Get VC Funding – Interview Lylan Masterman
Posted by John Livesay in podcast | 0 comments
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Episode Summary
Lylan Masterman is a Venture Capital Investor at White Star Capital and a Kauffman Fellow. Lylan shares helpful tips for selecting good board members as well as being a good board member yourself. At White Star Capital, Lylan focuses primarily on late Seed and Series A investments, but he does offer advice on how an entrepreneur can successfully navigate between Series A to Series B rounds. Listen in for more!
Get VC Funding – Interview Lylan Masterman
Hi and welcome to The Successful Pitch podcast. Today’s guest is Lylan Masterman, who is a venture capital investor at White Star Capital in New York. He has primarily focused on late seed and series A investments. He’s also a Kauffman Fellow, where he is doing academic research project on the Internet of Things. He previously worked as a software engineer in product management for 15 years. He joined Atlas division of aQuantive in 2004 where he focused on big data. He helped lead the company’s Rich Media advertising technology platform.
He’s also led product organization for 4 early stage companies. Prior to joining that he worked at Microsoft and he’s also worked at Sierra Ventures, which is a San Francisco based VC firm. We’ll be sure to ask him the differences between San Francisco and New York, as I’m sure there’s quite a few. Lylan, welcome to the show.
Thank you, John. It’s a pleasure.
Before we get into all the wonderful things you’re doing at White Star Capital now, would you take us back to your days of being a software developer at IBM and then being a program manager at Microsoft? Did you have a vision that you were eventually going to get into VC? How did you go from that to where you are now?
White Star Capital
I was a computer science geek. I went to the University of Waterloo which, for people who are not familiar with the school, it’s considered the MIT of Canada. For the people in France, it’s the Polytechnique of Canada. From there, my last internship or coop in the ’90s was at Microsoft WebTV in California. My manager at the time, we had discussed career options. There were some people down the hall who were product managers, or by Microsoft parlance, program managers.
We talked and we agreed that that could be a really good path for me because I was getting frustrated spending hours on end, trying to fix a bug in the code that was a missing semicolon. I like the interpersonal aspect while also leveraging my technology background. I went to Microsoft full time in Redmond. I was on the first team to launch a Visual Studio .NET. The first ever .NET team in C#and J#.
Then I went to a company that I’d never heard of that time actually, in Seattle, called Atlas, part of aQuantive. We doubled and tripled the business year over year. It was just fantastic. I ended up having four jobs simultaneously. I was running the Rich Media product, behavioral targeting product, user experience, and internationalization all at the same time. Because that’s what you do when a company is growing quickly. In my last year there, Microsoft acquired us for the $6 billion, which at the time was larger than all of Microsoft’s other acquisitions combined.
That’s quite an exit there.
Yeah. Skype subsequently surpassed us. What was interesting there is that Mike Galgon was one of the co-founders of aQuantive. At one point I approached Mike for a little bit of mentorship. I was considering to go do my MBA. I was already in my 30s, so it was now or never. Mike was a great mentor for me. In the discussions, we talked about the history of aQuantive. The web was different back then, knowledge about Venture Capital is different back then. Your show was not on back then.
That’s true.
Mike, he told me about the history of starting aQuantive, which was then called Avenue A. He told me about how he and his co-founders started it, but also how he raised money from venture capitalists. I didn’t even know what a venture capitalist was. Similar to how my manager at Microsoft in the ’90s urged me think about product, Mike didn’t necessarily urged me to think about venture, quite the opposite. But he did awaken my interest into it, even though he didn’t necessarily think that would be necessarily a best choice of career. Because it’s a dark side and all.
Get VC funding: I would find the one person in the firm who I thought had the most similarities to me and I would email that person.
I started thinking more and more into it. I thought, “I might just absolutely love this.” It was a perfect timing for my career because I was going already to business school. Business school’s a great time to try something new. While at business school, I decided that I was going to try venture capital. I did not know that the economy was going to tank and that I’d be looking for an internship in 2009. What I did is I networked.
For me, what that meant was I looked up every single VC firm I was aware of or could learn about online. I read the bios of every partner in principle in the firm. I would find the one person in the firm who I thought had the most similarities to me or most affinity to me, as some people put it, and I would email that person.
I’ll give you the colloquial version of the email. Of course the email was very formal, but the colloquial version email basically said, “Hey, we have this in common. We both study mathematics, we’re both Canadian, we both work in online advertising, etc. I think what you do for your career is interesting. Do you have 20 minutes? I’d like to pick your brain.”
I love that so much because I’m constantly telling the listeners, you must do your homework on the investors you are fortunate enough to pitch. What you just did was, this is also obviously how you got a job, but it’s that same … Look at the similarities because you want to make sure that who you’re even approaching for money has a lot of things in common with you, whether it’s background, experience, connections. What you just shared is gold. I love it. Keep going.
One of the investors I reached out to is a New York investor, Geoff Judge. In my conversation with him at the end of the call, he said, “Hey, Lylan. I like you. I think you have some good potential. There’s no space at my firm to take on an intern, but let me introduce you to somebody.” He introduced me to his friend, Mark Fernandez.
Mark’s admin wrote me back and said, “Mark would be happy to have a call.” I did what you’re trained to do. Lie. “I very much would appreciate a call but I happened to actually be going to the Bay Area in a few weeks. Is Mark available to meet in person?” She said, “Yes.” Then I booked my plane ticket.
I met Mark in person. Mark made it very clear to me at the beginning of the meeting, they had never hired an intern before, they had no desire too. What I subsequently learned also is that the head of Sierra Ventures, the founder of Sierra Ventures, is Peter Wendell, who actually teaches venture capital at Stanford GSB. One can reason that if Sierra were to bring on an MBA intern, it would be from someone from GSB.
[Tweet “Get VC funding: Tenacity and persuasion is required to get someone to say yes.”]
By the end of the in-person meeting, Mark seemed interested. I think my technical background combined with fact that I was already in my 30s, didn’t need to be overly coached, had an impact. He knew that he could bring me on and I could run independently. I just owe so much to Mark for giving me that break. It was an absolute joy. From there, I had a great experience at Sierra, and then I applied for the Kauffman Fellows program.
Let me just ask you to pause because there’s another gem there. The objections you got at Sierra. Most people would just say, “Oh well.” Lying is not something we ever propose people do, but you were willing to go the extra mile, put your own money and spend your own money, your own dime, to get yourself there for that interview that didn’t look promising. But you still were willing to do it.
That’s that extra mile that a lot of people, “I’m not going to do that unless I really think I have a good shot.” You still went. You get there. All you do is hear a bunch of objections about why they never do it, and if they do it, it’s going to be from somebody from someplace else, and then you are able to turn that around. That’s the kind of tenacity and persuasive selling skills or storytelling that’s required to get someone like you now to say yes.
Get VC funding: Show that you researched me and you didn’t just simply do a copy and paste.
Very much so. The idea of what you said earlier, of researching somebody, of understanding their background, understanding your commonalities if there are some. You don’t need to have some but at least show that you researched me and you didn’t just simply do a copy and paste. Maybe we’re drastically different about something and you want to talk about that. That’s fine. Just show me that you didn’t do a copy and paste and that you’re willing to do a little bit of effort just the way I continue to do.
It can even be somewhat playful. “I see you speak French, I eat French fries, does that count?”
I haven’t received that one but, yeah. At least it would show some level of research.
And some playfulness. If you want to stand up from the crowd, sometimes you have to do something a little out there like that. You’re doing well there. Tell us about the Kauffman experience.
At Kellogg, Azeus Jelani was a year ahead of me. He’d been selected for the Kauffman Fellows program. I learned a little bit about it from him. I looked up the list of Kauffman Fellows through the history of the program. There are many fellows who are part of the who’s who of venture capital. The program is a two-year program where we meet once a quarter for three or four consecutive days. In the times that we meet once a quarter, there is a fixed curriculum.
