 --> 00:22:27.500
you're in restaurant, your event,
forget it. It's not what you're
296
00:22:27.539 --> 00:22:32.569
trying to write right out this this
period of time. The way I means
297
00:22:32.690 --> 00:22:34.369
is there some though. There's like
the halves that have not, if you
298
00:22:34.410 --> 00:22:37.450
are I have, and maybe as
fifty percent, sixty percent of the market
299
00:22:37.490 --> 00:22:41.450
that can have some tail ones behind
it. All of of these tea still
300
00:22:41.529 --> 00:22:45.559
have capital and they want to they
want to invest in the fewer deals now
301
00:22:45.759 --> 00:22:49.240
to invest in. So activity is
kind of picked up. Their second thing
302
00:22:49.359 --> 00:22:52.200
is, I think, when you
know this is something that you know we're
303
00:22:52.240 --> 00:22:57.079
very much focused on the Midwest.
Historically that's been really tough to access capital,
304
00:22:57.200 --> 00:23:02.349
particularly at the preceding seed or even
series a stage, has been hard
305
00:23:02.349 --> 00:23:04.109
to access where most of the capitals, which is, you know, California,
306
00:23:04.230 --> 00:23:11.109
Boston and New York. And so
now you can access that capital by
307
00:23:11.829 --> 00:23:17.180
bogging into zoom and you're betroom,
and you know that's and there was hot
308
00:23:17.299 --> 00:23:21.380
there was a hesitancy from postal investors
to invest here early on because they wanted
309
00:23:21.420 --> 00:23:22.420
to get to the team and they
they know that they had to sit on
310
00:23:22.539 --> 00:23:27.730
boards and fly out to Des Moines, are staying Louis or wherever, and
311
00:23:27.890 --> 00:23:32.450
that was a huge hassle. And
now they're realizing how affective board means can
312
00:23:32.450 --> 00:23:36.609
be all remote and they're realizing that
I'm having to build a relationship with a
313
00:23:36.650 --> 00:23:41.559
person down the street and Palo Alto
the same way I'm building a relationship with
314
00:23:41.680 --> 00:23:45.119
a person and Lincoln Nebraska. You
know, I it's not a big deal.
315
00:23:47.400 --> 00:23:51.880
Imagine that. And so imagine that
there's great opportunities everywhere. We've all
316
00:23:52.480 --> 00:23:56.109
they've all known that, but it's
just hard. The transactions have been really
317
00:23:56.390 --> 00:24:00.190
hard unless you're riding a finding in
our plush chat. And so now we're
318
00:24:00.269 --> 00:24:03.829
seeing, you know, the the
world turns eyes on deals everywhere, which
319
00:24:03.829 --> 00:24:06.549
has been, I think, a
really great thing. If you're a founder
320
00:24:06.589 --> 00:24:10.539
in the Midwest, had access to
not just him twenty five, not just
321
00:24:10.859 --> 00:24:14.779
the handful of firms that are here. So that's that's been really that has
322
00:24:14.859 --> 00:24:18.380
picked up investment, speeding pace a
little bit to it. That's great.
323
00:24:18.980 --> 00:24:25.529
What landmines have you observed that you
might suggest? Are you got to avoid
324
00:24:25.609 --> 00:24:29.809
this? For an early stage startup
founder? That's going to limit your growth,
325
00:24:29.930 --> 00:24:34.049
that's going to threaten your survival.
Any landmines you've seen that you might
326
00:24:34.369 --> 00:24:38.200
suggest? Hey, stay away from
that. Or here's what we learned here
327
00:24:38.680 --> 00:24:42.480
with this particular situation. I mean
there's a lot right and some of them
328
00:24:42.519 --> 00:24:48.279
are just so glaringly obvious, obvious
and hindsight. There's the companies that that
329
00:24:48.559 --> 00:24:53.549
scale up really fast, way ahead
of revenue growth, meaning that the higher
330
00:24:53.589 --> 00:24:57.710
a lot their expenses, wearing up
all their spend. You know what the
331
00:24:57.750 --> 00:25:02.150
forecast says it's that's going to result
in revenue three months later, and if
332
00:25:02.150 --> 00:25:06.150
it doesn't or if it's six months
later, they could be screwed. Not
333
00:25:06.309 --> 00:25:08.099
have enough to rate. has spent
all their money to have enough to raise
334
00:25:08.660 --> 00:25:11.940
our next round. Of course you
need to be aggressive in, you know,
335
00:25:12.380 --> 00:25:17.660
in not, you know, be
too conservative there and spending capital at
336
00:25:17.660 --> 00:25:22.369
your raise are having the bank.
