Build Your Tribe with Philip Folsom
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Episode Summary:
It is not anymore about the team, it is now about the tribe. Industry leader in team building and leadership Philip Folsom shares how to build your tribe in business and in life. Moving away from the concept of a team, a tribe has become the people who are beyond acquaintances or transactional business partners. Philip talks about how to build a legitimate relationship-based collaborative connection. He gives great insights into creating an environment where people feel safe and healthy, which ultimately increases productivity and loyalty. Making a play on words, he also puts forward the notion that to decide is connected to suicide and homicide where you are literally killing off other ideas. Philip goes deep into all of this as he lays down in metaphors on why we need better relationships in our businesses.
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Listen To The Episode Here
Build Your Tribe with Philip Folsom
My guest is Philip Folsom. He’s gone into the dark woods. What he learned there is that individuals and organizations can do and be anything if two things are in place. One, a model of success and two, the tools to reach it. He’s got game-changing tools that have improved over 500,000 people’s lives in the last many years through his work. He’s acknowledged he’s an industry leader in team building and leadership, especially the Los Angeles High Ropes Challenge courses where he has a Professional Development Adventure Program. He came from Washington State. He has a great story he’s going to share about being raised by a single mom and joining the Army at seventeen. His own hero’s journey of hitting rock bottom and coming back up and helping everyone who works with him and encounters him heal. Philip, welcome to the show.
Thank you, John. It’s a pleasure and an honor being here.
I like to ask my guests to take us back as far as they want to the story of origin. Did you always know you loved animals? Tell us about your journey. You can you can start when you joined the Army or you can start earlier than that. I want to give people a timeline of what happened to you that caused you to become an expert in this.
Part of the theme when we talk about the hero’s journey or any type of narrative related to that is that it’s only by going into the shadow that we are able to excavate our gold. That’s a vital component of my story and all of ours. I grew up in classic pre-trauma environments of some neglect and some poverty. It was pretty abject challenges when I was growing up. My dad left early. I went into the Army at seventeen. Like a lot of us, I didn’t go in out of patriotism. I went in there as a means of escaping the situation I was in. In the Army, I had some acute trauma piled on top of chronic trauma. When I got out it was brought to my attention that I had some challenges that I had to deal with. I dropped out of grad school and went on to as a contemporary Vision Quest experience where I studied meditation. I studied equestrian therapy and Outward Bound adventure programming and archery.
What I discovered about myself was that there was healing to be done. It was a choice that became available to me. One of the big themes is the choices of the function of awareness. A lot of people simply aren’t realizing that they have the opportunity to heal and expand and grow and connect and claim the title of hero of their own story. I was always a minor character. In fact, inside of me, there still is a little kid who is marginalized, unsuccessful and terrified of being revealed. I have to acknowledge him. I keep him right next to me. I don’t let him get behind me. I don’t let him blindside me and undermine me. I want to have that little rat sitting right next to me so I can keep an eye on him. I can choose to have him sit down. I get to be the full king of my kingdom now instead of the minor Prince character.
[bctt tweet=”Going beyond team building is tribe building. ” username=”John_Livesay”]
Let’s talk a little bit about the equestrian therapy and how that tie into also what you’re doing with the SPARTA Project?
Equestrian therapy is incredibly powerful. My horse guru is Cheyenne Price. She’s an amazing six-foot blonde horse guru. She has the ability to utilize her animals and tap directly into whatever secret stuff is going on. Horses are prey, which is different than us. We are predators. We have eyes in the front and we are designed for acquisition. One of the secrets of success is to be able to turn whatever it is that we want to have a shift in our life into an acquisition story instead of an avoidant story. Predators don’t like to lose anything including weight. Instead of losing weight, I want to gain fitness. All of a sudden, this reticulate activating system gets triggered and we look for opportunities to gain fitness. The horses are the opposite. They are prey animals, so they move away from energy. It’s a different dynamic. If you can learn how that communication system works, all of a sudden it allows us this tremendous desktop experience of being able to manage our emotions and connect with those things. They see right through you.
The moment you walk into the round pen, here’s a big naked 2,000-pound animal that knows exactly what’s going on with us energetically. We’ve stuffed down our animal nature to the point where we are in our head a lot of the time. Horses can’t afford to do that and they don’t have that available. They know if you’re a bully. They know if you’re an impostor. When I trump in with all of my masculinity and my boots and whatnot, they call me immediately on it like, “You’re not all that.” Come down to your real level and then we can engage with a conversation and a relationship that’s healthy. Once you’ve earned that respect and trust, now we can engage with some different forms of more robust conflict. The horses are one of the animals I use. The other one are wolves. That’s probably not been my favorite thing over the last couple of years.
In fact, your tagline is, “The time of the lone wolf is over.” If you wouldn’t mind sharing why does a lone wolf cry? How does that relate to wolves never biting each other as dogs do? That’s a fascinating insight you have.
We have to start with the reality that we are pack animals. In addition to being predators, we’re pack animal. We have things called mirror neurons, which is this synaptic, legitimate neuron-type that we have that gets triggered when we are connected with another member of our tribe. It releases serotonin. It also is the source of empathy and compassion. We need each other. We need it at a cellular level if we’re going to feel good about ourselves. Wolves are the same. Wolves are also a pack animal. They’re predators. They have mirror neurons and so do horses. What’s happened in our society is that instead of being in our kinship-based tribal systems, we have gotten successful that we’re living in these giant mega tribes. We have moved out of that sweet spot of about 50 to 75 people that we can maintain deep relationships with. We’ve shifted from being personal, connected and collaborative, vision, mission, value-sharing partners to these impersonal relationships we move around with and it’s anxiety-producing for us.
Build Your Tribe: One of the secrets of success is to be able to turn whatever it is that we want to have a shift in our life into an acquisition story instead of an avoidant story.
What happens is when we’re looking at the big drivers of wellness, health and success, it comes down to relationships. This has been studied scientifically from not only longevity but in your specific field of sales and business success. It’s all about relationships and getting those skills. The wolves, why I use them are that they are designed to hunt big game. We are also designed to hunt big game. Except for our big game now and we start looking at our lives is the game of doing something that provides meaning, purpose, service and something bigger than us. If we are going to be able to move towards those big goals in our life, we need other people. We need them beyond an acquaintance or a transactional business partner, but a legitimate relationship-based collaborative connection.
It always comes down to the team and over and over. No matter how big or small the company is, it’s how well does that team get along and respect each other.
Beyond team is a tribe. The tribe is people who are not only connected at a mission or accomplishment level and a visual level which is here’s our job. Beyond the job is what’s the why? What’s the meaning? Why does this exist? Why am I being willing to share and donate eight hours of my day to this cause? It needs to be that important. That’s a tribe.
Part of the way the wolves operate as a pack in their particular tribe is they may fight, but they don’t ever bite each other. Can you explain the difference of how dogs fight versus wolves and how that impacts us in our business life?
When we need somebody, if you have a partner that you need to be able to show up and deliver for you to sell a house or in the case of SpaceX to be able to get to Mars. You’re talking big game stuff. You need those people to do their job. You can’t afford to have them be compromised in any way, which means instead of vague, undermining, politicking gossip, competing with those people. You want to now be reciprocal and be the best cheerleader those people you can because they are an extension of yourself. When we’re talking about tribal or partnership relationships, you want that partner to be absolutely at their sharpest, their most powerful and they’re most resilient. You can’t afford to undermine them. In the case of wolves, they can’t afford to bite each other. It takes ten wolves to pull down an elk.