Get VC funding: The curriculum is specifically on how to make us a better technology investor.
The curriculum is specifically on how to make us a better technology investor. The curriculum doesn’t relate to term sheets and financial terms. It’s assumed that we learn that on the job or we’ve already learned it. If we don’t then we can just ask. Let me give you two of my favorite examples of the curriculum. One example was how to be a better board member. What Kauffman did is that they invited internationally recognized VC’s who are known as being exceptional board members.
Is this advisory board members or a board member of directors?
The board of directors, because generally as a venture capitalist, that’s …
You’re on the board.
Absolutely. That training was outstanding.
Do you have one or two takeaways on what makes a great or how can you become a better board of director?
Everything that happens in Kauffman is Kauffman confidential.
Sorry, okay.
No, no. What I can say, because a friend of mine actually recently published this and so he leaked the information first, if you will.
Fair enough.
In addition to having great board members come in and speak to us, we had an entrepreneur come in and speak to us. A well-recognized CEO. At one point, the question was asked of him about his board and his level of appreciation for the board. There were many of his board members who he felt did not contribute as much as they’re capable of, they were not as helpful. He thought that all those individuals had the networks, had the skills, had the intelligence, had all the attributes required to be helpful, but just had never invested enough time and effort and mental energy.
[Tweet “Get VC funding: Time, effort and mental energy.”]
When we asked him which of these people would you want in your board. Again, the answer was surprising or was disappointingly low. The key takeaways there were often about some of the simple stuff, John. Simple. Read the deck, as a board member, read the deck a week in advance. Assuming the CEO sends it to you a week in advance. If you have questions, start asking those questions in advance so that you’re not stalling the board meeting unnecessarily.
Those are the three key elements to be successful in anything, whether it’s pitching for funding, being a good board member. It’s all, like you said, simple things. Put in your time, put in the effort. Not just effort of being busy, but mental energy. I love that. That’s such a great line.
If you just do what intuitively feels like the right thing and you make your portfolio become your priority, that should naturally occur. There’s a lot of the small things too. Your behavior in the board meeting. How often are you checking your cell phone or email? Are you writing down notes for yourself about what’s been discussed and about your follow up and your action about how to be helpful. That’s important stuff.
Sure. It shows you care.
Get VC funding: It takes an attentive board member to recognize a seminal moment and to make a certain recommendation.
It does. We should care because our job is on the line, our personal income is on the line, our reputation is on the line. In the life of most companies out there, the CEO is driving the company. But there can be one or two seminal moments where an outsider, as in a board member, will observe something that the operational team, the CEO, the C-levels, the VP’s, will not observe because they’re stuck in the wheats. It takes an attentive board member to recognize a seminal moment and to make a certain recommendation. Or to even ask the intelligent question that allows the CEO or the team to reach a certain conclusion.
I love that. That’s so great, because it works both ways, doesn’t it? When you’re pitching someone like you to get funding, you better be sure your phones turned off. You better be sure you’re listening to what you say and maybe even taking a note during the pitch meeting. You show that you’re engaged.
Absolutely. It’s fine to have your laptop open the whole time if it’s clear that you’re taking notes and you’re not overly multitasking. Or if there is something urgent in your life going on and you’re expecting a certain phone call, just say so.
Get VC funding: When I know I have another meeting, instead of being the guy who is always checking the time, I set myself an alarm.
One little thing that I try to do, and I think I do more often than not, is when I do have a meeting with someone and I know I have another meeting coming up thereafter, instead of being the guy who is always checking his cellphone for the time or checking his watch, I set myself an alarm. That way there, I’m not rudely checking the time. I trust that my alarm will notify me when it’s time to start wrapping up the meeting.
Nice. That’s very helpful. You’re meeting once a quarter. Obviously it’s a huge commitment. How to learn to be a better board member. Is there anything else you can share from those confidential quarterly meetings of what you’ve learned or no?
There was another session on how to best define your personal brand and your firm’s brand. You can imagine that the VCs that we invited to speak on the branding side were different than the board member side. Some people are much better at one than the other. For us to be able to pick and choose and learn from the best at each part of the curriculum is key to Kauffman.
On the branding, it’s all the normal stuff that we talk about, just applied to venture. Branding is especially difficult for VCs who are considered generalist. A generalist is defined as a VC who invest in many different categories.
You don’t specialize. “We only do medical or we only do fintech,” then people will say, “Okay, that’s your brand.” There’s still so much branding that can be defined. I can’t wait to talk about White Star’s branding in a second. Please keep going about, I’m really curious about what they might have told you about how important it is to have your own personal brand.
[Tweet “Get VC funding: Have a personal brand that is memorable.”]
Your personal brand and your firm brand need to be very complimentary. I certainly hope so. At the same time, we are each individuals. We each have our own way of being memorable within the firm. That’s how it is, I hope, with all firms. Be it that you organize events, be it that you wear some kind of peacock, to use a term.
At the end of the day, those are great hooks into what is the core of you and your firm. It’s fine to have that little memorable thing that gives someone a reason to remember you. Then they also have to remember you for the key two things, which are being really, really nice and being incredibly helpful or useful. Because a nice person who’s not helpful is just not all that valuable.
We’re going to tweet that out. “You must be nice and helpful, not just nice.”
[Tweet “Get VC funding: Be nice and helpful.”]
It’s absolutely critical. There are some people out there who are known as the nice guys or the nice women. It’s important to be nice, but the buck does not stop there.
I also like this concept of your personal brand is defined by what can you do to be memorable. That’s another great tweet. It’s so important. Is it something you wear, a certain hairstyle, colored socks, or you’re known as the go-to guy for events or you’re known as a go-to guy for being able to help people with their pitch or whatever it is.
That stuff is a little bit kitschy but it works, as long as it’s done effectively. Then there’s just the core fundamental parts of branding. One of the firms that I admire the most in the whole wide world is Emergence Capital. Emergence is truly a top firm, a fantastic portfolio. The people I know there, I can’t speak highly enough of.
[Tweet “Get VC funding: People know you for something important.”]
At Emergence, they defined themselves early on as the firm that invests in SaaS, before people even knew what a SaaS was. They use a couple of other terms around SaaS. Because they started investing in SaaS before the term SaaS I think was even defined. They invested early on in SalesForce.com. That’s a strong form of branding. All the other stuff helps.
First, on capital. What do they invest in? There’s something nice about either by your name or just how you define yourself externally that people know you for something important and as applicable to many entrepreneurs.
Let’s talk about the branding of White Star Capital. Before the show started, you told me a little story about how they came up with that name, White Star, for the VC.
White Star fundamentally, we are a transatlantic firm. We have investments in many parts of Western Europe including London, Paris, Berlin, Stockholm, and also in North America including New York, Montreal, Toronto, Ottawa. We even have some investments in LA and San Francisco. Looking at the history of what brings both sides of the Atlantic together, White Star Cruise Line, I may not have the exact details straight here, but it’s effectively the first cruise line, commercial cruise line, to cross the Atlantic.
Perfect. That said it all, right there. Even the little logo has a white star obviously. It instantly brands you as a place that is international and cutting edge, you being the first and all that other great stuff. In your bio, I talked that you lived San Francisco as a VC and now you’re in New York as a VC. I rarely get the chance to talk to people who’ve done both coasts and they’re so different. What would you say are some of the differences about being a VC based in New York versus San Francisco?
The differences are shrinking, I must say that, because New York is becoming very much more focused on all the industries of technology. It’s no longer so strongly focused on ad tech and fintech and fashion media and so on. That being said, the competitive dynamics in the west coast historically in the last few years, even though it is slowing down a little bit now, are different. The time it takes to make an investment at the Bay Area has shrunk because of the competitive situation.
Get VC funding: The time it takes to make an investment at the Bay Area has shrunk because of the competitive situation.
