Delegate Or Stay Small Forever With Jim Palmer
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Jim Palmer, who is the author of several books, the most recent one being on the power of decision, and he has a special offer for people at the end of the episode, where he shows you a link that you can actually get the book for free. Be sure to listen to that. He said, “If you want to be successful, you need to be a good listener to find out what problems there are to solve out there.” And, “Under promise and over deliver to keep your customer’s happy and with you all the time. That’s how you keep customer’s sticking to you like glue.” Finally, he said, “Delegate or stay small forever.”
Listen To The Episode Here
With Jim Palmer
Welcome to the Successful Pitch. Today’s guest is Jim Palmer, who is an entrepreneur, and author, a speaker, and a coach. He’s a marketing and business building expert and in demand coach. That’s for sure. He’s the founder of the Dream Business Academy, and Dream Business Coaching and Mastermind Program. He’s the host of Dream Business TV, the hit weekly web TV show watched by thousands of entrepreneurs. He’s also the host of Stick Like Glue Radio, a weekly podcast based on Jim’s unique brand of smart marketing and business building strategies.
He’s known internationally as the newsletter guru and the creator of No Hassle Newsletters, the ultimate done for you newsletter marketing program, used by literally hundreds of clients in nine countries. Jim, welcome to the show.
John, thanks. Thanks for having me on. I love your format, I love your show. It occurs to me Stick Like Glue is a good name, because we’ll be talking a lot about stickiness today.
Yes, indeed. We certainly will. You’ve done so many interesting products, including a new book you have, which is called DECIDE – The Ultimate Success Trigger. Let’s take people back to, how did you decide you wanted to become an entrepreneur, and become known as this newsletter guru? Tell us a little bit about how you became such an expert in helping entrepreneurs?
DECIDE – The Ultimate Success Trigger
John, in 2000, I was a VP of Marketing. I’ve always work for entrepreneurial companies, and I always thought that someday I am going to have my own business. I think it was part of my DNA, so to speak. But at the time, I had four teenagers and married, mortgage, and all the different things. I thought, “Now is not probably the time to do that.” After being unemployed for fifteen months and one year into the unemployment, I was first had a battle with cancer and so I got to a place in my life, cutting a fairly long story short, John, I got to a place where I was very low, my self-esteem was not very high. I thought, “There’s nowhere to go except up.” I felt really near the bottom.
I decided in October of 2001 to start a business and I knew I’d be probably some sort of a consultant or coach or marketing guy. I also knew, that’s kind of a hard road to hoe getting started, but I’d always done newsletters. I created my first newsletters when I was 21, when I used to manage a bike shop, and everywhere I went from then forward, I was doing newsletters.
I started offering newsletter services to local companies and chambers and associations and nonprofits. That really took off. Five years later, I had a multiple six figure business, I was doing well, starting to get myself together financially again. I reached the point when I had about somewhere around 20 or 22 clients where I had no more time, I felt like I was hitting a ceiling, John, and just kind of maxing out. The question came, sometimes called the question that rocked my world.
My wife asked me, “Why don’t we go on vacation? We haven’t been on vacation in five years.” Although we could afford a vacation at that point, I couldn’t understand how I was going to take off because I was my business. Like so many small business owners, you start with your skill or your talent, you open a business and you just do everything that’s required. Even as you grow, you’re still the chief cook and bottle washer to a large degree, and that’s the trap I fell into.
Crap, that’s not the life I want to have. I decided to start it over. I got immersed in internet marketing, direct response, copywriting, really focused a lot on retention in addition to leverage. I ended up creating my second business, which is one of my core businesses today, No Hassle Newsletters, branded myself the newsletter guru, just for the whole celebrity expertise type of marketing. Off we went, and quickly fast forward again, I have, I think, five different internet businesses. I do a live event called Dream Business Academy and I have my Mastermind and Coaching Program, as you mentioned, called Dream Business Coaching.
There’s so much I want to dive in there with you, Jim. One of the things is coming up with a dream business that investors would want to invest in. It’s something that’s scalable and typically investors are looking to have somebody pitch them where they can answer these two questions. Why you? Why are you uniquely qualified to execute this? Secondly, why is now the right time? Under your expertise of what a dream business is, can you give us some descriptions of how somebody who is looking to pitch an investor could think about that?
The investors are always looking for ROI. Why would he invest in a business, in a product, in an app or whatever if he can’t make money? He could stick it in the stock market and do fairly well. I suspect that if he’s going to invest with a start-up of some sort, he’s going to probably assume doing some due diligence. Obviously there’s always risks. But he’s going to want to make some sort of ROI.
Delegate Or Stay Small: In the pitching arena, it needs to be about the investors, not about you.
I would imagine very much like you see on Shark Tank, for example, when you do your pitch, really first of all, you have to know your numbers, you have to exude extreme confidence, and you have to be able to explain what you’re going to do with the money, how quickly you’re going to grow and therefore let them be able to recoup and things like that.
I think by and large, most entrepreneurs don’t get that. They don’t get that it’s not about them. I think too many people focus on them, what their needs are, what they’re going to do, and it’s the kind of the me language if you see what I’m saying. Especially in the pitching arena. I’m preaching to the choir here, John. In the pitching arena, it needs to be about them.
Yes, I always still like to tell my clients, “The more you show empathy for the investors and the more you can show that you have empathy for your customers’ problem you’re solving, the more people are going to want to fund your start up,” which is exactly what I think you were saying there.
Yes, there’s no shortage of opportunity, there’s no shortage of ideas, there’s no shortage of people who need money to either start or to increase the pace of their start up. But there is to some degree a shortage of people willing to invest. You don’t have too many chances, you don’t have too many bites at the apple before you get your stuff together.
One of the things investors look for when they decide whether they’re going to fund a startup or not is there any traction and how much income, is there proof of concept. You have some really insightful strategy on how to create more income. Can you share that with us?
One of the things I’ve been able to do is create multiple streams of revenue, and now I teach other people how to do it. The secret sauce, so to speak, is being a really good listener and keeping your eyes open as to what problems and what challenges. Frankly, just things that people, AKA your customers and prospects, are asking for. I’ll give you a quick example of how I did that. When I started No Hassle Newsletters it was originally a program where I supplied a lot of content. A number of articles that people who already had newsletters could use in their newsletter. For lack of better description, filler content.
I started doing well. I wrote my first book called The Magic of Newsletter Marketing. I talked about newsletter design and the type of content and how newsletters should be laid out, the type of paper, all that stuff. People started to say, “I’m not big enough to necessarily have a graphics team. Who do you know can design some templates for me?” I said, “I do templates.” I curated some templates which can be quickly and easily adapted to any business. I started with four different templates. That was adding value to my program but it also increased my revenue.
You could make an argument, it wasn’t a new revenue stream, it was just growing my current one. Then someone said, “Jim, I know in your book you talked about how they should be printed and folded, etc. Can you recommend a printer?” It was right about that time, John, when I started thinking. I like to be helpful. I referred people, but I also came up with an expression. I said, “I can keep referring people or I can create a new revenue stream.”
I partnered with a buddy of mine who actually is a printer. I said, “I’m going to feed you tons and tons of jobs. Some might be small, medium, some might be pretty large. But all together, it’s going to be a nice new chunk of business for you. I’m going to get the sale, I’ll collect the money, you bill me and obviously there will be a markup for me on what I charge.” That’s what we did. My third online business was Concierge Print and Mail On Demand Service.