But we've seen. We've seen that and
337
00:25:22.769 --> 00:25:25.650
you know it's result the results in
doubt, if you're lucky, really can
338
00:25:25.730 --> 00:25:27.809
result in the down round because it's
hard to raise it down round. Right.
339
00:25:27.930 --> 00:25:33.170
So, so's that's a common issue
and we see that with both experienced
340
00:25:33.289 --> 00:25:37.720
and new founders. They both have
experience. Founders maybe that were often because
341
00:25:37.839 --> 00:25:42.079
they're more, you know, selfconfident. Got To not not staving as much
342
00:25:42.079 --> 00:25:48.559
in the bank. MORLS converts sometimes
even more resiverse. So and then,
343
00:25:48.680 --> 00:25:52.549
you know, there's other things,
like like what to spend money on.
344
00:25:52.789 --> 00:25:56.789
Can Be so confusing for founders at
what time. I mean it's like,
345
00:25:57.029 --> 00:26:00.950
do you do to spend money on
the PR firm at this point? Do
346
00:26:02.069 --> 00:26:04.980
you spend money on these conferences in
trade shows? Do you spend money on
347
00:26:06.940 --> 00:26:10.019
do we need to hire a fulltime
CFO at the stage in our business and
348
00:26:10.220 --> 00:26:15.259
sometimes you just you know, we
know what the average compody is spending money
349
00:26:15.299 --> 00:26:18.049
on. We know what you know
has has been successful or not. They
350
00:26:18.089 --> 00:26:22.089
have a lot of that sharing happen. Naturally what we're founders that have on
351
00:26:22.210 --> 00:26:26.769
through a stage are going to share
that advice with founders that are kind of
352
00:26:27.049 --> 00:26:33.240
that stage and basing those decisions.
So I think like having happening to mentors
353
00:26:33.279 --> 00:26:36.440
and advisors that are actually doing what
you're doing or maybe just one or two
354
00:26:36.480 --> 00:26:40.559
steps ahead, not versus, not
always just happening the person that did it
355
00:26:40.720 --> 00:26:44.640
in a big way twenty years ago. You know, like sometimes having that
356
00:26:44.880 --> 00:26:48.950
live footprint of what's you know,
like hey, this person tested this and
357
00:26:48.990 --> 00:26:52.190
I can tap into that knowledge.
That's that's good because you're going to avoid
358
00:26:52.230 --> 00:26:59.750
some of those frivolous expenses or unnecessary
moves. Yea, also sounds like you
359
00:26:59.789 --> 00:27:02.660
provide that sort of an environment for
sharing best because, I mean, that's
360
00:27:02.700 --> 00:27:07.619
that's a big part of the twenty
five. I mean sometimes would be compared
361
00:27:07.660 --> 00:27:11.099
to like an accelerator that you know
you're going through this co where you have
362
00:27:11.099 --> 00:27:14.420
a lot of this peer learning,
but it doesn't always those, those relationships
363
00:27:14.500 --> 00:27:18.529
and that peer learning doesn't always last. We're trying to emulate having a continuous
364
00:27:18.890 --> 00:27:22.569
network you can tap into and the
relationships with and it's kind of on the
365
00:27:22.650 --> 00:27:29.329
same side as you. Whether you're
preseader serious be right. So that's that's
366
00:27:29.369 --> 00:27:33.079
a little bit, maybe less intensive
at any one time as an accelerator,
367
00:27:33.319 --> 00:27:37.440
but maybe kind of more you can
be helpful over a long period of time.
368
00:27:37.160 --> 00:27:41.920
One of the thing I'll say is
a common, common issue is chasing
369
00:27:41.279 --> 00:27:47.910
the bright and shining object and or
getting too distracted versus trying to execute.
370
00:27:48.430 --> 00:27:52.630
Like some of the best, some
of the best companies are executing on a
371
00:27:52.829 --> 00:27:56.910
relatively narrow market opportunity, knowing,
and I could be they're getting hounded by
372
00:27:56.910 --> 00:27:59.140
other opportunities. But like we're going
to do this, we're going to spend
373
00:27:59.180 --> 00:28:02.900
ninety five percent of our time and
effort on this and will maybe dabble a
374
00:28:02.980 --> 00:28:06.700
little bit just to exports people warm. Maybe it's so we can show some
375
00:28:06.859 --> 00:28:10.339
examples for what will spend our money
on our next fund raise or something,
376
00:28:10.420 --> 00:28:14.089
but they know they need to get
to that next milestone and grow here.