[bctt tweet=”Choice is a function of awareness.” username=”John_Livesay”]
If they compromise the strength of the pack by infighting, they all starve. This is a hard-wired behavior amongst the wolves because they have that taboo against biting each other. It’s a survival mechanism. All of a sudden, they have the opportunity to express and discharge conflict almost nonstop. They squabble. They talk. They snarl. They posture. They also play because once they have discharged any of that immediate conflict that they’re having, then they get to be completely clean with each other. They run off and play and engage with whatever they’re doing without having that weird, toxic, stuffed down experience that we have when we can’t express our feelings. Sigmund Freud calls that the Theory of Hydraulics, “Whatever we shove down, it’s coming out somewhere else.”
I’ve heard the term that it’s leaking out the anxiety or the stress. What you’re doing with the SPARTA Project, it’s a non-profit for veterans and emergency first responders who are dealing with post-traumatic stress. How does your work with the wolves if at all impact that? What are you doing to help people overcome that?
We are running a cohort. It’s a five-day residential free program for veterans and first responders. This is an all-female cohort starting. We’re proud to be running this program. We run off donations. If you or somebody else you know is interested in giving back to a lean, non-profit, TheSPARTAProject.org is the name of that. We use what’s called a parallel process, which means we are going through this journey along with the veterans because all the good facilitators, all the good storytellers, yourself included. You’ve come from a place where you had to go on that journey. You had to go into the woods and you discovered that the only way out is through. We have to get all the way through the story. We have to resolve.
It’s different than the medical model where there’s a smart person telling you how you should live your life or how you should refill your strategic objectives at work. Good people are co-creators. You mentioned that even when you’re talking about engaging with your clients in a co-creation process. It’s the difference between a doctor and a midwife. The doctor gets to deliver the baby. The mothers who are reading this blog, you know the doctor didn’t deliver the baby. You delivered the baby. The truth is that we’re here to facilitate the creation of whatever that project or healing is for our clients and where they are to be. Sometimes a cheerleader, sometimes its support, sometimes it’s an accountability partner.
That’s what we’re doing with the veterans and first responders are we’re going through this journey with them because we’ve been through the dark woods. We know what’s in there. We know the road that will get us out. The wolves heal each other. Here’s another shout out to a great lean nonprofit, ApexProtectionProject.org. They rescue and rehabilitate wolves and wolf dogs that have been abused, mistreated and neglected. They bring them out to their sanctuary. They slowly integrate them into their healthy pack and the pack heals the wolves. This is how we as humans are going to heal each other are that we need to build the relationships. We need to be able to discharge our shame. We need to be able to go through and feel the pain and get honest with each other. This is true at a relationship level and also at an organizational level. When you’re looking at all the big societal challenges that are happening in our industries, at some point we’re going to have to go all the way through this piece and get the healing done.
Build Your Tribe: In our own journeys, we had to go into the woods and discover that the only way out is through.
The other thing that is surprising about you because you present an extremely alpha male. The way you dress and the fact that you’re outdoors with animals and wolves and horses. You’ve got the hat. You’ve got the whole Indiana Jones vibe going on. Yet you also spent several years as a professional ballet dancer. I’m fascinated to hear that story. How did you go from being in the Army and hitting rock bottom? Ballet is traditionally something that people start very young or something that typically only wealthy people are involved with. It’s a cultural artsy niche. How did that come about?
If I have received any divine blessings, one of them is the ability to go on weird journeys that for some reason people are not allowed to do. I can thank my strange parents for that. I grew up on a commune. I grew up pretty alternative and maybe that little chunk of experience allowed me to go on some weird journeys that are different than other people. Thanks, mom, thanks dad for that. One of them was I got out of the military and I had to take a PE class in community college. I was going through all of my challenges and trying to reintegrate. I was trying to do things as far off of the military as I could. I was looking for balance. The military is highly structured. It’s hyper-masculine. Here was an opportunity to get a PE credit and do something that was much more expressive and much softer. I took a ballet class in a community college. I enjoyed it. It was fun. The teacher said, “I’d be willing to give you some free classes if you come down and do some of the partnering work.”
I was out of the Army. I was twenty years old and strong. It sounded like fun to me. I was taking classes one evening and a bunch of strangers showed up in the class that I hadn’t seen before. I was taking classes with kids. It turned out it was an audition class for the Spokane Ballet Company. There weren’t any tall guys and the prima ballerina of the Spokane Ballet at the time was Rachel Ferrelli, a big six-foot Italian lady. The ballet director said, “Have you ever wanted to be a dancer?” I said, “What does that mean?” “I’m looking for a partner for Rachel Ferrelli and all you got to do is learn how to partner well and look good in tights.” I said, “Let’s do that.” It led me down to Los Angeles. I danced at the Los Angeles Ballet and I danced with a bunch of companies down here. I was never a good dancer. I had done enough martial arts and I looked good in tights.
I know a lot of professional athletes, football players, in particular, do a lot of ballet work to be agile and things. It all fits into your work because you’re working with companies like Sony, DreamWorks and Apple helping them as a high-performance tribe culture coach. Can you tell us what that looks like? Who would hire you? What problem are you solving typically? Give us an example or story of an outcome of someone after working with you.
Stepping back from that, I spent many years doing team building at a local company in Los Angeles. What I was noticing is that it wasn’t changing anybody. I was seeing the same clients that would show up year after year. They were having the same challenges. I realized something that our industry is doing is not creating sustainable results. I’m in my 50s right now. We start looking at legacy. You start thinking about the purpose. What impact did I leave with this? Did I move the conversation forward? I would define that as the transition from passion, which is kindling, it burned hot, fast and easy. It’s me-centric and then transitioning from that passion into purpose, which is like a big log. It’s something that carries a tremendous amount of energy, but it’s hard to get it lit. We get to into this point in our career where we’ve got a lot of skills and we’ve done our 10,000 hours to achieve mastery. We start looking at those bigger purpose conversations of, “What I want to do in the world?” Usually, it’s not about us anymore. It’s about what’s the service component. I eventually started realizing that I had to do a couple of things in my career if I was going to achieve organizational transformation with my clients.
[bctt tweet=”It’s only by going into the shadow that we are able to excavate our gold.” username=”John_Livesay”]
I needed to start understanding strategy. I also needed to start understanding the culture of the organization because it’s easy to change people short-term. If we go out and do something together, there’s going to be an immediate boost in morale, trust and some other fast-burn drivers of energy. We immediately are going to revert back to our baseline of behavior and that baseline is culture. We need to be able to go into a culture and we need to fix that. What is culture? What are the components of it? That was when I got to start growing in my true passion, which beyond healing people is understanding humanity. I studied Paleoanthropology at UCLA. How does our species work? It turns out that journey is a perfect dovetail to upgrading the culture of organizations because the reality is we’re no longer kinship-based animals. We are career-based. Our work teams are the new tribes. That is the anthropological reality.
