TSP056 | Andrew Goldner – Transcription
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John Livesay:
Welcome to The Successful Pitch. Today’s guest is Andrew Goldner, who works at GrowthX, which is a VC fund. He has a really fascinating background from working at Thomson Reuter in Asia to being a lawyer to now being a VC. He has a whole explanation of what it takes to be successful to get funded as a founder and the qualities they’re looking for in a person, which include humility and the ability to focus. He said being busy doesn’t mean you’re making progress. You need to have thoughtful intention of what you want to accomplish every day and then be transparent to your team so that you can get what you need. He’s really big on focusing on the quality of the meetings you have with investors and not the quantity. Enjoy the episode.
Hi, and welcome to The Successful Pitch Podcast. Today’s guest is Andrew Goldner, the co-founder of GrowthX. Andrew has a very interesting background that goes all the way back to when he was winning the Journalist of the Year award for Thomson Reuter in 2009 and then has now become a VC. So he has quite an interesting background. He’s a mentor at Golden Gate Ventures. He also mentors Startup Mexico, helping them become innovators there. He has a whole wide range of experience and we can’t wait to hear him tell us all about his insights and what it takes to become a successful founder and get funded. Andrew, welcome to the show.
Andrew Goldner:
Thank you very much, John. I’m happy to be here.
John:
I always like to have people tell us how they got to where they are and, certainly, we don’t get many journalists becoming venture capitalists. So that’s an interesting story. I’m guessing you had a passion for journalism and somehow it transitioned into shifting from telling stories to making them.
Andrew:
It’s actually a little bit different than that. I would love to claim myself among the profession of journalism. I’m not actually a journalist. At Reuters, I was the publisher, and so to a certain extent, I was a suit in the corner. But I had the distinct honor of working alongside of some of the best journalists in the world at Reuters after Thomson and Reuters came together. I do think that I appreciate journalism and understand the rigors of journalism and I think I was fortunate, from that perspective, to connect with journalists. But, I, myself, am not a practicing journalist.
John:
Got it, and yet you got honored with Journalist of the Year in 2009. How did that come about?
Andrew:
Yeah, that was very special. I mean, every year, Thomson Reuters and Reuters, historically, has gathered some of the best journalists from across the file. David Schlesinger, the editor-in-chief at the time instituted something very new that year, which was pushing innovation in the newsroom, which is a lot of what we were working on together and I was fortune enough to be working alongside of some of the top journalists in Asia Pacific when we innovated around the idea of taking the Reuters messaging platform and bringing in journalists into a chat room so that clients could interact directly with journalists as they were at the edge of news and provide an edge to those clients such as FX traders. It’s something that we started regionally and ended up going globally and it still operates today.
So, at the time, pushing innovation and wanting to recognize it, David created that new award and so I and the team that I was fortunate enough to work with were awarded the Journalist of the Year for that work.
John:
Well, to me, it seems like the bridge between that award and what you’re doing now is that it all stems from a passion for innovation.
Andrew:
That’s absolutely right, John, and I appreciate that perspective, and I think if you look at my nonlinear path, I think there are a couple of themes that are consistent and, certainly, entrepreneurs and innovation is one of them. I try to do that inside of a law firm. I did that inside of Corporate America. I did that on my own. I’ve done that at early stage companies and now, of course, doing that at GrowthX.
It was an extraordinary time to be at Thomson Reuters and to be associated with Reuters News. There was a tremendous amount of innovation that’s gone on that continues to go on and, of course, the changes that are taking place in the media space are dramatic and so innovation has certainly played a role.
John:
So, tell us a little about what you do at GrowthX and what makes it so unique in that the way you do seed funding has its whole premise that you and I talked about earlier which I just love which is you don’t have to move to get funded.