My friends who are Bay Area investors, in order to make the best investments, some of them have learned to be more proactive at creating investment theses or mini theses, if you will. Identifying some sub sector of tech and researching it in advance so that when it comes time to actually speak with a certain company that’s trying to raise the amount of money that you generally invest, that you already have your market knowledge, and so you don’t need to do catch up.
The reliance that a lot of VCs have an investing in companies that’s introduced to them, that’s decreasing. It still exist, it’s still very strong. But the proactive investors who go out there and say, “Here’s what we invest in. Here’s what we’ve established in thought leadership. Here’s where we have strong knowledge.” That allows you to make investment decisions a lot more quickly.
Now, one of the pride and glories of your portfolio is the Dollar Shave Club, which is such a success story. Can you share with us where you got involved? Was it seed into series A or how did you get involved with the Dollar Shave Club?
We are investors in a company called Science. Science is also located in LA, as is Dollar Shave Club. Science is effectively a startup incubator. They call themselves a studio. That’s what really what they are, is a startup studio. One of the startup studio companies that came out of Science was Dollar Shave Club.
By being an investor in Science, the head of Science is very good at letting his investors know when there’s something good coming from his program, from his studio. That’s when we learned about Dollar Shave Club. This was before the video came out. It was very good timing.
Get VC funding: We learned about Dollar Shave Club before the video came out. It was very good timing.
A funny story with Dollar Shave Club. I was having coffee with a friend of mine in venture capital a couple of months ago. He had taken a deep look at Dollar Shave Club, but he ended up passing. His reasons were very sound at the time. No product, no traction. They say they’re creating some video that’s going to go viral. Yeah, right. Then of course, they do the video, it goes viral. All his friends who didn’t even know that he had even looked at Dollar Shave Club are now sending him the video.
It kind of like rubbing it in your face. You can’t predict what’s going to viral or not. That’s for sure.
They didn’t know that they were rubbing it in his face, as you put it. He was like, “Darn it.” Looking back at his notes, his logic was sound.
Somehow you still did get involved with that, and it’s been a huge success.
It worked out really, really well. The most recent round of financing was quite large. The number of products that the company now has, it’s a lot more than just shaving products.
I know. I’m a customer. Everything, from what to wipe your butt with. It’s hilarious branding, but it stays consistent. It’s all funny.
It is.
It’s great. Talk about disruptive. I just love it. Now, can you share with our audience, since it’s called The Successful Pitch, what you think makes a good pitch?
Ultimately, giving a good pitch, I liken it to the word “story”. I assume some other VCs have told you the same thing. It has to be a story that gets an investor excited. Now, don’t get me wrong. Some of the best stories for me are really unsexy, boring businesses. But at the end of the day, money is sexy.
That can be misinterpreted by some people. But people who understand, the crux of what I’m saying, the genesis of what I’m saying, is that you can be doing a startup on improving database, server, something. You tell your friends, your non-geek friends, about improving something with database. Or you tell your parents, if your parents are not technically inclined, about improving something on database stuff. That doesn’t sound all that glamorous in a way.
[Tweet “Get VC funding: At the end of the day, money is sexy”]
It’s not like working on a social media startup. But still, a company that’s working on massively improving a database in some form or doing some artificial intelligence product for the enterprise, those can often also be really compelling businesses. They’ll generate meaningful revenue and meaningful recurring revenue.
It’s great. Do you often have people come to you at seed and then you’re there for their second rounds? Is that a common experience?
Yeah. There are times where we are the first institutional investor. Sometimes, that’s often a seed round. There are times where there are already great seed investors and it’s time for the company to raise an A. Those seed investors, they don’t have the capital, the check size gets too big for them. We’re there for the A. Ultimately, that’s a core part of the White Star strategy, is to do the late seed and the series A, and then help our companies get to the B. That’s very important, to the help and get to that next step.
What would you say, besides growth and traction and hitting the milestones, are some of the things that are so important to help somebody get from series A to series B?
The quality of the team.
[Tweet “Get VC funding: Quality of team is more important the more money you raise.”]
Just the same as the seed. It’s amazing how that never goes away, does it?
Yeah, but you know, suddenly when you’re trying to raise your … For every round, every subsequent round, there are higher expectations on the team. One of my colleagues, Christian Hernandez, out of London, one of the founders of White Star, he blogged about this recently. How it’s important to be leading a company that is today’s company, not yesterday’s company. Today’s company, the CEO may have been also historically doing most of the finance or heading up product.
Get VC funding: As your company continues to scale, you need to bring on leaders in each of those job functions.
At some point, the company should get big enough that the CEO should not have time to do both. You need to bring in a head of finance or the head of product, etc. It’s fine to go dabble a little bit in those areas and to coach on those areas. Ultimately at the end of the day, as your company continues to scale, you need to bring on leaders in each of those job functions.
Including, I would assume, a more impressive board of advisors than you might have at the seed round, correct?
The board of advisors can be helpful. When an entrepreneur tells me that h or she has an extraordinary board of advisors, I look at the names, I look at the titles and all that. Then what matters most to me is, these are great names and all, but what have they done for you lately? How active are they? Are they people that are in the office regularly or are they people that you have a call with one hour a week? Are they people who say, “Call me up, I’ll try to help you,” and at the end of the day, they end up calling you once or twice a year.
Very different levels of involvement.
That’s critical. Because at the end of the day, the people who are working the greatest number of hours on average in the company are often, not always, but often the most influential.
[Tweet “Get VC funding: people working the most hours are often most influential.”]
Interesting. Is there a book that you would recommend founders read about life or funding or anything you just think is important for them to know as people?
I’m going to avoid a lot of the obvious books. I’ll go a little bit off the beaten path. There is one book that I still remember something from even though I read it in 2009. The book is called The Trusted Advisor. In The Trusted Advisor, they talk about the formula for being a trusted advisor. Really, it’s not about being a trusted advisor. It’s the formula for trust.
I love it.
The formula, I call it the CRIS formula, and you’ll see why. To develop trust, you must have a high level of credibility, reliability, intimacy, and then a controlled level of self-interest. CRIS. I try to break this rule. I try to find errors in this. Ultimately, it really did come down to those four. Credibility, reliability, intimacy, and just don’t have too much self-interest.
[Tweet “Get VC funding: Credibility, reliability, intimacy and controlled self-interest.”]
Wow. Control self-interest. That is a really tough one for a lot of people. It all goes back to have a little empathy for your customer and a little empathy for the investor.
Absolutely.
Nice. It’s been such a pleasure having you on, Lylan. Is there a way that people can follow you on social media? What’s your Twitter and all that good stuff?
My twitter handle is @LylanM. I don’t publish much on LinkedIn. Actually, LinkedIn, I think I’m also LyanM. I have a specific blogging strategy that I haven’t launched yet. Stay tuned. Ultimately, through the White Star network. I’ll be publishing through there probably on Medium. Who knows?
That’s great. It’s interesting because I take the podcast and transcribe that to Medium as well. We’ll be able to do that as well for you. Thanks again, it’s been a pleasure. I love this trusted advisor criteria and how important it is for the team to continue to evolve as the funding gets bigger. Those are incredible takeaways.
I appreciate it. Thanks, John.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Lylan Masterman Website
Lylan on LinkedIn
Dollar Shave Club Website
The Trusted Advisor by David Maister and Robert M. Galform
Crack The Funding Code!
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Investing Between The Lines – Interview with Laura Rittenhouse
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Laura Rittenhouse is a trust and valuation expert, as well as a financial strategist and innovation coach to fortune 500 and small cap companies. She is also the founder of Rittenhouse Rankings, Inc. and the author of Investing Between the Lines. On this episode, Laura explains the importance of candor within an organization. She believes candor is what makes a company and its team succeed against the toughest of odds.