I’ve studied with the Maasai in Africa and all over the world. When we go in to study these people, there are certain formats about looking at how a culture works. That’s the same thing that business consultants are doing. They’re going in and going, “How was your alignment with vision? Does everybody understand exactly what the mission parameters are? Your strategy? Your tactics? How is morale? How are your values operating?” This is straight anthropology work, but it also allows people to co-create and participate in their culture. This is that time where we get to now have access to all of this tremendous information of humanity and be able to create the cultures that we want to have at work, which is hopefully they’re going to be healthy. More importantly, they’re going to be high-performing. That means we’re going to be able to be competitive, innovative, resilient and have high retention. These are all things that from a business standpoint are the primary profit drivers of the business. Culture does that for them. I work at SpaceX. I do a lot of work with Red Bull. I work at Universal and other industries.
What you’re helping them do is create a safe environment where people can express concerns or confusion or even new ideas without being heavily ridiculed or criticized. That healthy feedback loop from working with you on adjusting their culture allows companies to attract and retain top employees and to even be more productive with those that are there.
One of the unique things that myself and some other people are doing is that you cannot decrease safety. It doesn’t work. Creating safe spaces at universities where there’s no hate talking, it’s not ever going to work. At some point, you have to shape an environment where people are either resilient enough to handle pushback or they’re treating each other as extensions of themselves. At which point they can give feedback, but they’re not biting each other. You cannot write trust and safety up on the break room wall and go, “Now we have a safe environment.” It doesn’t change anything. You have to shape the environment so that it’s changing behavior.
You do that by taking people out into nature and doing all these group activities together that build trust and bonds as opposed to being an intellectual concept.
Build Your Tribe: When we make a decision, we’re killing other ideas.
Those big challenging activities, which are my adventure Vision Quest stuff. I do ropes courses and other big epic things. Those are not creating character, they are only revealing it. The creation process happens during reflection and process. This is one of the things that we don’t do well and most organizations don’t because we are over-programmed and we don’t have time to reflect. A lot of the time we are simply jumping right into, “What’s happening in Q2? We need to get those numbers.” There needs to be that moment of breath where we go, “Are we in alignment? Are we creating the outcomes and the experience that we want to have?” This is something that is on a micro level with us and also on the macro level with big industries is there should be at least some breath in between Q1 and Q2 where you go, “Are we in alignment with our vision and values? Are those things correct?”
When we make a decision, we’re killing other ideas. In the business world, if you’re in sales, in particular, you’re asking people to buy what you’re offering. Therefore, you have to have some empathy that if they buy what you’re selling, they’re going to be making some changes and other options or ideas are therefore being killed off. Can you elaborate on that? It also helps people with addictions, which was mind-boggling to me with food. Anything you can talk about around that would be interesting?
When we look at the word decide, it contains the same entomological root as a homicide, suicide. It means in Latin to cut or kill. When I decide something, I’m killing off my other options. In economics, that will be your opportunity cost. If I want to find out how I’m making decisions, I need to pop the hood and take a look at what are my priorities. Even the word ‘priorities’ is a new term. Usually, that’s only a priority. It’s singular. What is the one priority of all those hundreds of things that I want to experience more of in my life? What’s the one that bubbled to the top and I made that decision and killed off all the rest of those things? That one top priority would be my highest operating value. When we’re looking at either individual or organizational decision making, change management. If we want to ever get in the driver’s seat of being able to make intentional directional courses as we move through our world, I need to at some point take a look at what are my values? Those values are driving the decisions of the things that I’m killing off. Organizational values are not simply a fun thing to put on your website in the break room. If they’re correctly implemented, then they are guiding the navigation of your organization.
Philip, you’ve been a great guest. Your website is PhilipFolsom.com. They can sign up for a newsletter. What’s the best place to follow you on social media might be?
I’m Philip Folsom at LinkedIn, Instagram and Facebook. That’s my website as well. Please jump on my newsletter because there is more of this strange esoteric but hopefully relevant and powerful information coming. In addition, there’s a monthly open program for people who want to spend a day with the wolves and me. There are cool change agents and seekers. I encourage you to stay involved. Keep changing the world and that starts with ourselves. It’s been an absolute honor, John.
[bctt tweet=”People don’t realize that they have the opportunity to heal, expand, grow, connect, and claim the title of the hero of their own story.” username=”John_Livesay”]
Thanks, Philip. It’s been insightful, entertaining and inspiring. I can’t wait to keep up with new ways you are impacting the world with animals and tribes.
Links Mentioned:
- Philip Folsom
- Outward Bound
- SPARTA Project
- SpaceXApexProtectionProject.org
- LinkedIn – Philip Folsom
- Instagram – Philip Folsom
- Facebook – Philip Folsom
- www.wolftribe.life
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CrowdSmart – Interview with Fred Campbell
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Fred Campbell is a serial entrepreneur, and knows a thing or two about raising capital. In the early 90’s, he was having trouble raising funds for his e-card greeting network, but with enough persistence, eGreetings.com grew rapidly and became a worldwide top-20 website, with 13 million registered users. Today, Fred is the CEO and co-founder of CrowdSmart, a platform that enables user-generated scores and reviews of startups by alumni, investors, and customers. Listen in to find out what it takes to raise $40 million in capital.
Being the First to Market – Fred Campbell
Hello. Welcome to The Successful Pitch. I’m honored to have Fred Campbell, the CEO at CrowdSmart, as our guest today. Fred has raised over $40 million in various startups from Angel investors and VCs. He’s clearly an expert on how to do it. He has a business degree from Berkeley and his MBA from Stanford. He’s been involved in a number of very successful startups obviously. We’re going to ask him to walk us through some of that. What he’s doing now is fascinating in the world of artificial intelligence and helping people decide which startup to invest in. Fred, welcome to the show.
Thank you, John. I appreciate it. I’m thrilled to be here. As I was just telling you a few minutes ago, I love what you’re doing. You’re doing great work. I’m happy to be part of it.
I appreciate that, Fred. Let’s take people back. You have such a fascinating history. There was quite a bit of time, which I’m always fascinated, between getting your business degree from Berkeley and deciding to go to get your MBA from Stanford. About eleven years or so. What was the motivation there to take that much time? Because a lot of people maybe take a year or two and then they get their MBA or some people go right away. There must’ve been some compelling reason for you to say, “I’m getting my MBA.”
It’s a great question. I’m sure it’s unique for every person out there. Similar to what you were describing, I had planned to leave Berkeley, get a couple years in public accounting, get some practical experience, and then go back and get my Masters. I had started a non profit while I was at my public accounting firm, back then it was called RCM. Now it’s called probably Ernst & Young or something like that. That nonprofit, called the Christmas Carol Charity, turned into quite a large event in San Francisco. The company was getting clients as a result of that effort. It wasn’t intended for that, it was intended as a charitable effort to help Toys for Tots program.
CrowdSmart: I got a job opportunity with an investment company to be their chief financial officer when I was 26.
As a result, the company was getting a number of clients. I was getting promoted quite fast. I made manager in four years. They were keeping me around, providing me incentives just to keep me there. Then I got a job opportunity with an investment company to be their chief financial officer when I was 26 or something like that. It was a wonderful opportunity. I kept that trajectory going for a while until I got to a place where one of my early companies, I sold it, I made some money and said, “I’m going to use that money to go pay for my Masters.” I just thought it’d be a good time for me to make that pause. Stanford is obviously a wonderful university. It worked out great.
My only personal issue is being out of school for eleven years, they made me go through what they called Math Camp. It was a great experience because I got to meet all the older people that were part of the Stanford, about 30, 45 people. Eight ended up being my lifetime friends. It was a great experience as well from that point. Plus, I’m very good at math so I can do the work that took the rest of the classmates all day, I can get it done in an hour, so I went and played golf at the Stanford golf course.