I kept going from there. The next thing was Article Marketing. “Jim, you got a lot of writers that are producing all your content and things like that. Can you recommend a good writer?” I said, “No, but I can create a CustomArticleGenerator.com.” That’s what I did it. It wasn’t me like thinking about, “I wonder what’s the next business I’m going to start would be?” I was actually thinking about, how can I solve my customer’s problems? Instead of just referring them somewhere, how can I make them happy by solving their problem?
[Tweet “Think about how you can solve your customer’s problems.”]
Love it. It’s really, listen to what’s your customers need, figure out a way to solve that and that can be an extension of the current revenue that you’re doing. One of the things I thought was interesting since you’re such a newsletter guru, is when founders are pitching investors, typically there is more than one investor that funds around. They’re looking for let say a million dollars, maybe they get four different people who put in $250,000. During that whole process, they need to keep these investors up to date with the progress they’re making, either with new customers or possibly some press they’re getting, whatever it is, on a regular basis. Do you think startups would be wise to create a little newsletter that would go out to investors that they’d met with as a way to stay in touch versus just an email here and there?
Delegate Or Stay Small: Email is convenient, it’s inexpensive, but it’s getting completely ineffective.
Absolutely. By the way, email it’s convenient, it’s inexpensive, but it’s getting completely ineffective because so much email is not even getting through. But that will be a whole other topic. Yes, the answer is yes. When should you start? You start when you get your first client. If it costs you $5 to run off one newsletter and mail it, that’s what you should do. The thing is, people, when they want to repurchase or when they want to refer, you have to be top of mind. If you’re not top of mind, they’re going to go with somebody who they’re thinking about seeing an ad for, maybe they’ll ask somebody else.
Several years ago, I was out doing a ton of speaking around this topic. There’s a story I would say. I refinance our home. I’m going back 20 years, but it doesn’t matter. It was Sunday, I was looking in the Sunday paper under the real estate section, looking at a big grid, mortgage rates. I called three or four different people. Only one guy actually returned my call and he was super professional and said, “Mr. Palmer, I know you’re busy, how about if I can drop the forms off at your office, I’ll pick them up when you’re done. We’ll get you approved. By the way, for settlement, you don’t have to plan on an entire day, we’ll get you in and out in about 90 minutes or less.” The bottom line is he did every single thing to make it easy for me.
I started retail when I was fifteen. I’m just a student of good customer service. I started referring him. I probably sent at least three or four people, friends and a neighbor, because it was when interest rates were really dropping. Then there was about six or eight months went by, one of my neighbors said, “Interest rates are starting to tick up. Who was that guy that you used?” I said, “Honest to God, I can’t remember his name. “What was the name of the company?” I don’t know. I said. “I can get my car and take you there but I don’t know. I’ll look it up and I’ll get back to you.”
Now, it’s a true story, but imagine if that mortgage company was sending me a two page, even something as inexpensive as a two page black and white newsletter once a month, saying, “Hey, here’s a tip.” It doesn’t even have to be mortgage, because who refinances? Most people refinance every eight years, I came to learn from him as a client. What if there was some tips? How to save heating oil in the winter, or utilities, or if it’s the summer time, here’s some things you can do with your kids to get through a long car ride. Anything. By the way, a big key, it has nothing to do with the mortgage business. It has everything to do with making it fun, interesting and informative for the reader and therefore they’ll read it, and therefore they’re remember you.
Now, it’s almost counterintuitive, especially if you’re in the tech world and you think everything is email, I don’t send anything in the mail. But everyone is zigging and you zag and you actually sent somebody a hard copy of something as opposed to just yet another PDF to open up in an email. You’re talking about an actual physical newsletter, correct?
Yes, that is correct. Now, one of the examples I’ll give, let’s say you got a thousand people on your customer list, nice round numbers. This is just for easy math. Let just say five years ago you could get a ten percent deliverability or open rate, which is pretty darn good. Nobody gets that today. Let’s say you did. That means a hundred of your customers are actually opening the newsletter. Now the flip side to that, if I was a nightly news person, I had to put a negative spin on everything I would say, “90% of your customers are not hearing from you.”
[Tweet “Customers need to hear from you to remember you.”]
By the way there is a statistic from Direct Marketing Association that says every 30 days that goes by when your customers don’t hear from you, 10% of them will forget about you.” Right then and there, it’s like people say, “Jim, I can do email and it’s free.” That’s true, but if it’s only 10% effective at best … There are two numbers you need to know so you’re not so cheap, lazy and or cheap, is that if you know the lifetime value of a customer, it can obviously, John, vary by different businesses. Let’s just say an average customer is worth five grand or let’s just even go $2,000, low side. Would you not invest a dollar a month per customer when the return is likely to be that huge? Now, that doesn’t mean every single customer is going to come back and buy and buy and refer and refer. But how many does it actually take before you completely pay for your newsletter?
Exactly. I can see where you’re going. It’s a really smart use of your time and money and it’s going to separate you from the competition.
One of my longest clients is an attorney and he’s a trusted estates attorney. He does not only some financial planning but retirement planning, all things like that. He does a newsletter. I gave him so much credit because I think he mails about 3500 or 4000 newsletters. It’s a big bill every single month. Once in a while I touch base with him and, “Thanks for being a client.” I said, “I always marvel because when I see your order coming through, it’s sizable.” He goes, “That’s nothing.” He said, “Every time I mail that newsletter, I get at least two new customers by way of referral.” I said, “No way.” He goes, “Jim, clockwork, at least two. We can’t wait to get the newsletter out because I wonder who our two new clients are going to be.” I said, “What’s an average client worth to you?” He said, “Probably $25,000 to $30,000 when they get with us and stay with us.” There’s all kinds of things going on nefariously. Doing services for wills and they do some other things. Could you imagine, that is incredible ROI.
It is. You talked about sticking around if you get a new client. That’s one of the key things investors really look for, is not only if you’re selling dog food they want to see the dogs eating the food. But they want to know that those dogs are going to come back and keep eating the food so that you’re not having to start from ground zero every month on getting new customers. What are some of your tactics for this book, Stick Like Glue, to keeping customers happy? I’m assuming a newsletter is one, but there must be others.
Delegate Or Stay Small: One of the most important things to recognize with any customer relationship is you have to successfully manage their expectations.
There are. Really one of the most important things to recognize with any customer relationship is you have to successfully manage their expectations. I think Dell Computers does a wonderful job at that. I’ve been a Dell guy for twenty years. Whenever I order, almost every two years because it starts slowing down. That’s like ten years in dog’s ears or whatever. Every two years I get a new Dell and get the most powerful one I can and it’s good for a while and it slowly slows down. Whenever you place an order with Dell, they give you an expected delivery time because they build it and they ship it to you. Most of the time it’s pretty fair. It’s going to be there in seven to ten days. I can deal with that. They’re going to build me a computer. It’s not something in a box off the shelf. Don’t you know, what I’m thinking on low side is seven days. That thing arrives in four days. Let’s say I purchased probably eight Dell Computers or ten maybe over the course of my business. I know they do it, but I still smile when that thing beats the delivery date.
It’s really all about under promise and over deliver to keep customers happy. I think that’s what we’re we going to tweet out from this episode.
[Tweet “Under promise and over deliver to keep customers happy.”]
It is. There are things that I do for my customers. When someone with the No Hassle Newsletter, when they’re a client for six months, I will take my art team and we’ll custom design a masthead for their newsletter. Now, some people will say, “I want to start out, can I get that ahead of time?” Now, I normally charge $150. What we’ll do is we’ll charged it but we refund it so we can get it to them early. Sometimes when they order the masthead, we might send him $100 in print coupons to actually save on printing and postage.