Andrew:
Yeah. Well, to think, there is a couple of different components to the story of what we’re trying to do at GrowthX. We want to try and keep it simple but the reality is we are trying to innovate and do things differently, and so it’s less of an obvious story. I’d say the first component around GrowthX is that if you look at the history of GrowthX, we were born as a consulting firm that provided market development services to seed stage startups. The idea being that seed stage capital is plentiful nowadays but because the cost and complexity of launching a company and a product are so much less than they used to be, the reality is that you differentiate yourself at the early stages of a company.
Nowadays, less so about the product and more so about how do you take that product, apply it to a market, go to market, find product market fit, earn predictable revenue, and scale, and the reality is that, though seed stage capital is plentiful, the expertise in Silicon Valley and startup cities around the world in going to market, finding product market fit, earning predictable revenue is actually in quite short supply.
So we started out as a consulting firm, earning both cash and equity and, through that work, we were able to prove that our market development expertise is actually a more valuable form of currency than investment capital because as we were building that consulting firm working alongside venture capitalists, they were deploying money and getting a certain amount of equity in return, we were deploying our human capital and not only get compensated with cash, but we were earning significantly more equity than the angel and seed stage investors were getting at that same time.
So that was really the genesis. So GrowthX quickly grew from that into a venture capital model because we thought that there was a way to capture more value for everybody involved and align more long-term with everybody involved, and that includes the founders and the portfolio companies, the limited partners, the general partners, the co-investors. Everybody in our community, we think, is more better aligned as a venture firm that invests dollars in human capital as opposed to just consulting services.
John:
So tell me about some of the vision you have. I know you’re starting to do some work in markets like Nashville and Dallas that are not traditionally known as — well, Dallas has a Hubbub up but Nashville is certainly not. Letting people live where they live and still get access to seed capital, what’s the big vision for GrowthX? Are you going to be –?
Andrew:
I appreciate you asking because it’s obviously a lot more interesting than it is with the structure of the fund. The reason I bring it up is because they’re related. The reality is we started out with the premise that you’ve been referring to, which is that you ought not have to leave your home to build your company. The founders of GrowthX find it surprising that founders from around this country and around the world move themselves to one of the most expensive ZIP codes in the world in order to position themselves better to raise money when, in reality, they’re causing themselves to need to raise more money and for those people that have spent time in Silicon Valley, it’s a wonderful place but it also is high-paced and can be a bit of a rat race and so getting lost in Silicon Valley is an easy thing to happen to young founders.
So, our premise is unless your customers are in Silicon Valley, why move here? There’s more opportunity to work with developers in your hometown and leverage developers elsewhere. Keep the cost base low, stay focused, and let’s see if we can bring venture capital to you.
So, when we broke it down and said, “Well, how do we solve that? How do we do that at scale?” because of the economics of venture capital, it’s what led us towards the model that I just discussed which is being local in these communities. Being insiders as opposed to outsiders just visiting with a GrowthX team there that not only deploys capital and is an active member of the entrepreneurial community, but also can build a team of market development experts who can help these seed stage companies with the traction requirements that they’re going to need to satisfy to then raise series A venture capital is how we’re going about doing it.
So, yeah, our first office was opened up in Nashville. My partner, Brad Holliday is a 20-year veteran of the space in around the southeast and so we were lucky enough to connect up with Brad and have him as a partner in the fund, open our first office outside of Silicon Valley in Nashville, Tennessee, and we’re very active around that state. Tennessee has done probably the best job of every state that we’ve been exposed to in terms of the intentional approach to using entrepreneurism to fuel economic growth. Launch Tennessee runs a network of accelerators around that state and they’re just doing a terrific job and, by the way, playing to their strengths, which is part of the theme as well.
You have companies that are assuming they need to come to Silicon Valley to raise money or to accelerate their growth. But the reality is, again, unless there’s a history of “been there done that” or the customer base here in Silicon Valley, why not go somewhere like Memphis if you’re going to do logistics at the seat of FedEx. Or if you’re going to do health tech or music, why not do it in Nashville. Or if you’re going to do CPG, why not do it at The Brandery in Cincinnati. Or if you’re in retail, why not do it at REVTECH in Dallas with Nordstrom and Neiman Marcus.