You are everybody’s favorite friend with your accounting background, I’m sure. Let’s talk about what you did with Egreetings, which was basically inventing the digital greeting space in 1993 and how you grew that to one of the world’s top 20 websites with 13 million registered users. That was a huge number back then. Today, people would be thrilled to get that. The last great IPO of 99. What was that experience like and what did you learn?
That was a roller coaster ride. It was just a ton of fun. For listeners, it was also, early on, it was really hard to raise money for that company, very very hard. Any of your listeners that is developing something new that has not been done before, you’re going to get 99% of the people that are going to look at what you’re doing and scratch their head and go, “Why would I want to send a digital greeting?” I would get this from VCs often. Back then, they were 99% men. They would say, “Look, I don’t even get my wife a paper greeting card. Now you want me to send her a digital one? She would divorce me.”
It was a wonderful ride. Some of the tricks that I’ve learned, I learned from Egreetings, as to how do you get the market validation earlier in the process so you can raise that money? Because I had so much early market validation for that company, I knew that it was going to be a big success. We positioned ourselves in the marketplace and with investors to turn that into, like you said, a top 20 website. On a typical day, we would ship about 10 million digital greetings. At one point in time, it was the most significant media company on the internet. Our content was the YouTube of its day. There was a lot of aspects to Egreetings that are relevant to this day in terms of, for your listeners, how do you raise money.
There’s two things that pop out from what you just said to me, Fred. One is, if you’re in a market that technically doesn’t have any competition because you’re the first to market, how do you handle that? The second is, it seems like you handle that by showing traction. Is that accurate?
I think that’s probably more so this day and age for entrepreneurs. You have to be able to show traction, especially if your product has somewhat close competition, you have to be able to distinguish yourself from a pure traction point of view. If your company is really, it’s a cutting edge company that’s doing something that nobody else has done before, you’ll get some investor interest. I’ll talk about that. Finding an investor, early stage company that doesn’t exist, it’s creating new space, is truly like finding a needle in a haystack, finding that investor who’s willing to … Who’s already got the idea in mind. There are techniques, like what you’re doing right now in this podcast. There are techniques of turning that equation around and making sure that needle can find you.
[Tweet “CrowdSmart: You have to be able to show traction.”]
I love that. We’re going to tweet that out. Let’s have the needle find you. How are some of techniques, Fred?
Entrepreneurs inevitably are enamored as they should be with what they’re doing with their product. Building the next great thing, whatever that thing is. Their job is really about evangelizing that great thing. They need to think about their job from a point of view of, how do I get this out to the world? Inevitably, when you’re doing something that’s really innovative, you’ve got to this internal conflict going on, which is, “I don’t want to let the cat out of the bag too early. That’s a terrible expression, excuse me. I don’t want to reveal my secrets and let somebody else steal them. I’m going to keep them close to my chest and I’m going to be selective about who I talk to about it.” That doesn’t work.
From my experience, that does not work when you’re building a truly innovative company. Four of the seven companies that I’ve done are, they’ve never existed on the planet before. I remember coming out of a meeting one time, we were introduced to some of the folks there. They were doing some innovative stuff, we were doing some innovative. I left, walked out with my partner, and we had kept things pretty close to the vest. We walked out and he said, “Did you learn anything in that meeting?” I said, “No. Not a darn thing.” He said, “Neither did I. You know what, let’s try a different approach and just walk in with an open kimono.”
Walk in and reveal where we are and take the risk of losing it. At least, people will be able to embrace what we’re doing and maybe help us. That’s what I found. I’ve had another professor, a mentor of mine, say to a group of startup founders, “I tell you what, take your best idea you have and find the competitor who you think is the most aggressive. I will pay you $100,000 if you can get that company and that competitor to do what you’re doing.” Sell it to them, see if you can do that. They’re doing so many other things that they can’t do what you’re doing. They’re going to let you prove the market first and then they may jump in.
I love that. Let’s talk about that a little bit. I have so many people come to me that I work with that are so afraid of someone stealing their idea. I keep telling people, it’s about the team that executes the idea, not the idea. Investors don’t sign NDAs. More importantly, like you were saying, even if you talk to an investor and they have a competitor within their portfolio, a really good investor with integrity is not going to steal your ideas and give it to someone in their portfolio.
No. That’s exactly right, John. It is really is a paranoia that entrepreneurs have that they don’t need to. There’s no really empirical evidence that I’ve ever seen that would say that that’s true.
Great. Let’s jump in to yet another one of your wonderful companies you started, which was Lexy, the pioneer mobile platform for creating short form talk audio, which obviously I’m a big fan of, we’re doing a podcast. I’d love to hear about how to TalkRadio and Pandora all became in sync there.
CrowdSmart: Once you’ve had some success, it is easier to raise money.
Lexy was to TalkRadio what Pandora is to music, except the major difference was Pandora is a consumption platform. You use it to listen to your favorite music or to discover music. Lexy, you could use your phone to create TalkRadio content and then broadcast that out to your social media and other places. Lexy was, again, a pioneer in its space. We were, as far as I know, the first mobile based audio podcast or audio creation platform on the internet back in 2004. Partly because of the Egreetings’ success, and that’s one of the things that you know John, that your listeners probably are aware of. Once you’ve had some success, it is easier to raise money. It clearly is. People are betting on the jockey at that point in time.
Lexy was, and still is quite frankly, I’m surprised that nobody has done that company. That company was focused on doing some really fun stuff. We did a number of test markets to find out was the content that point in time really focused around … Was it sports content? Was it entertainment based content? Was it the long tail content, just people listening to whatever? What we discovered was that sports was really the key thing there. We were going to enable the sports personalities who were maybe not big enough to have their ESPN program but were clearly personalities which would pull a large crowd, like coach Calipari, now the Kentucky basketball coach, and coach Beoheim.
For the, I think the March Madness 2006 or 2007, I forgot now. Just dumb luck, we had five of the elite A coaches Lexy casting that just made it through the finals. The company was growing with 30% to 50% month on month. Our numbers were the classic hockey stick. I had raised, at that point in time, about $6 million of capital. It was an ad based business, wasn’t a lot of audio ads at that point in time. We were not generating substantial revenue even though we had … At that point in time, we broken in the top 15,000 websites in the planet. We were then growing very nicely.
The great recession came along and I was trying to raise a series B. That was the first and only time I’ve ever had in my life, hopefully won’t happen, where I could not raise money. That’s probably topic for a different conversation. I did not do what I needed to do as a CEO. I had a staff of 20 and I was running at a capital and I should have downsized the company. I should’ve let a lot of people go and made sure that my capital could sustain the company at least at a neutral place for a heck lot longer. It was a lesson. It was a very very difficult lesson for me to learn.
The big takeaway is you have to make those hard decisions in order to keep the company alive sometimes. Let’s take a dive in to, since you’ve got so much experience in raising money successfully. Thank you for sharing that. If someone like you had trouble, it makes other people not feel so bad if they’re having trouble. What differences do you see that investors are looking for in the different pitches that you give between a seed round and a series A round? Obviously, there’s some traction differences. I’d love to have you just expand upon, besides hitting milestones, what are they looking for?