Investing Between The Lines – Interview with Laura Rittenhouse
Hi and welcome to The Successful Pitch. Today, I’m thrilled to have as my guest, Laura Rittenhouse, who is a trust and valuation expert as well as a financial strategist in innovation codes to Fortune 500 and small cap companies. She’s the founder and CEO of Rittenhouse rankings and the author of an amazing book called Investing between the Lines, How To Make Smarter Decisions By Decoding CEO Communications. I’ve had the opportunity to talk with her before the show. You are all in for a huge treat. Laura, welcome.
Thank you, John. What a pleasure to be with you on this call.
You are not only someone who’s smart and kind and connected, but just so enthusiastic about life. I just love people like you who make the world a better place. Before we get into all the books and your connections to Warren Buffett. Who by the way everybody, Warren Buffett said that you are on the side of the angels. Laura is in fact somebody that you’re going to want to get to know and you must read her books, Investing between the Lines, Buffett Bites. Just such an expert.
How did you become who you are? Take us back a little bit before you started your company and your first early jobs that made you want to get into all this world of investing.
Coming out of college, my first job was being accepted as a Peace Corp volunteer.
I love it.
I worked in an orphanage in Turkey. That was one of the most meaningful. It was a great experience because it was a total failure. It wasn’t a total failure. It was a failure in the sense that we had signed on for a two year commitment. It ended up being one year because the revolutionary fists of a free and democratic Turkey wanted to bang on their heads. It was thought that it would be a good idea for us to leave the country at that point.
I’m going to jump around, but we’ll go back to your background. You were ranked one of the 100 Most Trustworthy People in America by Trust Across America. You’re an expert in candor and trust. You do just wrote this amazing blog, Clowns Without Borders. Now that I know that you were in the Peace Corp, it speaks more to why you have such authenticity around this.
Can you just tell us a little bit about that great blog you wrote, Clowns Without Borders, and how you’re making such a difference in the world by just putting that out there for people?
What an amazing story, John. The story gives us a window into the whole topic of candor. I blog for Forbes. What I’ve wanted to start is the series on Candor Heroes. Who are the Candor Heroes? They’re people who, and as you and I have discussed, are courageous and shining light into dark places. That mission is embodied in the very word.
Investing between the Lines by Laura Rittenhouse
The word candor comes from the Latin candere, which means to illuminate. The word candle of course comes from that same root word. When you think, what does illumination do? It shines light into dark places. Leaders who do that, very impressive and also very courageous.
The blog started out of a webinar I was listening to on a topic very much related to candor, called conversational intelligence. Wonderful work. It links brain neuroscience with the opportunity we have to use conversation in a way to create good things in the world and to avoid creating bad things.
The person who hosted this, a man named Benjamin Croft. At the very end of the blog he said, “Glad that you’re on the call today. By the way, in a few weeks, I’m going to be near the Syrian border with Clowns Without Borders. Wish me luck.” I was stunned. I thought, “Oh my heavens, Clowns Without Borders? I know about doctors, but whoever heard of clowns?” I immediately googled them. It’s a legitimate organization.
I contacted Benjamin. He wrote back to me and we’ve become friends since then. Yes indeed, this story happened after the Paris attacks. He was in Istanbul at the time. He said, “We have to do something. What can we do?”
He used the money that they earned from giving this webinar and they sponsored a tour of Clowns Without Borders. They brought clowns over from the US. They contacted clowns in Turkey. After about a week and a half of training and so on, they actually went to these refugee camps along the border.
Clowns Without Borders
There was one place they went to in Eastern Turkey where only just months before, 20 people had been massacred, on the same stage where they were performing. It was almost like an exorcism there to have this horrible experience, now turned and transformed by the clowns into a place of joy.
I felt so strongly that it was important to get this message out to the world. I’ve gotten terrific response, wonderful emails back from people who were so inspired by it.
It’s just taking a wonderful concept of lighting something in dark places and bringing it to life because it doesn’t get much darker than that. Clowns are such a opposite, you don’t think you have time for laughter and joy when you’re in survival mode. Yet, something like that can remind us all of how we can shift our focus so quickly. Like you said, “Don’t curse the darkness. Light a candle.”
Absolutely. I love what Benjamin said too when he said, “There are lots of things. We could’ve brought them stuff. Stuff can be stolen, stuff is used.” We wanted to bring something that couldn’t be stolen, that could last forever. A memory like this, how could you not love it?
That’s so wonderful. Making a difference. You were at Lehman Brothers for ten years, being involved with corporate finance. Now, you’re running Rittenhouse Rankings. You really have become an expert in being able to cut to the chase, as it were. Really cut through the clutter and get to what’s going on. Tell us about Candor Investment Fund and what you do there.
Leaving Lehman Brothers, and you asked earlier, how did I get to do the things I’m doing today. I loved being in Lehman Brothers. This was the time when Wall Street was still very much guided by the value of making sure that clients were taken care of and serving them and coming up with brilliant ideas on how they could run their businesses better.
I reached a point in my life where I felt that … I think a lot of people, if you’re lucky, you get to the point you say, “Who’s life am I living? Am I living the life I should live or the life that I truly was born to live?” I decided I wanted to take some time out, to figure out what that was.
[Tweet “If you’re lucky, you get to the point you say, who’s life am I living?”]
I spent a year travelling, talking to people. A lot of the CEOs that I had worked with on Wall Street called me and they said, “We still want to work with you. What can we do?” We began to set up investor relations programs, which at that time was a new thing to do.
In doing that, it became clear that the reputation of the CEO was a major factor in the stock price valuation. If my CEO clients could become truly effective, authentic communicators and build trust because, without candor there is no trust. Then this would be a very powerful way to enhance the valuation of their company. Trust is the foundation of a corporate culture in a business.
You’ve got people operating in all cylinders, wanting to work together. They’re aligned in a mission, aligned in a strategy and you’re going to be generating better results than your competitors who don’t have high levels of trust.
[Tweet “Without candor, there is no trust.”]
We’re going to tweet that out, “Without candor, there is no trust.” That is so insightful. What do you think caused you to be ranked as 100 Most Trustworthy People of Business? You’re clearly an expert in this. I’d love to have you define what makes people trustworthy as they have to be candor and transparent. I believe that’s one of the things you’ve talked about before.
I have a client that, when he introduces me to people he likes to say, “I’d like to meet LJ Rittenhouse. She spots bullshit faster than any …” I consider that a great tribute.
That’s great. It is. One of your key expertises is looking at the shareholder’s letter and a stock report and being able to not even have to read anything else to determine whether that’s a good investment or not, right?
In order to be effective with your investors, you have to have a very compelling story and it had to be real.
That’s exactly right, John. That is what has led to creating the first ever Candor Investment Fund. In that work I was doing with CEOs, working with them on their strategies. In order to be effective with your investors, you have to have a very compelling story and it had to be real. Again, the basis of conversation intelligence is that nothing happens outside of conversation, nothing. Conversation is the special sauce that creates things in the world.
It’s not emails, it’s not your proposals, it’s not your business plan, it’s conversation, right?
It’s conversations about the business plan. It’s emails that stimulate conversation. Again, person to person is still more powerful ultimately than digital to digital. Although, I don’t like to take anything away from digital. We’ve seen that it can have a lot of power too.
[Tweet “Person to person is still more powerful ultimately than digital to digital.”]
In my experience, moving things forward in the world, especially new things, something like candor. It’s funny. People are afraid of candor. When I say the word, they get nervous because they think that I’m judging them as to whether they’re lying or telling the truth.
I think more importantly, what people miss is the element of authenticity. Mark Twain wrote so many wonderful things about candor and truth and lying. He said, “Tell the truth and then you don’t have to remember what you said.”
There you go. It is so important when you’re pitching for an investor too, that you are authentic. Because you can’t lie. It’ll come out during due diligence and then the whole deal will fall apart.
There goes the trust. You’re asking about the shareholder letters. As I was advising my CEO clients, I read lots and lots of shareholder letters. I read my clients letters and then I read letters of their competitors or their peer companies.
Over time, I began to see patterns. That’s the first step in creating a model of reality. That’s the first step in creating a taxonomy so that you could begin to find the similarities and the differences and the ability to compare and contrast. That does make sense to you?