377
00:28:14.809 --> 00:28:18.210
And then there's the other founders that
are all whatever comes to the door,
378
00:28:18.369 --> 00:28:22.890
whatever tunity. A couple of years
ago was like Oh, we're going to
379
00:28:22.930 --> 00:28:25.650
raise an ICO and I'm like that
was not part of the business plan.
380
00:28:25.849 --> 00:28:27.799
You know, why? Why are
we thinking about tokenizing one thing? And
381
00:28:29.799 --> 00:28:34.119
you know, really distracted on that
and the short term shiny object and that's
382
00:28:34.920 --> 00:28:40.160
that's hard because you know, you
know something. You know sometimes people think
383
00:28:40.160 --> 00:28:42.470
it's season day or being aggressively going
after a specific thing, but you know,
384
00:28:42.509 --> 00:28:48.349
it takes some wisdom and some peers
and some advislutive. Yeah, it's
385
00:28:48.029 --> 00:28:53.029
the lutrue efforts. And remember this
is a competitive space or in so yeah,
386
00:28:53.150 --> 00:28:57.819
anyway, those are just a few
fewings. It's so I'll change of
387
00:28:57.900 --> 00:29:03.539
questions. or so what's different about
in twenty five now versus when you started?
388
00:29:03.619 --> 00:29:07.460
What's the Post that? Well,
hopefully we're making a lot law fewer
389
00:29:07.539 --> 00:29:10.809
mistakes. And for first the first
thing, I think you know when we
390
00:29:11.369 --> 00:29:18.410
when we first started, we had
a relatively simple view of our our approach
391
00:29:18.450 --> 00:29:22.369
to investing. We're going to,
you know, buy the best companies stock
392
00:29:22.450 --> 00:29:26.680
that we can, going to be
relatively passively involved. We're going to be
393
00:29:26.160 --> 00:29:33.119
trying to optimize around revenue, multiple
evaluation, a lot of change. We
394
00:29:33.240 --> 00:29:40.230
are optimizing on growth and speed of
growth and speed and potential opportunity. We
395
00:29:40.390 --> 00:29:45.109
are more active in what we can
do to help. We are shaping deals,
396
00:29:45.230 --> 00:29:49.470
we are more active in creating the
syndicate. We've led a majority of
397
00:29:49.509 --> 00:29:53.099
the deals on our most recent fund, so that's a lot different. We
398
00:29:53.299 --> 00:29:56.819
realize just how much opportunity that was
for us to be a leader in these
399
00:29:57.019 --> 00:30:03.299
early investments, I think. I
think another thing is there's there's an increased
400
00:30:03.380 --> 00:30:11.130
focus on on capital efficiency. I
will say in the sense, not just
401
00:30:11.250 --> 00:30:15.049
if, if you think about it, like we invested in a lot of
402
00:30:15.130 --> 00:30:18.890
different types of companies in our first
in our first fund, and a kind
403
00:30:18.930 --> 00:30:23.440
of all over the valuation range and
some of them were, I'll call it,
404
00:30:23.480 --> 00:30:30.240
almost the we work type model,
where you're trying to force a normal
405
00:30:30.440 --> 00:30:34.710
business to be a software or tech
business and a tech multiple and you're spending
406
00:30:34.869 --> 00:30:40.869
like crazy to get there and it
just isn't happening. We're a little bit
407
00:30:40.910 --> 00:30:45.789
more judicious on like if a company
is a certain type of company, they
408
00:30:45.869 --> 00:30:48.869
need to have, you know,
they need to have a certain type of
409
00:30:48.869 --> 00:30:53.539
ratio of capital to revenue or efficiency. You know, efficiency path basically,
410
00:30:55.180 --> 00:30:59.539
and you know for software that you
know ideally it's one to one. You
411
00:30:59.619 --> 00:31:03.849
know you're that you're raising if at
a certain point you're hitting you've raised two
412
00:31:03.849 --> 00:31:07.730
million. You want to be a
million of aarn. You know, it's
413
00:31:07.849 --> 00:31:11.329
really if it gets out of wag
of your raised six or ten million,
414
00:31:11.369 --> 00:31:17.769
you get two million of air are. That's maybe need it a flag right
415
00:31:17.890 --> 00:31:23.119
like that's an inefficient fill. Yeah, so, absolutely so. If a