That makes people incredibly happy. Now, I’m sharing now with however many people listening to your show. That’s what we do. It is standard operating procedure. If somebody said, “Could I do this?” and we just simply said, “Yes, sure.” You’re going to do it and that’s good, but it doesn’t make it special. One of the thing you want to do is make whatever you’re going to do seem special. I know in my heart I’m going to do it anyway because I really know how much I value relationships. It’s about the power of reciprocity and things like that. I know I’m going to do it, but you always want make it seem in a way like you’re going above and beyond, going out of your way. Because people just totally dig that. Again, that increases the chance that they’ll feel the need to reciprocate.
I love it. Since you’re so busy and running so many different things, and entrepreneurs like you can really relate to the challenges, especially before they get funded or even after they get funded, they still have so much on their plate. Do you have any secrets you can share on how you get so much done?
Yes, I delegate. I think it’s chapter four in my book DECIDE, which I appreciate you mentioning. The chapter is called Delegate or Stay Small Forever.
Wow, that’s a great tweet right there. I love it.
Truth of the matter is, when you are doing work that you could hire somebody, whether it’s an employee, an actual W2 employee, or a 1099 contractor. When you yourself as the owner of the business are doing task oriented things, you are worth what you would pay somebody to do that. I’ll give you an example, let say you’re having somebody do follow up phone calls to new clients. “Hey, thanks for coming.” Or you’re doing database management, or you’re actually sending out books for people that ordered books, what happens every day. If you’re doing any of that thinking, “Nobody can do it as quick and as cheap and as fast as I can. I might as well do it myself so I don’t have to pay somebody else. I’ll keep all the money.”
[Tweet “Delegate or stay small forever.”]
If you’re doing that kind of work, you’re worth about $25 to $30 an hour because you can get somebody, you can get a virtual assistant, very good, to do that for that kind of money. Now to help illustrate this, again just for easy math. If you want to earn a million dollars a year, let’s say you’re going to work 50 hours a week and you’re going to work 50 weeks a year, you’ll take two weeks off. That means you have to earn $400 an hour. If you do that, you’ll earn a million dollars. Now, if you’re doing work that’s worth $20 or $30 an hour, you are woefully going to fall short of your target.
We only have so many hours, don’t we?
I have a team of eleven people that help run No Hassle Newsletters and also social media, the print business, the custom article business. I have somebody that schedules all my interviews like this. I have somebody that specifically takes care of all my coaching clients. All I do pretty much, and I do it three days a week, I am on the phone from 8:30 to 6:00 and I go from either interview to coaching client to interview to coaching client to prospect, but they’re all scheduled. They’re all scheduled calls, Tuesday, Wednesday and Thursday. I take off Monday and Friday. Excuse me, I don’t take off, especially in the winter, but I don’t have any interruptions. Actually, Monday and Friday are very good production days. Whether I’m writing a book or producing content or doing anything, I can just sail through it for as long as I want. I don’t have to stop and refocus.
I love what you said there, Jim, that’s the key, that’s it right there. You have scheduled your time, so you’re not constantly context switching between projects. This is my time to do interviews, this is my time to write a book and I’m not crossing the tube back and forth. That’s how you are so productive.
Delegate Or Stay Small: Anything that is a high enough priority, you will find time to do it.
I was on an interview yesterday, as you and I are doing this. The question was, “You’ve written six books in six years. How in the world did you get that done?” Anything that is a high enough priority, you will find time to do it. I wrote my first book in eighteen months, I wrote my last two in 60 days and that includes editing. I actually wrote the book in about five weeks. The way I was able to do that, because I am fairly busy, I can’t jam too much more into three days a week, for sure. But what I did is, I said, “For about five weeks, maybe six weeks total, I’m going to get up even earlier than I normally get up.” I’m usually up and going by 5:00, something like that.
When I’m in book writing mode for example, I might get up at 4:00. Sometimes I don’t even need to set an alarm just because my brain doesn’t shut off. I get up at 4:00 or 4:30 and I don’t shower, I don’t do anything, I don’t eat, I don’t look at Facebook, I don’t open email. I come into my office, it’s dead quiet in the house, obviously it’s still dark outside. I open up a Word, my file, and I start typing because I’m very focused on writing. Let’s say I’m writing at 4:30. I’ll write until about 6:30 every day. At 6:30, I’ll shower, walk the dog, get some breakfast and start my day, ready for my first calls. That’s a commitment.
Now, I always find some people, “Yes, Jim, but you don’t understand the value of sleep for your health.” I totally get that. I think five or six weeks, if you were to do that, you’ll survive. Again it’s placing a high enough priority on it. The other thing I don’t’ do much of, I do a little bit, but I don’t watch a ton of TV. When I go to events or even sometimes I’m out with family, “Have you seen The Walking Dead? Have you seen this? Do you watch this?” I have no idea what any of those show are about. It’s not that people don’t need some down time. I’ll watch ten hours of football on Sunday. But generally, I just think it’s not a good use of your time.
You’re not the first person I’ve heard say that. It’s really about your priorities and what’s important to you and what you decide. The name of your book, again, is DECIDE – The Ultimate Success Trigger. We’re going to put that in the show notes for people to be able to buy it, go to Amazon or whatever their preference is on how to consume that kind of content. Jim, is there any last thoughts you want to leave our audience with on how to run a business that makes you irresistible to investors?
Yes, I’ll do that. Right before I give that though, I appreciate you mentioning DECIDE, I’d love to give your audience a free copy, if that would be okay.
My goodness, what a gift.
We’re on launch mode. If you go to Amazon, you’ll see it’s $20 and approximately $5 shipping. If you go to www.DecidedForSuccessBook.com, that would be my website for the book. You can order it there, it will be free. We just ask you to pay $6.95 for shipping and handling. I even ship internationally. I think we just shipped a book to New Finland for $28, it’s okay. It’s $6.99. Every order goes out of here in 24 to 48 hours. This book will change your life as far as the thinking, because it’s all about your mindset.
Now, the tip I’ll give you is this, John. No matter what you do, whether you have a product or service, whether you’re an entrepreneur or an investor, whatever it is. You need to understand that you will earn significantly more revenue for who you are than what you do. The amount of money you can earn is not tied to the deliverable. It’s tied to how people perceive that you are the expert, you are the one that’s going to get it done. If that’s good, I’ll leave it there.
[Tweet “You earn more revenue for who you are, not what you do”]
That’s fantastic.
I can give you an example, if you want.
You’re the newsletter guru. You’ve been on TV doing that. I’m known as the Pitch WhispererR. I’m all about getting people to know instantly who you are and what you do and how that differentiates you.
That’s exactly right. Imagine if somebody, “I got to pitch this to a bunch of investors. I could work with a coach. I could work with a communication expert. Wait a minute, the Pitch WhispererR?” I don’t know your tag line off the top of my head but I’m sure it’s pretty cool. Therefore, “That’s the guy that actually does this for a living.” They’re going to call you.
My tag line is “How to go from invisible to investable.”
I like that. You see, that tells people exactly what the benefit is of working with you. When that happens, 90% of the heavy lifting is done.
That’s fantastic. Thank you so much, Jim. It’s been a pleasure. I can’t wait to get this out so people can really dig into your wonderful book about the power of decision. DECIDE – The Ultimate Success Trigger. Thanks, Jim.
My pleasure, John. Thanks for having me on.
My pleasure.
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When Science Meets Tech, Lives Are Saved With Jay Goth
Posted by John Livesay in podcast | 0 comments
Episode Summary
Jay Goth is a fund manager here in the Los Angeles area. He talks about how being direct and specific can get you to a yes or a no in 30 seconds rather than waiting 30 days for an answer. He shares a lot of tips on how to pitch whether for a startup or for a fund. He also shares the exciting things happening in the biotech startup industry, showing that when science meets tech, lives are saved.