We both have been at this for a while. I can tell you that raising money for each of my companies, this is company number seven right now, is that … Even for an experienced CEO, raising money off of a napkin, those days are gone. There truly was a time back in the 90s where you could raise a lot of money off of a single piece of paper. You can’t anymore, you have to have traction. What we’re seeing now, at the detriment to some extent of the entrepreneur, is what used to be the traction needed to get the series A. Hard customer revenue, key metrics, product … However your key metrics are defined, maybe downloads of your app or whatever. Those are now the seed round.
CrowdSmart: Raising money off of a napkin, those days are gone.
Seed investors have the luxury now of investing in companies that are already getting the traction that, ten years ago, would’ve been a series A investment round. That continues on. What you have to bring to the table for each round, now to get series A money, you need to show some very serious revenue traction. You might even need to be approaching a point where you’re 10 million revenue annual for a million a month run rate. The bar has gone up a lot. You hear this where you got this funding gap between the seed and the series A.
Here’s the numbers that we’ve accumulated, is that at any one moment in time right now, there’s about 300,000 startups in United States looking for capital. There’s about 70,000 of those that will get seed funding on average about half a million dollars. That’s about $30 billion a year around that number that are getting seed capital. Only 7,000 of those will go on to have any exit or follow on funding. It’s a very inefficient market right now in terms of, there’s a lot of capital for seed investment, that’s a good news for entrepreneurs. There’s a lot of startups competing for that. About in a quarter, 1/4, will get some seed financing. Unfortunately, only 10% of those go on to be successful. They’ll run out of money before they will be successful.
That leads right into my next question, which was going to be, how did you come up with the idea for CrowdSmart? Because it seems to me that’s the problem you’re solving, would that be right?
That is the problem we’re trying to solve. Because you need to show metrics in order to … We can go back to this if you want to. If you take some of the strategy of letting the needle find you, then you will get some funding. There’s enough money out there. If you got a decent idea, you’ll probably get some funding. You get one swing at the plate as a seed founder. You better have you ducks in row when you get that money. Because the clock’s ticking down and if you don’t show some serious traction to get to that series A, you will not get your follow on funding. You just won’t. It just won’t happen. There’s too many good deals that VCs are looking at these days that is stacked against you.
What CrowdSmart is intended for, what we’re doing is we’re working with, right now we’re working with communities. You need to be associated with a university, an accelerator or be in the hunt at one of the investments aggregators or one of the groups of Angel investor groups. We’re working with these communities in part because we tap those communities to get feedback in the aggregate of what they think the probability of your company is to be successful and how you can improve upon that probability to be more successful.
Our premise is, it’s kind of a “duh” once you hear it, it’s like, “Of course.” If you can aggregate and take any, I’m just going to pick something out of thin air. You can pull together a thousand drones that fly around. If you could put enthusiasts, knowledgeable experts, whatever, people who want to use that, you can pull them together and you have some new product for a drone. Either a new drone or maybe a new GPS aspect of a drone, whatever, maybe camera, GoPro. If you could aggregate the knowledge of that community, you’ll have a much much better sense for what the market need is and what a good solid product market fit would be. How do you tune your product to fit the needs of the market? If you had all that information. In our day and age of being totally interconnected, there’s really no reason why you can’t get that information earlier in the life cycle of a company. That’s what CrowdSmart does.
For me, if I was pitching, I would say CrowdSmart takes artificial intelligence plus real time intelligence of people in social media to help startups show they have a product market fit to make their funding more predictable and desirable.
CrowdSmart: We combine human and machine intelligence to turn qualitative feedback into quantifiable predictive information.
That’s great. You’re hired. That’s exactly right. We combine human and machine intelligence to turn qualitative feedback into quantifiable predictive information. That’s what we do right there. The other thing on top of that is that if you do get that information together and you … Essentially what the system creates is the FICO like score for startups. If you think of it as a FICO and you get a score of 700, you could go online right now, I’ll literally use that analogy just for a second. You could go online right now with a score of 700 and you can get a bank loan, new credit card or whatever, without them ever seeing you. The same would be true for your FICO score for your startup. If your score is solid enough, we will put money in your company.
Wow, nice. I love that because what you just did there Fred, was show people how to make an analogy that people instantly understand what your company does. We do FICO scores for startups. Boom, that’s your tagline. You don’t have to be in the startup world to understand what that is. That’s what everybody needs to have when they pitch, whether it’s a tagline or the one sentence, really easy to understand way of grabbing people’s attention. Where do you stand on storytelling? Do you give examples of how before someone used CrowdSmart they were struggling and now after using it they’re getting better results?
We’ve got a number of use cases and stories about that. Just to confirm what you just said, one of my investors in Lexy was Peter Guber family, which is major media personality in Hollywood. I sat down with him, he was introduced to us as, “This is what Lexy does.” I sat down and the first thing he said to me was, “Tell me a story.”
He’s the guy that run Sony with Jonathan, Batman and all that.
You’re absolutely true what you’re saying about being able to convey the … To merge both sides of your brain. People make investments from an emotional maze. They use logic then to basically validate it. You never will get somebody to invest in your company if you just purely go from a logical, this make sense point of view. You just won’t get more than threshold. Being able to convey that message in … We create FICO score for startups. That kind of thing, that’s a nice tagline with the emotional connection behind that. That’s part of what the story is.
For us, the story is almost no startup has come on the platform. This is a typical path for a startup. It can be discouraging for startups. They come on the platform and they’re incredibly enthusiastic about what they’re doing, they love what they’re doing and we love what they’re doing. We ask the community to give them feedback, honest, direct feedback. They almost always, the equivalent FICO score, they’ll score between 450 to 500, which probably will not get you a decent credit card basically with that analogy. Inevitably, the startups are heartbroken and about half of the startups will say, “I just need to ask a different group of people.” They didn’t get it. They didn’t understand what I’m doing. It’s not my problem, it’s their problem. They’ll act defensively.
Oh my gosh, I’m so glad you brought that up Fred. So many times when I’ve made introductions to investors, I’ll have founders, when they get a no, they say, “That’s just not the right investor.” I’ll say, “No, no, no. That’s what all of them are going to tell you. Your valuation’s too high,” or whatever the problem is.
Pitching is an art. Every pitch you need to consider as pure practice. Physicians, attorneys, they never say, “I perfected law. No, “I’m practicing law.” You as an entrepreneur are practicing your pitch all the time. How do you get better? You got to get feedback. Unfortunately, most people give feedback in a live setting or even follow on setting, the sandwich approach. “I like this. I didn’t like that. I don’t like this.” Entrepreneurs love it because they go, “I got two out of three. That’s pretty good.” No, get rid of everything that’s not in the middle. You need the substance which is unfortunately is almost always in the middle of the sandwich. What did they say? Why didn’t they like the deal? Why didn’t they connect with the deal? Do your damnest as an entrepreneur … VCs are notoriously bad at this. Angle investors are a bit better. Try hard to get honest feedback. When you get that standard letter, which basically say something like, “Not quite for us. Keep us informed, we may be interested in the future.”
[Tweet “CrowdSmart: Try hard to get honest feedback.”]
The polite no.
That’s the polite no. There’s no advantage for them to basically do something that might piss you off. Hell, you might actually make something that they want to invest in. Try really hard to get that negative feedback. As Elon Musk has said, the only feedback he goes after is the negative feedback.