So I think we’re looking for opportunities to enable communities that are playing to their strength and enabling their startup communities and we want to play a very important role, not just as outsiders, but to be there and physically present.
John:
I love that. Can you speak a little bit, Andrew, about your other big disruptive shift a little bit in that everyone talks about the importance of the team and building a network of trust? But what I love that you said to me earlier was that your GrowthX is going to be featuring the founder’s faces as opposed to the logos of the companies that you’re funding.
Andrew:
Yeah, thank you for asking. I mean, we’re working on a new website right now. What we’ve got up is just kind of a placeholder and we’re being very serious about this website because it is going to be our face to the world and we want it to embody all of these concepts that we’re building the culture of GrowthX with.
I think, typically, when you go to a fund website, you’ll see the portfolio with logos. Our view is that it should be community and human-centric and so our landing page is going to be filled with the faces of our founders. You’ll be able to dig in and hear their stories – to read about and learn their stories – and certainly hear about what they’re working on now. But, ultimately, we’re building a community of people. We refer to it as a trust network.
John:
It’s so great because when you have a trust network, then that’s ultimately what the investors are investing in is you and they have to trust and like you before they’re going to invest in you and most people lead with the product when they’re pitching as opposed to leading with who they are.
Andrew:
Well, that’s absolutely right. One of my founders — co-founders at GrowthX is Will Bunker. Will is the founder of what became Match.com and, after exiting that, has become a very active angel and venture investor and he was doing a significant number of relatively small investments and he came up with the idea of the trust network. Because the reality is when you’re doing over a hundred different investments, which he has in his portfolio, at the pace he’s making those investments, the only real way to do that is to build a network of trust and to do that by focusing on relationships and not transactions.
So that as you’re looking to do deals or as deals are brought to you, you trust the person who brought you that deal. You layer on a little bit of your diligence but you can make the quicker decision, and when you’re looking at a deal and you want to act fast, you can look into your trust network and say, “Who is a subject matter expert that we can enable to help us think through this? Who are the co-investors that would be strategic or otherwise helpful to this company and how can we enable them to come in?”
Again, because we optimize for relationships and not transactions, we’re not looking to take a piece of every relationship that we form. When we connect an LP in our fund to another fund, we don’t look to benefit in any way other than helping to grow relationships. When our LPs invest directly in the startups in our portfolio, we don’t force them to form a sidecar so that we can take a couple of different points of carry in addition to that which we have in our portfolio. When we introduce startups to other investors, we don’t sharp elbow ourselves into a larger position. I know, by the way, if, ultimately, there’s an investor that makes more sense than us then we’re in for the long-term. We’re playing this the long game and so if that particular opportunity doesn’t pan out for us, that’s fine because there’s plenty of other opportunities and if it works out for someone else in our community, we’re just as happy.
John:
Well, that so speaks to your character and, as you said, the long-term vision and not forcing something that’s not a fit and trusting that the right thing will be a fit. One of the things you wrote that I just love the analogy is An Astronaut’s Guide to Life in a Startup and, specifically, this whole concept of humility as it relates to a minus one, a zero, and a plus one, can you bring that to life for us?
Andrew:
Well, I mean, that’s something that came right out of the book that Commander Hadfield wrote that was my inspiration for that piece. You know, again, when you enter into an organization, if you’re striving too hard and too quickly to show off just how much value you can add or how smart you are, you end up distracting and detracting more than actually adding value, and a startup is an extraordinarily sensitive entity. It’s one thing to step into an organization of 55 thousand employees; it’s another thing to step into one with only 5 that’s only been around for five months.
So, absolutely, one of the things that we talk about and certainly something that we look for in the founders that we’re investing in is that idea is your best case when you enter into something new – as odd as it may sound – is to really try to be that zero, to just try to sit and listen and learn. Don’t be too quick to act. Don’t be too quick to think that you have to show off your value or your intelligence. The most important thing is that you have a neutral impact until you’re able to then add value and then reach for the opportunity to become a plus one. But, you know, as Commander Hadfield wrote, proclaiming your plus oneness at the outset virtually guarantees you’re going to perceived as a minus one regardless of the scales that you actually apply regardless of how you actually perform.