Listen To The Episode Here
When Science Meets Tech, Lives Are Saved With Jay Goth
Hello and welcome to The Successful Pitch. Today’s guest is Jay Goth who is a fund manager here in the Los Angeles area. He has always been an entrepreneur and enjoy the success of building large companies. After years of being a consultant and an investment banker, an entrepreneur in resident, a nonprofit director, basically a cheerleader for the startup community, he is now forming a fund where he comes up with new discoveries that literally save lives, reduce treatment costs and eliminate unnecessary surgeries and reduce human suffering. How great is that? He’s going to be a different kind of venture capitalist he says. Instead of raising money and looking for special companies, he works with a core portfolio companies to create new investment opportunities. Jay, welcome to the show. My Goodness, I love what you’re doing.
Thanks, John. I’m having a blast.
I bet. Before you became such a maverick in saving and changing the world, can you talk us back to your early days? I know you graduated from University of Colorado in Boulder. From there, you worked for some energy companies and solar. You’ve always been at the cutting edge of technology it looks like to me.
I’ve always been an entrepreneur. I started basically right out of high school, working for myself. I never really got along with bosses too well. It was the entrepreneurial life for me. Back in the 90s, after being in insurance and real estate, trying all kinds of different things, I started raising money for other people. I was terrible at it. I made a lot of friends and zero investors and learned that sometimes you don’t want friends, you want investors.
Interesting. Let’s do a deeper dive into that. People always learn so much when people are willing to talk about what didn’t work as much as what did work. What do you mean by that? You can’t be friends with the investors or you were just too focused on the relationship and not what they needed for a return?
I wanted to be friends with everybody. Sometimes when you’re getting people to write you a check, you can’t quite be so friendly. You have to take control of the situation. Initially, I generated a lot of leads. I was one of the best lead opening people anywhere I worked. The problem was I wasn’t closing people because I wasn’t really taking control. I was just ceding control over to them and they’d always give me some excuse and I wouldn’t nail them on it. I’d just go ahead and go with the flow.
Jay, I think this is so valuable. I’ve never had anybody in over 90 episodes talk about this. I’m really happy you brought this up. So many times, people get the polite no. “Come back when you have more traction. You’re too early in the market.” Or whatever the excuse is. They never get a yes. I like to say that the longest distance sometimes is between someone’s mouths and their wallet. Give us some techniques or ideas that people can use to not just take the first no.
Science Meets Tech: “I’m looking for investors who are interested in this and are willing to write a check. Is that you?”
It’s really a basic thing, asking for the order. A lot of times, we beat around the bushes. “I’d love to see you as an investor,” or this or that. What I learned is that if I start my conversation with a prospective investor, right up front, “I’m looking for investors who are interested in this and are willing to write a check. Is that you?” I was always afraid to do that. When you start that way, then all of a sudden their guard comes down a little bit. I’m not one of the guys that’s sitting there, calling them, beating around the bush. I’m a real person asking him if he’s interested in making the investment. It’s just as easy to get to no in 30 seconds as it is to get to no in 30 days.
It saves a lot of time when you’re that specific and that direct.
Right.
I love it. Let’s take a dive into what you did at Red Tail Capital. I’m interested to know what lessons you learned from that and what types of things you’re invested in.
Red Tail Capital was an investment banking operation. I was really working on mergers and acquisitions, did some debt financing for people. Really, where I learned how to pitch and the things I learned were really when I started a company called Commonwealth Energy back in the late 90s. I was one of the founding fathers of this company. Basically what had happened is we were looking for investors for a number of other companies. Every time we raised money for one of these other companies, they would blow it. They would take the money and they wouldn’t spend it the way they should and they would be coming back to us looking for more money. Our investors weren’t happen with us and we weren’t happy with the management teams. Finally, we decided, why don’t we just raise money for ourselves? With saw an opportunity in the energy deregulation here in California in the late 90s. We built a company called Commonwealth Energy and we started raising money for ourselves. John, we raised $60 million from 1500 private investors over the course of a couple of years.
Holy cow. What was the average investment to get such a large number?
We were doing it under a special California exemption so that we were using California investors and California companies. We were able to get in people who wouldn’t qualify under the “accredited” investor status. There are some looser regulations for those. We were able to get in a lot of people. The minimum investment was $10,000 but sometimes we’d package one or two investors together if they were qualified. Like I say, we raised a lot of money, but the best thing about it was we actually built a business. We build something that became the largest unregulated supplier of electricity and natural gas in the country. Ran the revenues to up to close to half a million dollars and went public on the American Stock Exchange.
Congratulations. That’s a great exit.
Yeah. All of our investors did well. It was the greatest ride of my life, I’ll tell you. That was about four years of just nonstop excitement. There were times when we thought we were going to lose everything. There were times that we were just really riding high. Of course you get to a point in the company where the entrepreneurs leave and the professional management team comes in. That’s what happened. When I left that, I went into consulting and started doing all kinds of things. The core things I learned when I was raising capital at Commonwealth Energy have always remained in my mind. There were some very simple steps that I found that were taught to me that really can help. You get to a yes a lot faster.
Please share those steps.
The first thing you want to do when you’re talking to a potential investor is you don’t want to tell them a long elaborate story because the longer your story the more confused they get.
That’s a great line. The longer your story, the more confused they get.
[Tweet “Science Meets Tech: The longer your story when pitching, the more you confuse investors.”]
A confused investor never invests.
That’s right.
Science Meets Tech: Get three yeses and then ask for the order.
We would give them a very general idea of what we were doing. Of course you have to frame it in the right way so that it sounds really good. Then we would ask them a couple of very leading questions. Something like, “The pharmaceutical market is a multi-billion dollar industry. If you were come out with a blockbuster drug, don’t you agree that there’d be a lot of money to be made?” You’re asking them questions that they almost have to say yes to. The adage that I was taught was three yeses and ask for the order. You would ask them, “Blah, blah, blah, right?” They would go, “Yeah, that makes sense.” You would ask them something else and they go, “That makes sense.” You’d ask them the third thing and as soon as they agreed with you, you’d say, “Here’s what I suggest we do. Why don’t we go ahead and put you down for an investment?” Right away, you’re taking their temperature. Of course usually they’re going to come up with an objection. “I don’t know about that.” “Let’s just get a gauge of where you’re at, what you would feel comfortable in. If everything I tell you is borne out in writing when I send you all the information that you’re going to have to review before you make the investment decision, how much would invest at this point?”
Nice. Because you’re basically becoming copilot with them and saying, “We’re going to land the plane. We’ve agreed that if everything works, the landing gear goes down and everything in due diligence checks out, that you’re going to write a check.”
Exactly. If they said, “No, I’m not going to write a check.” I say, “No matter what I send you, you’re not going to invest, right?” If they said yes then we’re at zero and it’s a good time for us to shake hands and part friends. Go find somebody who is going to write a check.
[Tweet “Science Meets Tech: Be specific and direct when you pitch.”]
There’s nothing worse in my opinion Jay, than the maybe or let me think about it. That just drags everything out. Like you said, you can get an answer in 30 seconds instead of 30 days by being specific and direct. I love it. You are no longer pitching for money because you’re on the other side of the table now.
Wrong, you’re wrong. I still have to raise money for my fund.
You’re listening to pitches and pitching. What’s the difference between pitching for money for a fund versus pitching to get a startup funded?