Interesting. Let me ask you about CrowdSmart a little bit more. Two questions, you can take them one at a time if you want. One is, how do you make money? Two, how do founders apply to be part of CrowdSmart to get that FICO score?
I’ll answer the first one, we make money … I’m almost tempted to say the old fashioned way. Our business model is threefold. Primary way we make money is to invest in the best startups. We work with family offices, institutional investors and corporations that are looking for strategic investment. Or family offices that want to support their universities. For example, the very first family office we were associated with was a very wealthy individual whose got his name on the library at UCLA and a number of chairs.
He wanted to support the entrepreneurial efforts at UCLA. He was investing in UCLA startups that achieve this FICO score of 700 basically. He now, by the way, has said, “I like this. I like the startups. I like the deal flow you’re giving me so I actually wanted to see everything. I’m willing to invest in everything.” We charge basically half of what VCs charge. We charge a small management fee and a small carrier interest. That’s part of our revenue stream. As somebody said to us recently, “You are the ultimate seed investment platform.” Seed investment is a 90% gut, 10% data, we’re going to make it 90% data, 10% gut.
How great. I’d love to see that on a slide and reverse the images. That would make people really get it. That’s so great.
Because we’re relying upon, basically, crowdsourcing wisdom, crowdsourcing due diligence that we expect to be able to make on the order of a thousands investments a year. We’re looking to put in about a billion dollars a year when we’re at full scale probably four or five years from now. That’s one way. The other way we make money is that we do license the technology. If you’re not strategic to our investment interest, for example we’re working right now with four Japanese universities. The Japanese government has put up a billion dollars to invest in startups. It’s a job creation economy stimulus program.
These universities each have been given a quarter billion dollars to invest in the best and brightest from the university. They don’t know how to do that so they’re using our platform to figure that out. We charge for companies that can use our platform. That’s another thing. The third way we make money is to sell the data. We aggregate the data across … We’re really the only platform that will have presence at all of these different … Right now, we’re at UCLA, UC Berkeley, Sky Deck, University of Michigan and a whole bunch more that we’re in the process with right now. We can aggregate startups across that platforms. Series A investors can better target who they want to put their money in. That’s a subscription fee for accessing the data.
Fantastic. The other question is, how do founders … Do you fund seed round or do you only fund series A? How do people even get a FICO score? Do they apply online?
CrowdSmart: To get people to tell you your idea is really good when they really think it’s stupid, it’s almost impossible.
First of, we’re happy to be the first money in. We believe in our data. If you are part of an accelerator, then you can automatically qualify. If you’re not part of an accelerator, then you can use the platform. You go to CrowdSmart.io, you sign up. You’ll be invisible basically. You have to go out and get a minimum of 40 points of data, 40 individuals. We’ve heard this before, John. Wouldn’t it be easy, they can just put it up on their social media. They get to ask their friends to score, basically stuff the ballot box and they qualify. It’s amazingly hard to do that. To get 40 people to tell you your idea is really good when they really think it’s stupid, it’s almost impossible. You will learn in the process whether or not you have a mark by just tapping your own community.
I can totally validate that. You can’t get 40 people to write you a great review on iTunes for your podcast if they don’t believe it.
They don’t believe it. They just will not do it. We say, “Here’s the tools, go out in your own community. If you can get 40 of your friends and family, mentors, coaches, whatever, to rate you and rate you above a seven basically out of a 10 and give the reasons for that, we’ll elevate you to the same status that you would if you got into Y Combinator.
Nice. This has just been so great, Fred. You’ve been so generous with your insights, your information. How can people follow you personally? What is your Twitter handle?
It’s @FredCampbell. I do most of my posts on LinkedIn. If they do search for Fred Campbell CrowdSmart, they’ll be able to find me.
Fantastic. I can’t thank you enough. You’ve been a great guest. I love how the needle in the haystack find you. That’s one of my favorite all time quotes. I’m looking forward to watching you continue to help startups and shift that 90-10 data logic gut thing. It’s fantastic.
Likewise, John. You’re doing a great job. At some point in time, we’re going to combine our efforts so we can make your material available to all of the startups in our platform.
That would be amazing. I would love that. Thanks, Fred.
All right, John.
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The Intersection of Technology and Health – Interview with David Whelan
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Episode Summary
David J. Whelan is a seasoned strategy, business development, and general management executive building businesses and inspiring entrepreneurs at the intersection of technology, health, and wellness. David discusses how he combines his love for health and the tech industry into one, and what a successful pitch looks like, when aiming towards these types of investors. Listen in for so many great nuggets of wisdom from David on the topics of investing, raising capital, and building your network.
The Intersection of Technology and Health – Interview with David Whelan
Welcome to The Successful Pitch. Today’s guest is Dave Whelan, who is a seasoned strategy business development and general management executive, which builds business and inspires entrepreneurs at the intersection of technology and health and wellness. He’s a consultant and advisor and operating executive. He devotes his career to building successful businesses. He was an integral part of the creation of the New York Genome Center, a unique not for profit scientific research institute where he was a chief strategy officer and collaborated on the development of the business plan fund raising of $115 million. He launched one of the first fitness tracking wearables with 24 Fitness. He holds an MBA with honors from UCLA Anderson School and a BS in Symbolic Systems from Stanford University. Dave, congratulations on all that accomplishment and welcome to the show.
Thank you so much. I forgot about the with honors parts. I’m not even sure if I deserve that. Thank you for reminding me.
What is Symbolic Systems? What is that?
It’s Symbolic Systems. Essentially, it’s an artificial intelligence human computer interaction major at Stanford. It is indeed a real major. Marissa Mayer is probably a more famous alum of the Symbolic Systems program than me. Hopefully I can catch up with her at some point.
You’re in great company. How fantastic to be able to be that cutting edge on artificial intelligence, which is sort of the future internet of things and all kinds of stuff.
Exactly.
Wow. Let’s dive back into, what made start there? I want to hear about that. How did you even decide, “I want to learn about artificial intelligence and make that my major.”
The intersection of technology and health and wellness
You mentioned this intersection of technology and health and wellness. I’ve been in technology my whole life, or passionate about technology my whole life. The health care part came accidentally later. I was definitely one of those computer kids growing up. My first computer was a Texas Instruments, TI 994A, which was discontinued about a month after my parents invested in it for me. I switched over to Apple and I’ve been an Apple guy forever. In fact, I purchased the first Macintosh for my school district to run the high school newspaper back in the late 80s. Early adopter, and all of that got me excited about the world of artificial intelligence, which seemed to the next big thing at the time.
That led me to Carnegie Mellon for a year and then I transferred to Stanford. Loved Stanford, loved the program and was still passionate about technology. I graduated into what was not the best market for artificial intelligence. AI was in a dormant stage at the time. My first job out of college was actually with a biotech incubator, probably even before they were calling them incubators. I was hired not for my biotech expertise since I had none, but I was literally hired as the IT guy in this firm and that quickly evolved into more of an operations role. I guess I’ve actually been connected to life sciences my entire career but took a pause there after that job and spent about six years as a retained executive search consultant.
Again, this is mid to late 90s in San Francisco. It was just an amazing time for technology businesses, for telecom, eventually internet. Probably the best time ever to be a search consultant. We were building venture backs, senior management teams for again, technology companies, telecom companies, some biotech, some consumer, automotive. It was a lot of fun. I probably could’ve stayed doing that forever but I was about to turn 30, really wanted to get my MBA. At the same time, the dotcom crash was happening so it was a perfect time to take a change of scenery. I moved to LA to attend UCLA Anderson School as you mentioned.