It does. I think it’s fascinating that you can measure something like candor into structure and then make predictions based on that.
The book, Invest between the Lines, which I never expected this. It was more than a dream come true. This book was recommended by Warren Buffett in his shareholder letter. The granddaddy, the gold standard of all shareholder letters. Warren, throughout the years, has been very supportive of our work.
Warren Buffett. The granddaddy, the gold standard of all shareholder letters. Warren, throughout the years, has been very supportive of our work.
What the analysis, when investors, portfolio managers, I’ve talked with them over the years and I’ll give them my conclusions about the value proposition, the investing value proposition in a company. It’s almost ludicrous.
They’ll say, “Yup, we understand. We agree with that. Yup, we agree with your assessment on management. Spot on. Yes, this is a strategic vulnerability they have. Yes, they’re doing great. They make great products.”
So much agreement. At the end, I’ll sit back and I’ll say, “It’s just great that we see so much of the same thing. But let me just observe something. Number one, you spend hours and hours running, spreadsheets, talking to management, talking to employees, visiting customers, talking to competitors, going to industry conferences. You’re doing all this effort.” All I did was read the shareholder letter and we came out with basically the same conclusions.
Crazy. It’s a huge amount of time and money you’re saving people if they just use your expertise. What advise would you have Laura, for someone who is a founder? Maybe they’re public, maybe they’re not.
They have to communicate in whatever form that’s going to be, whether it’s a pitch or a shareholders letter, to people so that you can get a sense of who they are. Is it the candor that we’ve had some troubles and we’ve addressed it versus trying to just gloss over things? What is it you really look for when you’re looking at those letters?
There’s something called a strategic balance. All the topics we were coding and scoring for could be organized into a seven system model.
There’s something called a strategic balance. I described this in my book. After all the years of reading these letters and creating this taxonomy, it became clear that all the topics we were coding and scoring for could be organized into a seven system model.
Those seven systems are, strategy supported by accountability systems. That’s two. Vision supported by strong leadership. The back bone of a company are the stakeholder relationships, the quality of those relationships.
In the center of a business is the commitment to capital stewardship. After all, it’s a profit making company. If you’re not focused on how smartly you’re allocating the capital, you’re probably wasting it and you won’t be meeting your investors’ expectations and you could go out of business. Capital stewardship is the key principle. Something to observe. Most importantly is candor. That’s the seventh system in this business.
As we’ve said, candor supports the quality of those stakeholder relationships and builds trust. Now, you asked how do we make assessments of companies. We have seen over time that companies that are balanced, which have high scores, high linguistic scores, content scores.
[Tweet “Candor supports the quality of those stakeholder relationships and builds trust.”]
They’re not all strategy, but they have good balance between strategy and accountability systems. Good balance between vision. It’s not over 50% vision and then very little on the other systems. Companies that are very well balanced, you think about it, that gives them a solid foundation to deal with whatever, the economy, their competitors. Whatever gets thrown at them.
That’s one factor. Another factor is the BS and the truth telling. That’s a very important factor. Those are the rankings that we publish every year. We rank order 100 companies based on how much candor, positive candor truth telling they have and how much obfuscation or BS they show in their communication.
When we correlate these top ranked companies and the bottom ranked companies, we’ve found over the past decade, that the top ranked companies outperform the bottom ranked and also outperform the market over this period.
Let’s talk about the connection between candor and vision, which is one of your other strategy systems that you talked about. I’d love to hear that connection and how important it is to balance your vision and your candor.
Let me ask you, what do you think of when you think of vision?
I think it’s important for a founder to have a vision that they can communicate to the employees about where they see the company going. What the mission statement is? What the big picture is? Then turn around and communicate that to anybody who is going to invest. Whether it’s an Angel investor or stockholder, eventually. Having that vision and if that vision needs to change, being able to communicate that with candor.
I’m so glad you asked me that question because it gives me a chance to focus on something that I’ve been spending a lot more time thinking about. You’re absolutely right. When people think of vision, they often think of what’s our mission. I think the word that kind of relates to that but I think is more powerful is, what is our purpose?
[Tweet “What is our purpose?”]
There we go.
What is our purpose? I’ve been watching this video of Richard Leider, who does a lot of focus on this. He likes to say, “What are the two most important days in your life? We can look on this as both a business and as one’s own individual life. Is it the day you’re born and the day you die? No,” he says. The two most important days are the day you’re born and then the day you learn why you were born. Purpose.
[Tweet “The day you were born and the day you learn why you were born.”]
Nice, I love that. We’re going to tweet that out, “The day you were born and the day you learn why you were born.” Great.
That is no different from a company. If you are in a company where you feel that this company is bringing something meaningful into the world, doing it with integrity, you can see what a difference it’s making, boy, that gets you up in the morning. That gets you up. It’s like Warren Buffett likes to say, “I tap dance to work every day.”
What a great image that is. Because there’s a purpose behind what he’s doing. It’s not just to make money.
It is about making money because it’s a score card to tell who’s winning, right?
Right, but if not just about that.
For him, it’s how he’s making that money that’s important.
With integrity.
It’s how can we analyze companies better than others more smartly? Here’s the really important distinction. How can we do it for the long term? What we have is the cancer in our financial system. Here’s a tweet for you. The cancer in our financial system is this focus on short termism.
[Tweet “The cancer in our financial system is this focus on short termism.”]
Yes, that is a cancer. That’s what causes turnover. That’s what causes in morale. That causes fear. When you’re just focused on short term vision of, “Oh, if you don’t hit this number for the quarter, you’re all fired.” Or, “We’re totally changing our purpose and our mission statement and shutting down factories,” as opposed to seen the big picture of what this could be.
Exactly.
What are some of the other quotes that you like from Warren Buffett? Because he has so many and I just want to hear what some of your favorites are since you’re so connected to him.
The one we shared that comes from his owner’s manual. It’s so interesting. Berkshire Hathaway is the only company that has published an owner’s manual. Just like if you’re buying an appliance and you get in the instructions here, “This is what you can expect from using this.”
He wrote the owner’s manual. If you buy the stock, this is what you can expect from us, the owners. The reason that candor is one of the principles that he follows and promises to investors is because he says at the end, “The CEO who misleads others in public will eventually mislead himself in private.”
There we go. That’s it. There’s the gem. If you lie to other people, you’re eventually going to lie to yourself.
Exactly right. Thank you for saying that because that gets us into the topic of Candor Boot Camp. I have worked with corporations on how to bring more candor into the organization. That means working with teams. What’s most successful is when I worked with multi-level teams. Anywhere from presidents down to factory workers.
It’s so powerful to get the people who don’t normally get to communicate with each other have conversations with each other.
It’s so powerful to get the people who don’t normally get to communicate with each other have conversations with each other, to stimulate that. There’s so much learning that goes on. It requires a certain humility. You’re bringing a humility to that and an openness that leads to innovation and creativity.
Candor Boot Camp, when you think about it John, this is what we’re developing now, Candor Boot Camp needs to be taught in three modules. First, and it’s what we’ve just mentioned in relation to the Buffett quote. First is intrapersonal candor. Bringing people together and helping each other suddenly confront the BS in their own lives. What am I lying to myself about? What is special? What’s my purpose? What is my purpose? If I don’t know what it is, how can I find that out?
There’s that whole piece. People come out of that session and it’s almost like I don’t want to say they’ve been to church because that has a certain connotation these days. It’s very freeing. However, once people have experienced what it means to live candidly, to go back into the workplace and work with other people that haven’t had this experience can be very hard.
The next module is to bring teams together and practice, have skills and exercise where people can practice team-based behavior.
[Tweet “You’re bringing a humility and an openness that leads to innovation and creativity.”]
Because that allows everybody be speaking the same language when you do that.
Exactly, and feel safe. The whole point about candor is that you create an environment where people feel safe to say what they really think and what they really mean.