There’s absolutely no difference. Whenever you’re asking somebody to write a check to somebody they don’t know, to do something, it’s always a difficult situation. It’s never easy. Whether you’re a startup, a fund, an established company. I’ve worked with public companies before. It’s always the same question. What do you do? How do you make money? How am I going to make money as an investor? When am I going to see it? Those are really the things they want to know. There are a couple of different ways you can approach investing. With the biotech, I’m always talking about the greater good, I’m talking about saving lives, speeding innovation to market and really making a difference in all the people that are suffering today that don’t need to if only we can get them the right drug at the right time in the right dose. That’s what I do. That’s what gets me all fired up about biotech. As much fun as I had at Commonwealth Energy, it’s nothing compared to the rollercoaster I’m on right now.
Let’s just quickly recap. There’s such great questions that you just gave us that you could ask when you’re pitching, whether it’s to raise money for a fund or a startup. The first one I think you said was, how do you make money? One of them is, how do I, as an investor, make money? Correct?
Right.
In other words, what’s your exit strategy? In the case of a fund, I would assume that somebody gives you money for you fund, they make money when one of the companies that you fund that they also own goes public or gets sold, correct? There’s some strategy there that eventually there’ll be an exit for them to make a big return.
In a fund, it’s a little different because we’re investing in a number of companies. It’s not just one. You’re a little more diversified so your risk may be a little lower because if one doesn’t hit maybe another one will. At the same time, we’re a very specially focused, special purpose fund. We’re not out there, I’m not looking for the next investment. I’m helping actually produce the next investment. What we’ve been able to do is put together three core companies that I call our consortium or eco system if you’re in the west coast. I know east coasters don’t like that. Basically, these companies work synergistically to develop new intellectual property assets that we can then package into a new company and take to market. I’m very involved in funding these three companies to keep them going. At the same time, I’m really more focused on these new assets that we’re developing because these are the things that are going to be game changers in the medical industry.
What do you look for when somebody comes to pitch you to fund their medical biotech startup? Are you looking more at the team and their background? Are you looking at their passion for making a difference in the world or that they have a business plan? What is your criteria?
I think if you talk to investors, and I talk to them all the time, the number one thing that we always look for is management. We want to see somebody who has successfully been able to do what they tell me they’re going to do now. When I tell somebody that I started a company and we took it public, I have a little bit of credibility compared to somebody who says, “I started a company and it never really got off the ground.” I’ve done that too, believe me. You’re not an entrepreneur if you haven’t had a couple of spectacular failures. I’ve got those. Really, the management team has to be able to execute.
[Tweet “Science Meets Tech: Show that your team can execute the idea better than anyone.”]
You have two risks in biotech I think. One is the execution risk. That’s the management team. That’s the group of people that are going to make this happen. In biotech, so many times you see a great management team of scientists but you’re missing a business element. A lot of times when I see a biotech deal and I see a bunch of doctors and scientists, I’ll say, “This is all great, but who’s going to make the business part happen?” They’re like, “We all run our own operations. We understand business.” I say, “No, this is a whole different thing.” You got to talk about marketing, scaling, operations. There’s just a lot more involved than simple research. You’re translating a product that you’ve developed in a lab to a commercial product. Management is key.
Number two in biotech is really a regulatory risk. Is the FDA going to approve this or not? One out of ten drugs that starts in the clinical trial process actually makes it to becoming a drug. It takes over ten years and a billion dollars. When you’ve got that risk, that’s a very low success rate. You really got to look at how can we maximize the opportunity and increase the possibility that you’re going to get through clinical trials. Fortunately, that’s one of the things one of my portfolio companies does, is you can actually tell in advance who will respond to a drug and who won’t. So when we go in to clinical trials, we’ll be able to tell what our efficacy rate is going to be ahead of time.
One of the things I’m really interested to hear about Jay, is not only do you give money but you roll up your sleeves and get in the trenches and help these companies be successful. That’s so important.
I think a lot of venture capitalists say that they do that. To an extent, as much as they can, they do. That’s why I kept my fund size very small. I’m not looking for a whole bunch of companies. I really want to help make this happen. I’m intricately involved in all aspects of the companies’ operations, even though I don’t hold a management position and I don’t hold any vote. We do have governance positions where we can take an oversight look at the thing. Really, the key to me is if I want my investors to be happy, I got to make their investment spectacularly successful. What can I do to make that successful?
What are you working on now that you can share that you’re excited about?
Science Meets Tech: We’re coming up with a liquid biopsy that will actually just use a little bit of your blood.
We have a diagnostic that we plan on bringing to market very soon. Right now, if you get a CAT scan of your lung because you’ve had this cough for a long time and you look at the lung and there’s a mass in there, you don’t know what it is. The first thing you do is do a needle biopsy. Go in and you actually pull a piece of that mass out to see if it’s cancerous or benign or what it is. We’re coming up with a liquid biopsy that will actually just use a little bit of your blood from your arm and be able to tell with 100% accuracy whether that mass is benign or cancerous.
Wow. Early detection is everything. To make it so non-invasive is really exciting.
That’s the key. This was actually developed by a surgeon who didn’t want to do unnecessary biopsies. This is just one of the exciting things. We’ve ran the tests on 282 patients and it came out 100% accurate. We’ve done a couple of other tests for validation and they both came back with the same high accuracy rate. We’re really looking at moving this out to the market next year.
What do you do in terms of worrying about barrier to entry from competition?
The competition in the biotech sector is just super intense. Everybody you talk to knows somebody who’s working on something. I was at a conference yesterday and I must have talked to 20 people who are working on exciting biotech things. Some of them overlapped, some of them didn’t. I just talked to a gentleman today on the phone. I thought I was pitching him for an investment. It turns out he was pitching me for an investment. He’s running a diagnostics company and I’m running a fund that funds diagnostic companies. Who knows, we may be able to do something together. There’s just so much competition in the space.
What do you do about barriers to entry? We actually have a very strong intellectual property attorney. The companies have formed a relationship with a gentleman who is one of the top biological attorneys in the country when it comes to intellectual property. You want to not only protect the IP that you’ve developed, but you also want to protect how you got to that IP, what kind of strategies you need to employ to make sure nobody else can say, “We found something that’s very similar and we can use it.” Because you want to walk it up as long as you can from a greedy capitalist standpoint, but at the same time, when you’re looking at intellectual property like this, the research and dollars that go into generating it are so huge that you’ve got to be able to get your money back.
Science Meets Tech: I think what we’re going to see is this turn towards what I call precision medicine
I think, and this is me putting on my political hat a little bit, but I think the FDA is starting to take a different approach to how they look at things. They still want to maintain safety and efficacy, which is the most important thing, making sure people don’t get hurt by a drug and making sure that people are helped by a drug. I think what we’re going to see is this turn towards what I call precision medicine. That’s generally the term. You can call it personalized medicine or individual medicine. Really, we take a little bit more time before we do a diagnosis and treatment. We look at your individual human biology. We look deep into your biology to figure out, “Just because you have diabetes doesn’t mean that your diabetes is as advanced as the next guy’s diabetes and what works for him may not work for you. Why don’t we design a treatment based around you as a specific individual?”
I think we’re going there and I think that this is going to actually end up, even though drug makers won’t be selling as much of a drug because we’d be prescribing different things, I think they can actually, because the drug is going to be working, we’re going to go to a pay for performance model eventually. If I prescriber a drug for you and it doesn’t work, that drug maker is not going to get compensated.
It also sounds like we’re really going into this whole specialized, customized dosage and everything else. It’s much like marketing is very specific and customized, that medicine is going to become the same way. I love it. What impact is artificial intelligence having on medicine and what you’re doing?