As I said, I really loved Stanford undergrad but Anderson I think was absolutely the best time of my life. Amazing professors, especially in the world of entrepreneurship, an incredible network that I draw on every day and some great opportunities. Even though I love LA, it gave me a chance to study at London Business School on exchange, which was just an amazing opportunity in one of my favorite cities. This was beginning of second year of business school. I actually arrived in London on, I think it was the first, maybe second flight from LA to Heathrow after 9/11. Just a weird time to be travelling, weird time to be leaving the country but also an amazing time to look back and see what the world was thinking about the US during those days. A sidebar, but interesting time.
I graduated with my MBA in 2002 and I’ve spent the past almost fifteen years now as strategy consultant, advisor, interim executive. That’s been areas as broad as technology generally, in aerospace, in defense, but more and more the health and wellness space. You mentioned the wearable world, which was my entrée into that. I was working with a subsidiary of 24 Hour Fitness and we had a chance to launch what was one of the first fitness wearables and online nutrition programs. This is way back in 2004. We were absolutely ahead of our time. Lesson learned there is do not launch a fitness wearable in a world that doesn’t have the iPhone or Facebook. It will fail.
Let’s talk about that for a second because I think one of the most important things when you’re pitching an investor, there’s two questions, why you and then the big one is why now? If you have this great idea but now is not the right time for Uber or fitness wearables if people don’t have enough smartphones to use them.
Technology and Health: We had this intersection of need and technology and an amazing solution.
Exactly. First of all, we were, in some ways, lucky enough to be part of this large global organization that was looking at investments perhaps a different way than a venture investor would, but the same questions I think apply. The why now aspect in some ways made a lot of sense from a standpoint of the need was there, the technology was coming together. We had this intersection of need and technology and actually an amazing solution. The challenge comes essentially from the network effect aspect or the lack thereof in this case. When you think about something that’s very personal like fitness data, fitness tracking and ultimately hitting your goals, or when you think of anything that involves connecting with other people, you’ve got to have the tools and technology to allow for that network effect.
Again, in a world without smartphones, without Facebook, we were launching into a vacuum. The exciting thing about that is ultimately the company that we were partnered with, which is called BodyMedia, got acquired by Jawbone. Their technology is still involved in what I think will be Jawbone’s new clinical work. The founder of that company, BodyMedia, is Astro Teller, who went on to run Google X or Alphabet X, whatever they’re calling it now. The cutting edge, a bunch of new technologies. There was some amazing people that were part of that. A lot of the efforts lived on. I took that experience about health care data, again, put it in the back of my mind for a little while. I was doing some work in aerospace and defense.
A few years later, this is back in 2010, ended up getting a call from a friend of mine who was in the life sciences real estate and economic development world in New York. She had a colleague we’re working on this for, what they were calling New York Genome Center. I basically saw this as a three month consulting opportunity with a trip or two to New York that ended up being a three year crazy ride with almost weekly commutes between LA and Manhattan, where we launched this large scale, non profit research institute. I was the first business person the team.
As you said, helped to write the business plan. I was part of this massive fundraising effort, helped to recruit the launch team and ultimately set the wheels in motion for what is now a world class research facility that is part of multi million dollar NIH funding grants for things around Alzheimer’s and autism. They’re doing some amazing work. I’m convinced that someday, some aspect of cancer is going to be cured there or something like that and it’ll an amazing thought that I was involved from the beginning.
That must make your passion really strong for making a difference in the world. Talk about the fundraising for non profit of over $115 million. Is that from one big government grant or do you go pitch it, like you would if you were a profit company with Angel and VCs?
This was very much multiple funders and very much like a pitch for venture backed startup. In fact, while this was a non profit, we were in some ways running it very much like a technology startup in terms of how we built the plan, built the business model, even recruited. From a funding standpoint, we started out by talking to what will be the course stakeholders, which were the academic institutions, the large hospitals in New York and literally going door to door, drumming up support. This was maybe a little bit different from an early venture effort.
If you think about getting in front of Angels, in front of incubators and accelerators, just in front of the movers and shakers in your community. This was very much what we were doing. Helping them understand what the vision was, why New York needed this, what the opportunities would be for them and their institutions as well as beyond. Those academic leaders, academic and medical leaders in New York, then led to some of the major philanthropic funders, led to some commercial funders. Ultimately with that momentum, we were able to go to the city of New York, the state of New York and ultimately even some other, as I mentioned, more recently they’ve got an NIH funding. This builds on itself.
Technology and Health: There’s a lot of similarities in terms of how you tell the story, how you get in front of one person, which leads to others.
While I can say that raising money for a large non profit in New York is in some ways much easier than raising money for a for profit venture in San Francisco or Los Angeles. I think there’s a lot of similarities in terms of how you tell the story, how you get in front of one person, which leads to others. Ultimately, how you use one success, one small success to move the next one. Eventually, you can bring in hundreds and millions of dollars to get this thing off the ground.
You’ve talked about networking twice, once with your experience in how the UCLA Anderson MBA continues to help you with your network and now you just brought it up again, which I love, which is one network connection gets you into another network connection. Can you give an example or a case study story of that happening for you?
Sure. Again, you hit the nail on the head in terms of networks leading to other ones. Actually, I’ll start with a story. This just came to me last week. One of my inspirations in the life sciences world, who also has a connection to UCLA Anderson School, is a guy named Larry Bock. Larry lived in San Diego, actually he just passed away last week after a struggle with cancer. That’s why he’s been on my mind very much recently. I never met him but inspiration to me in terms of this guy literally built 50, 60 life sciences companies in San Diego and beyond. He was part of the Illumina founding team and the genome sequencing space. He also had a passion for STEM education, launched science fairs, science festivals.
The Rainforest: The Secret to Building the Next Silicon Valley
He was highlighted a few years ago in a book called The Rainforest, which was talking about the Silicon Valley eco system. He was highlighted as, what they call, a keystone species in anthropological or ecological standpoint. Keystone species are these standout species that somehow make connections and exist in different eco systems or pull them together. In the context of innovation, this book highlights keystone species as someone who connects people who could benefit from working together. They might not work together under normal circumstances because of things like geography or cultural differences or trust or things like that.
When I think about it, and I’ve been inspired by that my whole career as trying to be a connector. Ultimately the idea is everyone is part of hopefully several networks, maybe many networks. This could be schools, it could be workplaces, it could be religious organizations, it could be geographic communities, it could be volunteer efforts. Each of those networks hopefully is a source of amazing connections. Everyone needs to think about how they keep each of those networks fresh, how they stay connected to them, how they contribute to those networks.
Back to this idea of the keystone species and Larry Bock, how do you actually take the leap to help connect people from these vastly diverse networks in a way that they would never meet each other but once they do, something amazing comes from it? I think it’s the idea that you can be at a cocktail party with your friends and have a conversation with someone and realize that this ties into the business meeting you were in last week or the conference that you were attending last month and you start to connect the dots and start to bring people together in a way that creates these really rich interactions. Hopefully, what comes out of that are businesses that would never have existed or investment connections that wouldn’t have happened. Eventually, you can change the world because you’re connecting people in a way that is very unique, very creative and hopefully redefining an industry.