Laura, it’s so interesting you said that because to me, that’s the highest compliment anybody can ever give me. Is, “I feel safe when I’m with you to be myself.” It’s also the highest compliment I can give anybody. “I can take my mask down, I can be a little bit vulnerable with you.”
When you said earlier about humility is one of the keys to innovation, that’s such an important takeaway for our listeners. When you’re pitching for funding for your company, you have to come across confident and humble at the same time.
In other words, you have to be coachable because that’s where the innovation comes. You can’t know everything. Nobody wants to invest in somebody who thinks they know everything. They want somebody who has a vision, with candor and humility.
Beautifully said. That gets us to the third module, which is creating the candid enterprise.
What’s a candid enterprise? Tell us about that.
We’re inventing that even as we speak.
Love it.
What it means is you start from the individual. The individual works in teams. Then there is a business, an enterprise, a corporation, whatever, that has a set of principles, a set of goals and strategies. That if these are not based on candor, then your teams are not going to be able to be supported in their efforts to candidly co-create and work together and achieve greatness.
There needs to be a design work to make sure that the enterprise itself has principles and expectations built into it. Getting back to our prior comment, that make it safe for people to experience candor on the job.
It goes back again to what you said. If you have a purpose of doing greatness, then everyone’s focused on that as opposed to necessarily trying to claim all the glory for a big idea or something.
Exactly.
Not only do you have to create a great team to get investors to want to invest in you, but then you also have to keep them working well together. It seems to me that this Candor Boot Camp is the secret sauce to keeping a team on the right track. Because you can get somebody who wants competitiveness, “I want to get promoted over you and want credit for this,” you’re way off purpose. It happens all the time.
That’s right. That’s why those three levels, intrapersonal, team-based and enterprise, are absolutely essential to be viewed together. Because if you have one and not the others, you can’t support people in this candid enterprise.
How did you come up with the title, Investing between the Lines? I love the title so much. It implies a little bit of intuition. I would love to hear how you came up with that title.
It’s a play on words. In fact, a lot of people say to me, “I love your book. Reading between the lines.” I have to say, “No, it’s Investing between the Lines.” Of course, that’s the phrase that most people are familiar with.
What does reading between the lines mean? It means that you intuit, that you’re taking signals on what’s obvious, the surface.
What does reading between the lines means, to your point, it means that you intuit, that you’re taking signals on what’s obvious, the surface. You’re getting deeper meaning from it. Similarly, investing between the lines means, “Okay, I’m reading this and I’m intuiting ideas and I’m analyzing, I’m processing information that allows me to make a better smarter investment decision.”
So great. I love it. Laura, how can people find out more about you, Investing between the Lines, the Candor Boot Camp, Twitter, all that good stuff?
First of all, you go to our website. Secondly, visit my blog, or see my articles on Forbes.
Did you have any last thoughts for our listeners about how we can all have a bigger purpose, make a bigger difference in the world from what you’re doing? Is there something that you would like to leave us with that’s inspirational?
Here’s a very, very important concept. People often say, “We need more trust in the world. We need more candor in the world.” That’s only going to happen if everybody makes a commitment to be trustworthy. If everybody makes a commitment, “Okay, I will say what I really think, what I really mean. I’ll say it in a way not to attack people, not to be a jerk, not to beat around the bush. But because I’m committed. My purpose here, I’m committed to work creatively with other people to make a positive difference.”
What’s so great about you is not only do you put that out there, but you also show people how they can do that and make money at the same time. Most people think it’s one or the other. You’re a living example of how to put something positive into the world and be strategic and still make a great return on your investments. Laura, I can’t thank you enough for being on the show today.
John, thank you for having me. Thank you for the work you’re doing.
Thanks.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Rittenhouse Rankings Website
Investing Between the Lines by Laura Rittenhouse
Clowns Without Borders Website
Crack The Funding Code!
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How To Pitch Millennial Investors with Lee Caraher
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Episode Summary
Lee Caraher is a CEO and an acclaimed communications strategist, known for her practical solutions to big problems. She started Double Forte as a new kind of communications firm, designed to work with good people and tell their stories. She is the author of Millennials & Management and discusses on today’s show how the older generation can connect with a millennial team member or be able to pitch millennial investors.
How To Pitch Millennial Investors with Lee Caraher
Today’s guest is Lee Caraher who wrote a wonderful book called Millennials and Management, The Essential Guide to Making It Work at Work. Lee has over 20 years’ experience in Silicon Valley producing integrated work teams that get a great deal done and have fun at the same time. She’s known as a communication strategist for practical solutions to the big problems. She founded Double Forte in 2002 to work with good people doing great work for good companies. Her clients span from well-loved brands and high tech startups not only in San Francisco Bay Area but Boston, New York and even Europe.
She struggled with trying to figure out how to work well with the Millennial clients, and how to pitch the Millennial investors. More than half of her own staff is under 32. She wrote this book saying, “I was fed up with the negative stereotypes that Millennials are burdened with,” that they’re determined to figure out how to create a culture where Boomers and GenXers and Millennials can all thrive together. Lee, welcome to the show.
Millennials and Management by Lee Caraher
John, it is so great to be with you. Thank you so much for having me.
I love people who have fun at work and have high energy and like to solve problems. That’s what the key to getting funded is, is what problem do you solve and is it a big enough problem that I could get a big return on my investment. That’s what our audience loves to hear. Before we get into how you started Double Forte, obviously you’re an entrepreneur yourself. Take us back to your experience in being an entrepreneur even before Double Forte.
Before Double Forte, I worked for InterPublic, a very large, multinational media firm. Before then, I was at Sega of America, the video game company. Once Sega of America was about a billion and a half dollar company, I left Sega to go to InterPublic Companies in the dotcom boom. I worked with, I can’t even count how many startups and took more than 20 public and all that stuff and got them acquired. Then the boom crashed.
In 2001, at 9/11, I decided … Really, 9/11 was a big moment in my life when I decide that I didn’t want to be in the big firm anymore. I really wanted to be able to craft what was important to me and create that workplace that meant that I was doing what I wanted to do more than flying around the country and waving my magic wand. I had 750 people when I was in that company. They were very generous to me but that really crystalized that wasn’t for me. It was for somebody else.
My intention was actually to take a whole year off. I had two young children. I went to yoga and I organized my house and I did all this stuff. I’m the chief baking officer in my house. My husband is the chief home officer. That’s what we call each other. I basically drove my husband crazy. With the color coding and the flower arranging, which people who know me are like, “You flower arrange?” I flower arrange. I say that I aspire to put the flower in the right place. I asked for books for the holidays. It was terrible. Oh my gosh. I had three glue guns. It was just destructive.
I drove my husband crazy and he’s like, “We’re not going to make it if you don’t use your time outside of the house.” I was always been entrepreneurial. I’ve always been very entrepreneurial. I started two companies for InterPublic Company. At Sega, I did all this entrepreneurial stuff as well. I was pretty risk averse.
In 2002, it was clear that I need to go back to work. I wasn’t going to last a year glue gunning everything, that’s for sure. I am the breadwinner and we had all these unexpected expenses, blah, blah, blah. I was looking for jobs. I was in the running for two very big jobs. Then my mother got sick. I live in San Francisco and my parents lived in Wisconsin. My mother got sick, she got diagnosed with 4 months to live. It was very clear that I was going to go be with her. I couldn’t take either of the jobs because I was going to go be with my mom when she needed it.
Out of necessity, I created my company. I had to bring home the bacon and I had to be in Wisconsin and my home is in San Francisco. In my kind of work, when you’re in house, you don’t really have the freedom to be wherever you want to be, even in today’s world. I decided that I really like this job that I do. I didn’t like how it gets expressed in a large publicly traded media company, but I love what we do. Figuring out what to say and who to say it to and helping people really understand their story and how to convey it because people aren’t really good at it.