It’s a good question. One of the things that we have is a bio informatics engine. It’s not artificial intelligence per se but it’s a whole new way of looking at math. We have a laboratory in Pennsylvania that we’re building right now that will be able to generate 250 million data points off of one single tissue sample. It’s looking at human tissue at a whole different way because it’s looking not only at the genetics but at the proteins, at the lipids and all of the different things that make up that little tissue sample. If you have 250 million things that you know about this sample and you’re trying to find out what is the reason for a specific outcome, why is this a diseased tissue versus a normal tissue, or whatever it is, and you have a dozen different tissue samples, 250 million times a dozen.
These data points are interacting with each other to cause whatever the problem is that you’re looking at, that’s a huge mathematical problem. A lot of people have tried applying artificial intelligence, machine learning, support vector machines, all these advanced ways of looking at math. Nobody has really been able to hit the nail on the head. Luckily I found a company that actually has done that with a whole new way of looking at math. It’s very cool. It’s almost like evolutionary math where the data actually fights itself out to find out who the victor is at the end of the day.
I love it.
It’s really cool stuff. We’re seeing all kinds of advancements. I think it’s this marriage of science and technology that is really causing a revolution in the medical industry right now. We’re right at the beginning of it. It’s very exciting.
[Tweet “Science Meets Tech: It’s causing a revolution in the medical industry.”]
Do you think the result of medicine and technology joining forces is that people will be living longer?
Absolutely. I hear people saying we’ll all be living to 150. The people who are born in the 2020s will be living to 150. I firmly believe it. The application of technology to medicine is allowing us to learn so much more about the human body and how it really interacts and what causes aging. Aging is simply our cells being unable to reproduce themselves the way they did when we were young. Because our bodies are always replenishing itself. We’re always rebuilding our cells. We start losing the ability to rebuild them properly. Why is that? There are some incredibly intelligent people who are looking at that right now, everyone from Craig Venter at Human Longevity to Dr. Michael Rose at the University of California Irvine. You name it. There’s just so many people doing this. There’s no way we’re not going to be able to live not only longer but better lives longer.
The impact that’s going to have on population growth and crowding and people not retiring at a certain age anymore, it’s all just going to be fascinating to watch.
You’re right. It’s going to be pretty incredible. Love being in the catbird seat, being able to watch all this stuff unfold.
How to Be a Power Connector: The 5+50+100 Rule for Turning Your Business Network into Profits
I bet. Is there a book that you would recommend someone who is interested in getting in getting their startup funded or learning to be a better entrepreneur or just learning about how to live a better life that you want to give a shout out to?
I’ll say two. One is self-serving because there’s a lady out there that I’ve met recently that I really love what she has to say and the way she’s able to connect people. You know her very well. Judy Robinett. How to be a Power Connector is killer. I hear she’s coming out with a new book soon. That’s one. When it comes to pitching and doing stuff, you’ve probably had people recommend this book before. Oren Klaff has a book called Pitch Anything that is just out of this world. I’ve read that probably 50 times and I’ll probably read it another 50 because I just love his approach.
Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal
It’s all about how the brain works and framing everything. It’s really well done. I love it as well. Fantastic. Jay, how can people stay in touch with you on social media, your Twitter handle, all that good stuff?
The name of my fund is Forentis Fund. We have Facebook, Twitter, LinkedIn. Feel free to hit me up there. We post regularly whenever I see something cool in precision medicine. We’re always posting news up there and of course our own stuff. It’s a good way to stay in touch with me. I’m at Forentis.com. If anyone ever wants to get in touch with me, you can reach me right through the website.
Fantastic, Jay. You’ve been a great guest. I love your passion. I love that you have so many great tips on how to be successful and have a successful exit and making a difference all at the same time. Thanks so much for being on the show.
Thanks for having me, John. I really enjoyed it.
Me too. Bye.
Bye.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Forentis Fund
- Forentis Fund Facebook
- Forentis Fund Twitter
- Forentis Fund LinkedIn
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How To Be Successful With A New Startup Company In A New Country With No Connections With Susan Kish
Posted by John Livesay in podcast | 0 comments
Episode Summary
In today’s episode, we talk about how to be successful with a new startup company in a new country with no connections, which our guest, Susan Kish, has done. Susan Kish is working on her own startup, is working inside large companies, she’s had successful exits, and she’s raised money. She talks about not having to have an exit strategy for certain industries, the timeframe that inventors expect to make profit from their investment, and so much more. Enjoy the episode.
Listen To The Episode Here
How To Be Successful With A New Startup Company In A New Country With No Connections With Susan Kish
Hello and welcome to The Successful Pitch. Today’s guest is Susan Kish, working for her own startup, working inside large companies, she’s had successful exits, she’s raised money. She just has such a huge background starting with graduating from Harvard and going into banking and then being the director of Knowledge Services at Bloomberg, all the way up to being the CEO and founder, dealing as a business development consultant with companies focused in transition. As if that’s not enough, she recently became a Connections Science Fellow at MIT Media Lab and is currently working as a senior advisor to a handful of Fortune 100 clients in media, energy and finance. Susan, welcome.
Thank you so much, John. I’m delighted to be here.
Let’s take a deep dive. Take us back to getting out of Harvard, 1980, what are you going to do with your life, how did you go from that to where you are now?
I can assure you, it never crossed my mind that I would be an entrepreneur, that wasn’t a career path, wasn’t something folks talk about at that time. If we thought of an entrepreneur then, it was Richard Branson in Virgin. I’m not even sure he was around then. I went to work for Chase Manhattan Bank, who at that time had a fantastic training program. It was like an MBA for a first graduate. I’d major in history and science, which was a fascinating area to major in. Not really good on the what you do next category.
How To Be Successful: I really loved building businesses, that that was really what made me happy to work until whatever hours.
But a bank like Chase was extremely happy at that time to hire liberal arts graduates and basically put them through a training program that taught you all about accounting and taught you about finance and taught you about corporate finance, M&A and it was really a terrific foundation. It was wonderful at that time to being a banker. I was at Chase for five years and then at UBS for close to fifteen. In retrospect, I was what was now called an intrapreneur. We didn’t have a term at the time. I started a series of business, launched a series of products and found that I really loved building businesses, that that was really what made me happy to work until whatever hours and happy to work whatever is required.
Can you tell us the story of one of those businesses you started as an intrapreneur?
One example would be municipal finance. UBS, this is the late 90s, UBS was a AAA rated Swiss bank. At that point, when I joined them in the late 90s, ’95 I think was when I started, I joined them in ’85. This would be the early 90s when they had me starting this for finance group. UBS had decided that there was an opportunity in the domestic, meaning the US based municipal finance sector, but they didn’t know what that opportunity was. I had started a broker dealer business lending to broker dealers. The branch manager called me up one day and said, “Susan, we want you to start a municipal finance business.”
I had no idea about what this sector entailed or what our positions should be. They gave me probably a month to immerse myself in the sector. I came back and I said, “There’s a niche called credit enhancement.” That’s where we use our credit rating to take the risk and provide investors with the security of a note issue, a revenue bond, a municipal bond. He said, “That sounds great.” I came back with a three page business plan and it was all systems go. We built a small team and within probably three, four years, we were the leading provider of credit enhancement. It was a wonderful niche market and it became a very profitable business for the bank.
How wonderful. Great experience. You really had the inside scoop as to what it takes to make a startup inside a big company, not instantly but certainly sooner than later, profitable, which is always a great sign of success.