416
00:31:23.279 --> 00:31:27.400
company is feels like a start up, feels like they're a good fit,
417
00:31:27.680 --> 00:31:30.880
what should they do? They should
reach out to us. Right. There's
418
00:31:30.880 --> 00:31:33.509
a lot of different ways that you're
connected. If you send an email to
419
00:31:33.630 --> 00:31:36.789
me, victor at in twenty five
dccom will take a look. We take
420
00:31:36.789 --> 00:31:40.910
a look at all quality as we
get. If you're outside of the Midwest
421
00:31:40.950 --> 00:31:44.910
or you're outside of the basic stuff
on our website that we focus you may
422
00:31:44.910 --> 00:31:48.220
not get a response because we'd expect
you to check out website prior to pain
423
00:31:48.259 --> 00:31:52.819
us. But you know, we
invest in early stage technology startups across the
424
00:31:52.940 --> 00:31:56.460
new West. We don't do the
deep techt like the life sciences. Almost
425
00:31:56.500 --> 00:32:00.859
all digital tech as what we'll call
it. But you know, if you're
426
00:32:00.019 --> 00:32:02.690
if you're in something that will look
at, then we'd love to hear from
427
00:32:02.690 --> 00:32:07.809
you. Additionally, you should be
thinking about not just reach out to us,
428
00:32:07.849 --> 00:32:10.529
but all the paths to attract capital
and to grow. You know,
429
00:32:10.650 --> 00:32:15.410
we want to see some especially experience
bounders. You might have gone through an
430
00:32:15.410 --> 00:32:19.839
accelerator or thinking about going through an
accelerator. We want you to be working
431
00:32:19.880 --> 00:32:23.680
on other paths of raise capital.
Syndicate who've also been the syndicate. We
432
00:32:23.759 --> 00:32:27.519
can be helpful with that, of
course, if we're interested in forward.
433
00:32:27.599 --> 00:32:30.549
So we want to see a big
sales effort in raising money and we did
434
00:32:30.589 --> 00:32:37.390
that next step. So that's that's
the way to connect with us. That's
435
00:32:37.470 --> 00:32:39.589
great and Victor, this has been
and great. It's been great to learn
436
00:32:39.589 --> 00:32:44.150
about you. It's been great to
learn about your work. You just came
437
00:32:44.190 --> 00:32:49.460
off a successful and twenty five summit, so congratulations for the great work.
438
00:32:49.539 --> 00:32:53.339
They're one of the biggest gatherings across
the country in terms of venture firms,
439
00:32:53.779 --> 00:32:57.259
so we appreciate your work that you
do it. I'm twenty five and wish
440
00:32:57.259 --> 00:33:00.490
you continue to thanks, Johner.
Really appreciate this and I'm glad, glad
441
00:33:00.529 --> 00:33:06.170
that we can share in discuss is
what we're seeing. The hopefully help some
442
00:33:06.450 --> 00:33:09.289
some tech founders out there and increase
the face knowledge base for all of us.
443
00:33:09.450 --> 00:33:16.079
Not absolutely appreciate it. So thanks
for listening to this episode of the
444
00:33:16.279 --> 00:33:22.160
Revenue Series on BB growth. I'm
your host, John Grispin, founder and
445
00:33:22.319 --> 00:33:27.750
sales coach at early revenue. Please
connect with me on Linkedin. I'm happy
446
00:33:27.789 --> 00:33:31.630
to answer your questions or provide recommendations. You can also email me at John
447
00:33:31.670 --> 00:33:39.430
at early REVENUECOM. Until next time, I'm out. Are you an early
448
00:33:39.509 --> 00:33:44.140
stage tech founder that's frustrated by limited
sales? Do you like the time to
449
00:33:44.220 --> 00:33:49.779
dedicate to a traditional sales training program
John Crispin's earlier revenue sales program helps early
450
00:33:49.819 --> 00:33:53.380
stage founders accelerate sales in large accounts. He's built a playbook that transfers what
451
00:33:53.460 --> 00:33:58.089
he's learned as a founder and sales
leader into a condensed, easy to implement
452
00:33:58.170 --> 00:34:01.930
program. If you're ready to increase
your startup sales capacity, visit early revenuecom
453
00:34:02.049 --> 00:34:04.009
to get started today.