So, it is certainly a lesson that I’ve learned. I’m proud to apply it and it’s certainly something that we look out for when we’re speaking with founders.
John:
Well, it’s almost like if you say you’re cool, you’re not cool.
Andrew:
Yeah, I mean, I think, to a certain extent, that’s true. I think humility is something that’s very important. We’re often asked at GrowthX, as a fund, of course, “What do you guys look for? What do you invest in?” and I think the answer they’re searching for is, “Industries, sectors, stage, business model.” Our answer is a little different. Our answer is it’s very human-focused and our number one response is we’re looking for founders that lack hubris. I’m biased. I grew up in Cleveland, Ohio, so I have a bias to Midwest and the life lessons that you learn at an early age growing up in the Midwest. I think humility is an important thing for people to have.
John:
Well, I’m just supporting your bias because I’m from the suburbs of Chicago and I gravitate towards people from the Midwest. I think just growing up in an environment where there’s so much snow and you just help your neighbors that you don’t even know get out of the snow because you hope somebody will do that for you sets the whole tone for your mindset. Speaking of mindset, in addition to humility, you talk about attitude and focus in this great article. Can you speak a little bit about what kind of attitude does it take to keep bouncing back when things don’t go right?
Andrew:
Well, listen, I think that is. Attitude really fortifies. I think it was Elon Musk that famously said that the startup adventure is like chewing broken glass while edging yourself towards the abyss. It’s an extraordinarily uncomfortable thing. It’s literally living minute to minute, hour by hour, day by day outside of your comfort zone. It’s what makes it an extraordinarily difficult journey and when you’re going through that and you’re feeling not just the inter-month highs and lows. This isn’t just the intra-week high and lows. This is the intra-day high or lows. From one hour to the next, you could go from cloud nine to the deepest of doldrums and you may simply have been set off by an email from a venture capitalist.
What fortifies, what gets you through it is the attitude. There’s going to be a lot of challenges and a lot of miracles between startup and success. The one trait, at least, that I’ve been – that I’ve observed – when I have met with entrepreneurs across continents, the thing that is the most common among them isn’t the full stacked development skills. It’s not their high IQ. It’s just that orientation to stay calm and carry on.
John:
Yes, I call it getting off the self-esteem roller coaster where you’re going up and down.
Andrew:
Very well put. I’ll tell you what, when everything is flying high, when everything is going well, it’s easy, right? But when you’re facing the end of your runway, when you’re not sure how you’re going to pay your employees, when a deal that you were certain you were going to land and you were counting on ends up flipping the wrong direction, that’s when true character shines.
John:
Right, and in your final aspect, it’s so important, especially running a company, is how do you stay focused and not get distracted? You have some great insights on that.
Andrew:
Well, it’s a very difficult thing to do. I mean, honestly, there I’d refer to Greg McKeown and his book, Essentialism. It’s a must-read and it’s not just a must-read for anybody who’s an entrepreneur that asks me to suggest a book but anybody that I speak to who’s asking for advice on a book to read or is struggling through what so many of us struggle through nowadays in the age of information and constant attention and awareness and access is the ability to focus and prioritize and I think there’s a lot of extremely powerful messages that Greg portrays through Essentialism. For me, one of the single strongest ones is the idea of being intentional of what your priorities are, otherwise you’ll find yourself spending most of your time working through other people’s priority list.
John:
Yes, that’s so great because you’re constantly reacting and you’re not focusing on what you need to get done then you don’t make any progress, right?