I think so too. It also taught you patience. You don’t turn that around, you don’t build a business like that in six months to a year. I consistently found that when I worked at UBS. I needed to budget myself three to five years to get a business to pivot to the right place for you to find a niche and to build from there and to build something sustainable and something with significant impact. I’ve actually seen that consistently in my career. Big businesses rarely happen in the three to six months timeframe that we’re all seduced by these days. Businesses often take that three year plus to really make sure you got traction, you’re in the right market, you’ve positioned and priced it right.
[Tweet “How To Be Successful: Big business success rarely happens in 3 to 6 month”]
I love it. We’re going to tweet that out, “Big businesses rarely happen in three to six months.” That should grab somebody’s attention. From there, you’re working at Bloomberg New Energy Finance in London. You’re traveling the world and learning all kinds of things. One of the things I see here is that you were involved with Coding for Non-Coders. Let’s talk about that since that’s a big topic for you with your TED Talk.
There were a couple of years in there when I was a classic entrepreneur with a variety of different forms and exits.
Let’s hear about that because everybody loves to hear a story about somebody who has a successful exit. Please, tell us one of those.
When I left UBS, it was to start my own company in Zurich, which was of course the triple challenge. You’re starting a new company and in a country where you don’t speak the language and where you actually don’t really know that many people and don’t know that much about building a business.
That’s the three Cs right there. A new company in a new country with no connections.
Add to that, the fourth C, which is the language, though that doesn’t start with a C. It was a fantastic learning experience. I found it exhilarating. Having been in a large corporation for all of my 20 years as a banker, being liberated to start something up in the late 90s, early 2000s, it was so much fun and so energizing, it was fantastic. We sold in the end, we sold that company to a … That company was a, in retrospect, I call it business think tank. It was focused on introducing the investors to entrepreneurs, it was focused on pulling together diverse perspectives to deal with, at that time, the very tough emerging questions about sectors. We sold that company to a firm called XING, which was the German LinkedIn. Then I joined a friend of mine, Michael Liebreich, who was building a clean energy research company called New Energy Finance. In turn, we sold that firm to Bloomberg in 2009.
Let me just ask you two questions right there, because so many people want to know, did you have an exit strategy at the very beginning or is this something that just evolved?
How To Be Successful: Given a choice of an investor who’s building to flip and an investor who wants to build a great business, I’d go for the latter every time.
For First Tuesday, I can say with complete confidence, we did not have an exit strategy. First Tuesday was part of a global network that had started in London. We were part of the first wave or expansion. In the beginning, it was simply a cocktail party that worked up and turned into a business. An exit strategy was the last thing in our mind. Over time, we had found a sustainable business model turn more into a professional services firm. This predates LinkedIn, it predates Meetup, it predates so much of the technologies that we find ubiquitous today. That firm was also really affected by the collapse of the dot-com world and then by 9/11 and the nuclear freeze that happened after that. I would say that we never had a strategy of building to sell or building to flip. In fact, in my experience, I think given a choice of an investor who’s building to flip, an investor who wants to build a great business, I’d go for the latter every time. There’s a different commitment, there’s a different frame of mind, there’s a different sense of timeframe. One is being built for generations and sustainability and one is being built for whatever is going to get you a bang for your buck.
Let me ask you Susan, because you’re the perfect person to answer this. If you as an investor are looking to find a founder who’s not interested in selling it in three to five years, which is sometimes investors want that because they go, “Oh, then I can get my money back in three to five years at a high return, but instead, I’m willing to invest in you because you’re not going to sell in three to five years.” How do the investors typically see themselves getting their money back as the company just doesn’t go public or doesn’t get bought but just keeps getting bigger and bigger? Is it that the revenues are so huge that the percent of the company that they own is giving them some kind of residuals?
That’s an extremely interesting question. It comes up a lot in the energy and industrial sector. I do a lot of work with energy venture investors. I started a conference with Emerald VC. Emerald Technologies is a VC based in Zurich. They were one of the leaders in clean energy financing in early 2000s. We still convene as investor for them fifteen years later. What you found is that, in that sector, in contrast with much of a consumer based digital technology, you cannot invest with the intent you’re going to get out in two to four years. Industrial applications, most B2B applications really don’t get enough traction or scale to make an exit within that timeframe.
Yet, investors are needed because these companies have huge amounts of value to create and they need that financing to bridge them from the idea, the garage to the incubator, to the first office and beyond. I think typically how these investors view it is that they are building it to scale for the longer term and that often means, from an investor perspective, that you’re looking for an investment where you see a strategic investor in there from a very early stage. An energy investor for example, maybe there are two or three standalone VCs who are in there but they’re really happy when an ABB comes in, they’re really happy when a GE Ventures comes in because that gives you a path to hopefully on one hand a sales force, an application, a way to really leverage the technology. It also gives you the hint of maybe there’s an exit at some point down the road.
Got it.
How To Be Successful: As an investor, you’re looking for probably more of a strategic sale than your whiz-bang unicorn based billion IPO.
It’s a different perspective because in that case, you’re typically, as an investor, you’re looking for probably more of a strategic sale than your whiz-bang unicorn based billion IPO.
If customers become investors and then sometimes investors become the people that buy you or someone on your advisory board becomes your exit strategy, it all ends up in a way that the investors get their money back, it’s just done in a different strategy. Is that accurate?
I think so. Also it doesn’t mean that you’re not going to get a multiple for your investment. It just means you probably need to be a bit more patient and you need to have a long view in mind.
Yes, especially if you’re going to wait that long then you want the multiple to be higher as well typically. Let’s dive into your TED Talk about Coding for Non-Coders and how your whole philosophy is how important it is to stay relevant. I watched it. It was fascinating and riveting. It’s always the unexpected that grabs people’s attention in any kind of a pitch or a talk. Bring that talk to life a little bit for us.
For me at Bloomberg, I was working for the CEO, managing the portfolio of innovate projects. Typically, that involved two or more divisions of the firm. I was frustrated when I had the opportunity to work with the tech folks and the engineers because they were making decisions, evaluating options and positioning initiatives in ways that I didn’t really get it. It was hard for me. You can only ask a stupid question so many times. At the same time, I was seeing that there were all these fantastic learning to code initiatives going around and yet they were all focused to, I don’t know, teenagers or first time entrepreneurs, people in their teens and 20s. Yet, what I was seeing was my generation, senior executives were needed to have that same understanding because there was really no channel with which they could do that in a gracious way that fit in their schedule.
It’s almost like you’re speaking a different language literally.
Absolutely. In my generation or when I started working, you had to understand the difference between an account receivable and account payable. You just needed to know that. Now, I think you need to know the difference between JavaScript and Java. You need to understand what’s the difference between building for an Apple, for an iPhone and Android. You need to understand what the functionality is, what the impact of your resource decision. The decision to learn to code was for me a decision of one hand of maintaining relevance, on the other to be able to have a voice in those resource and strategic conversations. It was a decision also of curiosity. It’s clear to me that the world is becoming more, not less, digital. Just saying it works or it’s a black box doesn’t make it. I don’t think that allows you to make an intelligent decision. Also, it was to me, the heroes of this age are the folks in California, the technology entrepreneurs. They’re not the heroes of Wall Street anymore. I wanted to understand what it was that made that difference, why it was that this series of entrepreneurs often who had come from an engineering and tech background, what was their magic sauce?
[Tweet “How To Be Successful: Stay curious to stay relevant.”]
We’re going to tweet out your line there, “Stay curious to stay relevant.” That’s such a great takeaway.