When you’re living close to an idea, it’s harder and harder to explain to someone who’s not close to it. That’s when I decided to start Double Forte. Here we are 13 years later. I guess I’m now fully fledged entrepreneurial because when you’re an entrepreneur, what you start and what you are in are probably two very different things. A plan is wonderful but really the goal is more important.
Before Lee could figure out how to pitch millennial investors, she had to figure out her company plan and goals.
I like that.
Plans should be in sand but goals need to be in concrete. You react to or respond to what the conditions are. We have probably reinvented ourselves four times since we started in 2002 to respond to the economy, to what the world is doing in communication, to be competitive in the situation and to who we want to serve. Today in 2016, we’re going to be 14 in a few months. I’m not sure I thought that when I started but here we are. It’s new every day, which is what keeps me interested.
“A plan is in sand but goals should be in concrete,” that’s a great line. That’s really helpful. Let’s take a second and take a little deeper dive into what you said earlier. Since you’re such a master storyteller and crafting something, especially if it’s techy, you do it for the media but the same skills apply for crafting a pitch for investors.
[Tweet “A plan is in sand and goals should be in concrete.”]
Do you have any tips on how to take something that’s fairly complicated or techy? How do you craft that for the media so the listeners could think about how they could do that when they pitch millennial investors or otherwise?
I think the most important thing in crafting your story is to frame your story with a problem and to describe the problem and the scale of the problem quickly, upfront. That’s number one. What’s the problem, what’s the scale of that problem? Number two, what is your inspiration to solve that problem? Number three, what is your approach to solve that problem and how does it differ from what’s in the marketplace today?
If you can be very clear about this is a problem and it’s big, it’s worth so many dollars, number one. Number two, that you have a passion to solve it and why you were inspired to do it. I think investors are looking for people who are smart, who are business savvy but who are just compelled to do something, to get it done and they have a big passion for that problem they’re solving.
[Tweet “Good money supports the passion of the founder.”]
At least good money. In investment, there’s bad money and there’s good money. It’s all money. It’s all dollars. Bad money, from my perspective, and I’ve had a lot of clients get bad money, bad money is money that, just looking for that quick ROI, not really there to serve and help you get there, not a connector. Mostly just criticizing and diverting you from the goal. Diverting you from the goal and saying, “That wasn’t your plan.” I’ve never seen a plan that executed 100% ever in my career because you just can’t control everything.
The purpose of a plan is to know where you should be so you can try and get them back to the point. In my experience, good money is from people who support the passion and the brains of the founders. If you can scale the problem immediately. It should be some amount of dollars there. Number two, why are you inspired to solve this problem? Number 3, how are you going to do it? What’s the innovation? Scale comes in innovation. Scale doesn’t come necessarily in just getting more efficiency. Scale comes in innovation. Investors are looking for innovation and scale to get their ROI out in a productive way.
[Tweet “Scale comes in innovation, not efficiency.”]
That’s another great one. “Scale comes in innovation, not efficiency.” I love that. It’s all about finding the good money that supports the passion of the founder. That goes to the whole point of whether you’re creating a team of people who work with you or investors, they all need to fit into the same culture. That’s the perfect segue into your expertise around Millennials. Let’s just define for everybody exactly how old Millennials are right now.
Millennials in 2016 will turn 16 to 36. It’s 20 years. It’s a big band. I break them down into three sections. The first section is the oldest section, 28 to 29 year old to 36 year olds. These people came into the marketplace after 9/11. As adults, they’ve never been to the gate to pick up a family member or a girlfriend or a boyfriend or a friend. They’ve never done that at the airport. They’re used to giving their IDs to get into a building. Their idea of privacy and security is very different from their older colleagues.
The next group is probably 23 to 28 somewhere in there. These people came into the workplace, into the work market after 2008, 2009. This is the group that’s had the toughest time finding work commensurate with their education. There are still Millennials trying to catch up to where they thought they should be, given their education and the economy.
The third group is going to be 16 to about 20. People who are in school. High schoolers and college students. This group of people learned entirely different from that oldest group. The iPad did not exist for the oldest group. Now, schools have iPads for every kid and they’re looking at videos at night and doing their homework in the classroom during the day. They learned very differently. They’ve had very different kinds of technologies.
The whole generation absolutely benefits from being technology sevant for sure. They’re digitally native. They all benefit from that. The youngest group is probably going to benefit the most.
In knowing how to pitch millennial investors, it’s key to recognize the educational environment they grew up in.
It’s so funny because in business, really luxury high end companies do well and really low end, the Walmarts of the world. It’s that middle ground. Same thing with restaurants. Fast food or really expensive restaurants and then that middle ground always seems to struggle the most. The same thing is true with the way you broke up this Millennial age group. That that middle ground is struggling to get where they need to be. I’m fascinated. I never thought of it, the 28 to 36 year olds never have dropped people off at the airport and all that stuff because of 9/11, right?
Right.
You just get yourself there. I’m not going to wait in line to pick you up. It doesn’t mean I don’t love you. It’s just that they’re not going to consider it.
There was a time, in so many airports around the country, than you couldn’t even get to the airport unless you showed your boarding pass. Definitely have never been to the gate, have never gone through security to get to the gate so they could say goodbye at the gate or welcome someone at the gate, ever.
Those emotional hellos and goodbyes.
Lee has been a speaker at The White House on millennials in the workplace.
You told me before we started the show that you spoke at The White House about this. Tell me about that experience. How did that come about?
They called me.
Did you think it was a prank call?
I did. In fact I thought it was a prank call so I said, “I’m very happy to talk with you. I’m on my way to a meeting. If you can email me with what you need and what the dates are, I will be happy to call you back.” Sure enough, an email came through from @whitehouse.gov.
I was doing a key note in DC about Millennials in the government. I think some of their people were there. They have seen the roster and they invited me to come. It was an amazing experience. That is a dedicated group of people who are doing just … No matter where you are in the political spectrum, the people who are in The White House, working every day for us, they’re just doing tremendous work.
I gave a workshop mostly about interns. They have over 150 interns at a time. How to productively work with interns so that everybody benefits. No matter where you are, has nothing to do with The White House, interns today, a lot of companies start with interns. You try them out before you buy them. Not The White House. White House works very differently. In commercial world.
Interns often show up into the business world just ready and go in that business pitch with you. First, we need to change your wardrobe. You don’t get to go to the top sales guy Day 1. There’s just a lot of expectation, false expectation that have been set by the media and by parents and by education I think about what an internship is all about.
I’ve got lots of stories in my book about interns. Interns, they’re the lifeblood frankly of the future because Millennials who are getting out of college, they’re super smart, super smart, super capable. They have a lot of energy. They want to matter. They want to matter immediately. You have to figure out a way for interns to matter and not go in to, not drop down into your boss’s desk and say, “Hey! What’s going on?” that is normal. That happens all the time.
Protocol.
How I work with companies who use interns is just helping them set expectations before they show up and explain what you’re going to get out of being an intern in the company.
You’ve been called the Millennial Whisperer. How did you get that title?
Oh my gosh. My friend called me that and she tweeted it out. She goes, “Lee is the Millennial Whisperer.” I was like, oh my gosh, that’s a little pretentious. I can’t call myself that. All of a sudden, all my friend would call and say, “We have this Millennial. We have a problem with him. I don’t know what to do.” I would help them figure it out, like the Dog Whisperer I guess. Cesar, right?
Right. I love it.
It just picked up from there. I prefer the Millennial Champion because a lot of what I read when I was researching my book … The book came about because I failed miserably at hiring and keeping Millennials. I hired six Millennials, or my company did hire six Millennials within about eight weeks of each other and they all were gone within three months.
One person, could be their problem. Two people, could be maybe their problem. But all six at the same time? That had to be us. When I started looking into it, I didn’t know there was such a thing as a Millennial at the time. It was all negative. So negative. I just can’t be negative every day. An entrepreneur is an optimistic person. An entrepreneur believes that they have a future, that they can make things happen. I’m an optimistic person.