Andrew:
That’s exactly right and, you know, I like to share with people in the context of this type of conversation. I would no more ask you to subjugate your priorities to mine than I would accept you asking me to subjugate mine to yours and though very few people, hopefully that you run into, are open and obvious about wanting you to subjugate yourself and your priorities to them and their priorities, the reality is that the subtleness of their behaviors or the subtleness of their reactions to your relationship, that’s the message that comes through loud and clear. When they’re impatient about an email response, when they’re needing something fast, or when they want you to reply and they push you, the reality is that you have a set of priorities and you need to communicate those clearly to the people in your community and do so with respect and if those people don’t show you the respect back and appreciate that you need to focus on your priorities and that you’re looking forward to engaging when you have that opportunity, well, that’s an invitation for someone to nurture themselves out of your community.
John:
Yes, or out of your company because sometimes you can hire people who are so needy and impatient that they don’t understand that you have other people to answer and other things to get done besides what they need done.
Andrew:
That’s absolutely right and I had this conversation often in the context of fundraising because not only do I spend all day every day with the fund and meeting with founders, but I also give a fundraising workshop and I do it as frequently as I’m invited and helping founders understand how to avoid the number one mistake that I believe a founder makes when raising investment capital and that is the mistake of being busy for making progress.
In Silicon Valley now, for a variety of reasons, it’s not difficult to get a meeting with an investor but the reality is is that investor aligned and is it an ideal investor for the story you’re telling, the company you’re trying to build, the stage you’re at now? So I find, often times, a hand will go up in the audience at the workshop and, “Well, Andrew, I appreciate what you’re saying but I’ve been working with one VC. I really want them on board. I’m really trying to help them understand the following things. They don’t seem to understand it so I need to make sure — I need to tell my story differently so I can help them understand these things or the questions that they’re asking don’t seem to be relevant but I need to make sure they understand them because I have to get them on board,” and my response is, “Listen, if you’ve taken the time and you’ve been thoughtful and intentional about defining, through logic, what the profile is of the investor that’s going to be most likely to be interested in what you’re doing now and it’s consistent with the story you’re telling and the company you’re building, you know right away that this person you’re speaking with, it’s just not a relevant person for you to be raising money for right now.” The traction effort delta. I’m getting money from them — it’s alluring and so be respectful, be polite, suggest that maybe this isn’t the right opportunity but you’d like the opportunity to engage later, and speak with the people that appreciate what you’re doing and that get what you’re doing and want to dig in from the right perspective as opposed to somebody you think is distracting.
In a roundabout way, I’m asking your question right back. The focus, I think this is how you focus. I mean, focus doesn’t happen without being thoughtful and intentional about it and whether it’s what I’m going to accomplish today in spending the first 15 minutes of my day being thoughtful about what my priorities are and then being polite and transparent with everybody else to let them know what I need to focus on today and hope that they’ll appreciate that and stay in the community or whether it’s what I’m going to accomplish in 2016. I think the same applies is the way that you stay focused is by being intentional about what your priorities are and whether it’s a post-it note on your monitor, a reminder app on your iPhone, whatever the case is, whatever it is that you need to do, keep it front and center.
John:
We’re going to tweet out a couple things you said. One, being busy is not equal to progress and the second is focus on quality not the quantity of meetings you have with investors.
Andrew:
That’s exactly right. I mean, I’m amazed at how often I am meeting with a startup and when I ask them what their fundraising strategy is, it is essentially to reach out to Google or Quora, find out what the top investors are in their geography or at their stage, to alphabetize those, to drop them into an Excel Spreadsheet or Google Sheet, to share that Google Sheet out with their friends and invite everybody to please annotate it with who they have relationships with, the strength of those relationships, and their willingness to make an introduction. But at no point have they even stopped to consider whether that fund or that person is the right person for the story they’re telling and the product they’re building. Is this the right person? Is there a reason that they will be attracted to what you’re doing, not just generally deploying capital?
So, for me, when I give my fundraising workshop or I’m speaking with entrepreneurs, I quote Albert Einstein and it’s one of the few opportunities I have to quote Einstein, when he says if he had an hour to solve the world’s problems, he would take 55 minutes to find the problem and only 5 minutes to solve it. I think that’s one of the most important quotes because it reeks of intentionalism and that’s a word that I probably overuse but it seems so useful, especially in the context of moving at the speed of startup. It’s very easy to jump into action but the reality is, by first spending a significant part of the time being intentional and defining what it is you’re trying to accomplish before you jump into action, it can actually be more productive.