It is critical I think as we do it. What I found in Learning How to Code was it was on one hand breathtakingly, humiliating is not the right term, but really brought your feet to the fire because you had to figure out how to write a line of code, you had to figure out that if you put the period in the wrong place or used a comma instead of a semicolon, the whole damn thing will be screwed up. You needed to not just learn one language. At that time, I was building a website, an online magazine because I wanted to read articles from Bloomberg News in a more pleasant way. I found I had to actually master three to four languages, I had to have an aesthetics sense, I need to have design, I needed to understand problems, you had to apply logic. All these things had to come together. It was hard for me to do because I’m not an engineer by background. It was also hard for me because a classic executive schedule is broken to 15 minute or 30 minute chunks during the day. To actually do this, you need to be able to zone in for one hour to three hours.
Do you think your experience learning a new language in a new country helped you learn this new coding language?
To a certain extent, it did. On the other hand, it was illusory because when you learn a language, let’s say, you’re travelling in Italy, you can always get away with half a dozen words of those languages and pointing and sign language. You can communicate. People are forgiving. Coding is not forgiving.
That’s so true. One little thing is often, “Forget it.” I love it. Let’s dive into what you’re diving now with being the advisor to so many of these Fortune 100 companies in this media energy finance. Is that some trifecta that I’m not 100% familiar with? I know about energy and finance, but the media part is new to me.
I think what is common for all those sectors is that they are sectors at various stages of transition. To some extent, media was really a leader in that. The transformation of the web, whether it’s newspapers or print or magazines, continues. The business models and the relevance of those players is, it’s played out in everything we see. The other of course, transformation media was the telcos, the battle of the telcos and the voice over IP providers, the battle of the telcos and cable. We continue to see that. Yesterday, I got something from Verizon trying to make sure that I didn’t cut the cable. I already did cut the cable. What’s interesting between that sector and, let’s say, financial services or energy is that those are two sectors that are I think in early stages of complete transformation. For banking, you can’t read about financial services without reading about the surge of fin tech and reading about, gosh, what is it that Facebook’s thinking about? What is it that Google is thinking about?
Just the way that we all send payments now, you can use PayPal, you can use Venmo. Who needs a bank?
How To Be Successful: The change is not going to happen in a year but the world will look very different in ten years.
When was the last time you physically walked into a bank? Financial services and not just banking, banking, insurance, reinsurance, the whole panoply of those services is undergoing transformation and there’s such inertia and there’s such a huge amount of regulation that prevents these guys from being nimble. The change is not going to happen in a year but the world will look very different in ten.
Those companies have their own venture capital division now looking for startups because they can’t be as nimble as they need to be and they want to invest to stay cutting edge.
A firm like Goldman Sachs has really shown that actually you could do that very powerfully. They have put a lot of money into that area. They’ve put a lot of emphasis in some of their best talent in that area. Their technology is increasingly viewed as really an interesting view. You can see what these financial institutions are doing around the technology like blockchain to find out where they’re trying to experiment and where they are fighting to maintain. Again, I would argue their relevance in that world.
What do you do Susan, when you’re advising some of these executives in these industries that are going through such disruptive change? How do you help them through this transition? Do you work on a long term plan? Do you work on short term plans? What do you find consistent things that all of these industries in huge transition need your advice on?
It probably would go down to three things, one is the classic issue of strategy. How we position ourselves and our firms so that the words in our mission statement are more than just words. Every business plan says something about innovation. Every business plan is something about repositioning. How do you actually translate that into something that’s not window dressing? Even VCs, there were just recently some research done in these months, I think Harvard Business Review article, about VCs, corporate VCs are increasingly focused on financing return, not strategic return.
Because it’s easier to measure a financial return, it’s harder to measure a strategic return. How do you reconcile those conflicting messages? I think that’s area number one, is around strategy. Area number two is around questions of what’s perceived as thought leadership. If you are in a sector, let’s say you’re a data company and you’re trying to ensure that your product remains relevant, top of mind, ahead of the curve, something that’s going to help your own clients transform, how do you do that? There are a gazillion data companies out there. What is it that’s going to make that difference so that somebody says yes to your product?
[Tweet “How To Be Successful: What is the difference for somebody to say yes to you?”]
It’s not being seen as a commodity if you’re an architect firm for example. “Everybody could design this.” “No, we have a unique something that keeps us ahead of the curve.”
That’s right. You’ve been in sales for many years. You know it’s difficult to actually make a distinctive, to genuinely show that there is a distinctive difference and it’s not just window dressing, it’s not just a spin to it. The third area is, actually through working with them, is driving real innovation. That typically means helping them get out of their comfort zone, helping them work across their divisions and sometimes helping them work with outside players. Because sometimes all those talents, your firm itself may have a huge amount of talent but if they’re not given a safe zone, it’s tougher than to go out there and really try and experiment. It gets back to where we started, which was you don’t deliver that in three to six months.
Exactly.
You need to have that patience.
Love it. That’s so great. When you had a successful exit for your next one before you had to exit there, did you have to raise money? Did you have to pitch and raise money for the second company that had the exit?
Yes, we did. We needed to raise a second round before we did our exit. That was fascinating because at this point, New Energy Finance, this was mainly led by the founder CEO, Michael Liebreich and the senior executive team was a component of that. We had to figure out a balance between demonstrating where our potential was and demonstrating where our tangible benefit was. The tangible benefit was, “Here’s all the research that we produced, here’s the unique data sets that we’ve created, here’s our pipeline, here’s our existing clients.” That shows where the tangible benefit and the track record is. But effectively by asking for that next round, we were asking for the money to go to the next stage. We were asking people to buy into what the potential was.
Really I think the key takeaway for me is having had a successful exit under your belt, when you go to pitch for a second round of funding on your other company, there’s so much more credibility built up because you’ve already done it once successfully, the investors are much more confident in investing in you, the jockey, that you’re going to figure out how to do it again.
That’s exactly right. Also, I think there’s a difference when you have gone through that first round and you have looked how much cash you have in the bank and were your revenues are coming in and you’ve decided that you need to cinch your belt. Investors appreciate when you have gone through that kind of process. It’s remarkably easy to spend money. If you’re a well funded startup, the temptation to get lovely new offices and fancy furniture and Tuesday catered lunch is, those are marks of stature. Sometimes you need to look at it and go, “You know what, my revenue’s flattening out. This isn’t going quite the way. I’m going to have to pivot. I have to make the tough decisions.” That typically means an investor needs to know that you can make that pivot. You can say, “From now on, every penny is a hostage until released at gun point.”
That’s fantastic. What a great line. “Every penny is a hostage until released at gun point.” I love it. We’re going to tweet that out.
[Tweet “How To Be Successful: Every penny is a hostage unless released at gun point.”]
It is a flip of mindset for companies. In an environment where perhaps you’re nervous about raising that next round or perhaps you’re hearing that it takes a little bit longer to close that next round or perhaps you’re nervous about the outlook in your sector. Your ability as a CEO to make the hard decision needs to be seen as a sign of strength and a sign of resilience, not as a sign of giving up or sign of weakness.
Nice. Strength and resilience, what a great place to end the podcast. Susan, is there a book you’d like to recommend for people to read?
Actually, there is. I’ve been reading Behind the Clouds: The Untold Story of How Salesforce Grew by Marc Benioff. I have been really struck by how he talks about the power of events. For him to turn his customers into his partners or turn his audience into a community and to really harness the power of live events and live interaction to help drive his business. Somebody who has used events or been surprised over and over again at the power of events to put you on the same side of the table as your clients, he articulates it really well.
Susan, how can people keep in touch with you?
The easiest way is probably through [email protected]. I do a fair amount of work both in conferences and in speaking engagements. That’s probably the best way to find out what I’m up to.
Wonderful. Thanks so much for being on the show, Susan. You’ve been a fascinating guest.
Thank you so much, John. You’re a wonderful interviewer.
Thanks.
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