Frankly, if you don’t have Millennials in your business, you don’t have a future in your business. My point of view was there’s got to be a positive way to do this. We figured it out in the company and my book came out of that. More than the Whisperer, I prefer to be a champion because I want people to know that I’m not … I hope being patronizing when I talk about it.
“If you don’t have Millennials in your business, you don’t have a future in your business.” – Lee Caraher
For people who are working on building their team to talk about, when they get funded to an investor, one of the things you’re going to be doing is hiring XYZ developer and this kind of thing. As they continue to grow, as you said, they’re going to have to hire some Millennials if in fact they’re not a Millennial themselves. What tips do you have for them to make sure that the Millennials fit in to the culture and they don’t have high turnover?
There’s several most important things. One, be very crystal clear on what the values and the company is there for. What is the mission of the firm, what is the mission of the company, what are you trying to do and what values drive the company? Because that will dictate what the behavior is acceptable and what behavior is not acceptable.
In general, Millennials are looking for something that’s going to make a difference. If you can’t articulate yourself in making a difference, you will have very little chance of getting the A list, the top notch talent in the Millennial generation.
The second piece is setting expectations really early, like day 1. “Here’s how we work here.” Every company has a different schedule. We work with a lot of technology companies. We’re lucky if they show up by 10:30. Strolling in, 10:30. Other companies, 6:30 in the morning, they’re all there at the gym and then they’re all in their seats by 8:00. What is the culture of your company? When do we expect to see people? What is the work from home policy? When is all hands on deck? What do you expect?
Because you should not … I hate that word should. It’s so full of judgment. If you expect them to understand that your day is 10:30 to 8:30 and you don’t say so, if they leave at 6:00 you can’t be irritated with them because you didn’t tell them. This happens all the time. All the time. The hours thing is the biggest point of contest.
“They should know that these are our hours,” or, “They should know, I’m here at 8:00. They should know that they’re late at 9:30.” I talked about this woman in my book. I said to her, “How would she know that I’m here at 8:00?” But she’s not there at 8:00 so she doesn’t see you. How would she know? For all you know, she thinks you got there at 9:29. That one woman thought she was going to have to fire this younger woman. I said, “You can’t fire her without telling her that she’s been late and what the expectation was.” I said to her, “How long has this been going on?” “Six months.” I’m like, “Oh my goodness. Be prepared for her to be pissed off because you let her be wrong for six months and you said nothing.”
Which leads me to tip three, which is give a lot of feedback. Don’t let someone be wrong. No one wants to be wrong. Don’t let someone be wrong for a long time. Just get in there and say, “That was a good effort and let me talk with you about how we could improve it next time.”
Love it. No one wants to be wrong.
No one does.
That’s such a great line. Let’s flip the story now. Let’s pretend that we’re over 40, over 50 even and we’re about to pitch Millennial investors. The Millennials might think they know more than we do and we have more experience than they and we’re the ones pitching them for money. We might automatically think, “Oh, they’re only going to give money to other Millennials and not somebody who’s older than they are.” How do you help people shift all that negative thought when they pitch Millennial investors?
That does happen. I think sometimes it happens because if Millennials have been burned by their older colleagues or their older cohort, or if anyone’s been burned, it’s not just Millennials, then they show up with a bias. How do you break through a bias?
I think one, you have to figure out where the bias is because you don’t want to go in assuming there’s a bias because that is just irritating and disrespectful. There’s no way to get no money faster than being disrespectful. The difference is people think disrespectful means something different depending on who you are.
I think explaining the company in the context of the future. If you’re 54 and you’re talking to a 29 year old investor, your research better be about that generation and what the potential is in that generation and how you know that. Not just saying, “We can fix …” You have Millennials on your team or you have a panel of Millennials or whatever it is. If you’re not relating it to the future generation, that’s a little tough. Number one.
That’s a great tip.
Number two is, are you relevant? I say it to Boomers and Xers all the time. Xers this year will turn 51. They’re 37 to 51. Boomers are 52 to 69, something in there. We all expect we’re going to work longer than we plan to. If you’re not relevant to the Millennial generation, which is the largest generation, you are going to be co-opted out of a job pretty quickly. Even if you’re the CEO or not, or if you’re just a worker, if you’re a worker bee.
How you stay relevant? Are you reading the things that Millennials are reading? Are you using apps on your phone? The reading thing alone. Do you know what theSkimm is? Do you know these different apps are? Had you used them at all? Just being versed in that stuff. So, so important because if you’re not versed in the way Millennials communicate and how they get information, there’s going to be a big divide before you even start your pitch on what problem you’re trying to solve.
Be versed in the way that Millennials communicate.
Just that whole communications preference. If you leave somebody, God forbid, a voicemail, nobody does that anymore for the most part. Or you say, “I sent you an email.” They’re like, “I prefer text,” and you’re not really comfortable with texting. Or there’s something else they prefer. “I prefer Snapchat.” Who knows? Or, “Send me a message on Skype.” There’s so many different variations that you have to keep being flexible to whatever their language is of the day.
Of the other person.
Whatever their currency is.
Communication is currency. The person you’re trying to influence is the person who has the card. You got to move to them. They’re not going to move to you. Once you got them, then they can move to you. Particularly in the money situation. If you’re on Slack, maybe you’re company is on Slack or not. Some companies only work in Slack and they’d only use email or whatever it is.
Finding out how people like to communicate is probably the first … You got to keep track of all that stuff. You might go up and down Sand Hill road one day and go from an email guy to a text person to a phone person to a “I only meet in person” person. Keeping track of who does what is super, super important.
[Tweet “Communication is currency.”]
To pitch Millennial investors, you need to craft it accordingly. You have to have a short pitch, a long pitch, on and on and on. This has been great. So insightful, such a unique perspective on how to communicate a pitch, not just to pitch Millennial investors but to craft that great team that everybody needs to be successful and to show investors that you have diversity within your company. Not only races but also ages.
Age is so important.
So that you can have a future focus. Is there anything else you want to leave us with? Time goes so fast when someone like you with such great takeaways on frame your problem and scaling it, the inspiration, why me and of course the innovation, what makes us unique and really focusing on what is your mission and how do you make a difference at this company is going to make a big difference on whether you can attract top talents and keep them. Of course the feedback and expectations. Those are such amazing takeaways from today’s episode on how to pitch Millennial investors. Is there any last little bit of insights that comes to mind that you want to leave us with?
I think sometimes all those things sound so daunting. “Oh my gosh, I got to remember to do all this stuff.” In the end, it just boils down to very simple concepts. What are you doing, who are doing it for, what difference are you going to make? If you can just get it right down to those very short sentences on those kinds of things, then people can grab on.
The point is to be consistent and to just keep doing. You cannot over communicate today. If you’re over 50 or over 45 and you’re used to sending a memo or an email and that’s it? This is one thing. From your advertising days, we used to use the number seven. The seven times you had to see something to maybe convey your message.
Today, we use the number 35. I am not telling you to do things 35 times to the same person. You need to think about the fact that you’re in that, this is the situation. People are seeing things 35 times before they actually grab on to them. One time does not do it. You got to find multiple times to reinforce, reinforce, reinforce. Don’t worry about it. Until someone says shut up, you have not conveyed it.
Good point. With all the social media distractions and everything, to break through the clutter requires a lot frequency.
And a lot focus.
And a lot focus. There you go. The two Fs. Frequency and focus. I love it. You’ve been a terrific guest. Millennials and Management is the name of your book. How can people follow you in social media, what’s your Twitter and all that good stuff?
My Twitter is @LeeCaraher. My website, my personal website is www.leecaraher.com where you can find my company, Double Forte, and all my book and my speaking stuff.
Terrific. Thanks again, Lee.
Thanks so much John. It was great to be with you.
You too.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Lee Caraher Website
Millennials & Management by Lee Caraher
Double Forte Website
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