John:
Well, you get a lot more rapport with someone if you show them the respect of doing a little bit of homework on who they are and what’s important to them.
Andrew:
I think that’s right.
John:
Well, before I let you go, we’re actually going to mention — put the Essentialism book in the show notes for everybody. But I do want to ask you about the Cargo Chief story about how hard it is to change people’s behavior when you’re putting a new product out.
Andrew:
Oh, Cargo Chief. Well, you know, Cargo Chief is just a fantastic, fantastic company. It’s out of the Bay Area. The CEO and co-founder Russ Jones is an outstanding man – proven track record. Essentially, Cargo Chief is the Saber of long haul trucking. Imagine if there were 10 thousand different airlines and if you wanted to go from New York to Chicago, you had to pick up the phone and call each of them and ask them if they were going to Chicago and whether they had a seat on their plane and then keep calling until you found one that was going where you wanted when you wanted and, in many ways, that’s how long haul trucking works currently and Cargo Chief is doing something extraordinary to innovate around that so that they can know the lane and capacity of every truck on the road in America.
We started working with Cargo Chief and helping them to find product market fit pretty early on and I think one of the things that we identified early is that when you’re building a two-sided marketplace when you are introducing an innovative product, you need to be careful not to drink too much of your own Kool-Aid in that the product might be innovative. It might ultimately lead to efficiencies in cost savings or higher profits but human behavior tends to trump everything else and changing human behaviors is extremely difficult and one of the things that we have found with innovative products, especially in the marketplace, it’s difficult to build up liquidity in that marketplace when you’re forcing to change your behavior from launch without having any true value to offer to or to be perceived by the customer.
So the advice that we offer and, certainly, the work that we do at GrowthX when we’re working alongside of select portfolio companies and helping them get product market fit is to figure out how to engage current behaviors and provide a significant amount of value by engaging those current behaviors and then, over time, as you introduce more value and deliver more value, then you can begin to change behaviors.
John:
So great. That’s really, really helpful. Andrew, how can people follow you on social media. Give us your Twitter and all that good stuff.
Andrew:
Oh, I appreciate that. So, personally it’s @agoldner. GrowthX is @GrowthX_SF, and growthx.com. We love having visitors, we love to hear from people. It’s a placeholder now but give us about four weeks and I think people are going to enjoy what they’re going to see. It’s going to be an opportunity for them to join the community and interact, introduce themselves, and we feel very fortunate to be in the space we’re in at the time that we’re in it to be meeting founders every day who are devoting themselves to ideas that they believe in and we think of those as opportunities and we always want to express our appreciation and we love hearing from founders. So if we can be useful, we want people to reach out.
John:
That’s great. I love the attitude, I love the intention, I love the focus, and, most of all, I love the message of humility because that requires a lot of emotional intelligence, which is what a true leader like you have.
Andrew:
Well, thank you, John. I really appreciate it. I’m honored to be on the show among your other esteemed guests. I really enjoyed this conversation. Have a wonderful day today.
John:
Thanks for listening to The Successful Pitch Podcast. If you like the show, please go to iTunes and write a review and encourage your friends to write reviews too. It really helps get the word out. You know, people say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest but when it comes time to write the check, they don’t do it. So how do you get people to say yes and then follow through? Visualize yourself on the left side of a riverbank and you have to cross the river and on the other side of the river is where the funding happens.
So, first, you make up your idea and then you make it real and then you make it recur. Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own with a lot less frustration that you will get when you hear a bunch of no’s and you don’t know why. So, if you want some help getting funded faster with less frustration, go to my free funding webinar, sellingsecretsforfunding.com/webinar and sign up and get in depth information on how you can get funded fast. Thanks.