Wow, that’s great. You’re almost like the catalyst, set up those connections that would never have made. If you connect the dots first and see the big picture and then step out of the way, magic can happen.
Exactly. I was at a conference a few weeks ago called Ideas Los Angeles, which was an amazing multi cultural, multi faceted conference around both health technology and entertainment technology in LA, Silicon Valley and beyond. First of all, I invited a ton of people to this event and so I ended being able to introduce people who, not only might not have met but were in the same place. There was one person I met there who was working on an amazing integrative health and wellness business and another one of the companies that I advise, which is building conference app tools for the life sciences industry. I saw some connections there and couldn’t introduce them directly at the event and tried to introduce them after the event.
[Tweet “Technology and Health: It takes vision and creative foresight.”]
One of the individuals said, “That sounds cool. I don’t really see the connection. It doesn’t make sense right now.” I actually pushed both of them to get together and talk about their commonalities and where they might be able to collaborate. Both of them after this meeting said, “Wow, this is great. We never would’ve even thought about this. Thank you for making the connection.” Again, sometimes it takes some vision, sometimes it takes some creative foresight, sometimes it just takes luck where you hope people will connect. If they do, great. If they don’t, there’s honestly no harm and maybe they’ve met someone that at least they like socially.
You’re creating real value so when they come across someone that they can refer to you as a potential client, as a consultant, they’re more than happy to do it, which is a great way to drive business.
Exactly.
Let’s take a little dive into when you raised over $25 million with the Precision Medicine venture. That was a for profit I’m guessing, yes?
Yeah. Again, another unique angle on fundraising. This was a commercial spin off from a hospital, from a cancer hospital, that was a public benefit corporation in New York. Which means it’s a non profit enterprise that’s got ties to the state, operates somewhat independently but in many ways like a state organization. In that effort, we were really focused on the typical starting point of let’s understand what the opportunity is and build the plan and start to build the story. We were putting together relationships where we were seeking funding both from the hospital system itself as well as from, ultimately from the state, both existing state moneys, Empire State Development Corporation, which is the state’s economic development arm, and eventually teeing this up for broader external investment.
[Tweet “Technology and Health: See the opportunity, build a plan, build the story.”]
Again, a little bit of unique twist on funding. In some cases I think, when you’re in a funding situation, and you could argue it happens to people in any company when they’re going to their boss, when they’re going to the general manager, their division, and they’re trying to fight for budget for the next year. Ultimately, planning for your budget for the year, planning for budget for a product launch, a marketing strategy or an invest in a company, there’s a lot of similarities. It’s really about having your plan straight, having your numbers straight. Being able to tell a story in a really strong way to get these people not only wanting to be a investor and a funder but ultimately being an advocate, being an ally, being someone who can then take your story to the next funder. Whether that’s moving in an organization, whether it’s going to the board or whether it’s going to a larger a investor down the line. Again, I think there’s a lot of common ground there.
When you’re talking about health care and you’re saying the importance of a story when you’re pitching for this kind of money, do you give an example of one particular patient and that person’s story so it’s really specific? “If we get this money, then we can do this for this cancer hospital and save someone like XYZ person who was suffering and who doesn’t have to suffer,” for example?
I think that’s absolutely one angle. The great thing about health care is that while it’s a large industry, really the largest industry out there by some measures, it’s also very personal. Everyone has dealt with health care on their own, they certainly dealt with it with their children, with elderly relatives. Health care is just, by definition, a very personal topic. This idea that when you’re telling a story, how do you do something that can provoke, that can inspire, that can challenge, that can tease what the solution will be? Bringing it back to something that is very personal, very relatable.
Technology and Health: Build a story that can provoke, inspire, challenge, and tease.
I’ve certainly seen, not so much in an investor pitch, but certainly in public pitches or public presentations. Even the ability to bring a consumer, bring a patient into the story physically, bring them into this presentation to have them tell their story. Have them talk about where they’ve come from, who their family is, where this disease, this condition, this situation came about, what was the discovery process, what was the diagnosis process? Then either they’re pushing for a cure, which is that big north star vision, a massive goal we can think, about or they’re sharing how this solution might have helped. I find that something that the public loves, investors love but it’s also something that I think really is the way to connect the scientist and physicians to this whole investor conversation and customer conversation.
I think there’s a lot of people who give scientists or physicians a bad rap because they’re not always business people and they don’t have that business mentality. That might be true in some ways but from my standpoint, when I work with scientist and physicians, I help guide them and help them realize that in many ways, the scientific method and scientific research are really a lot like entrepreneurship. You got to identify a problem, create a hypothesis, find the funding, pilot your solution in some way, you asses the results, you course correct and then you keep at it until you’re successful.
When I get in front of scientists and talk to them about this fundraising effort shouldn’t be scary, shouldn’t be foreign. It’s actually something you do all the time anyway. This whole idea of building a company is not that different from putting together a massive experiment and hopefully coming out with some great results. Once I make those connections for scientists and physicians, it clicks in a way where they become a really strong part of the process, which then makes them that much more sellable or approachable or understandable to not only investors but ultimately the customers or consumers who are buying this.
What you’ve done is you’ve given them a story, an analogy to follow to create a story. You say, think of it in terms of how you do scientific work and then just transfer that to the ability to run a business. You create story that they are familiar with and that’s the power of storytelling. When you can get people to put themselves in the story, then they come alive. I really like what you said, when you pitch, you want to provoke, inspire and tease the solution. We’re going to tweet that out from the episode, that’s a great line. Let’s switch gears really briefly here about what you did at the Chinese Casino Game Leasing venture. That sounds interesting.
There’s some good lessons and some cautionary tales in that one for sure. As I said, the intersection of technology and health and wellness, sometimes that is very much in the health and wellness space. Sometimes it’s a little bit more on the tech space. A few years ago, actually through a business school network connection, I got introduced to a Chinese, almost family office investment group, that was in the process of assembling an investment fund to acquire some casino game leasing operations in Taiwan and the Philippines. This is a few years ago. I’ve traveled a lot of places, but at the time I had never been to Asia.
First of all, I saw this as an opportunity to learn more about Asia and hopefully I get a chance to spend some time there, which I ultimately did. A whirlwind due diligence trip to the Philippines, to Taiwan and being up in Shanghai to meet with the family. We were building, very much building a story about what this business could look like and ultimately trying to pitch it to US investors. That was my connection, was building this bridge of a story between the Shanghai family, these businesses in the Philippines and Taiwan and then US investors. We went really far down this process. Again, there’s not going to be a happy ending here. We went really far down this process. Interestingly, I was actually thinking about this longer term because the family also had investments in the massively growing, if you could imagine, retirement community business within China. If you think that the US has a large aging population and a large retirement community population, just imagine what China has with many more people.
They were actually looking at leveraging some of these technologies into mind games and games and tools for maintaining mental acuity, mental sharpness in old age. I was thinking about this from a health care standpoint all along. As we pushed forward with this effort, sadly, unfortunately, this will be my second time mentioning death on this life sciences health care podcast, not by design. Anyway, the senior member of this family passed away from a kidney transplant that didn’t take. Obviously, their business was in turmoil from that. Literally, the entire business not only collapsed and unwound, as might happen with any family business anywhere. But it was sucked back essentially to the party, to the government financial entity.
[Tweet “Technology and Health: Leverage opportunities even if they go wrong.”]
Long story short is I’m still trying to collect on that project. I’ll call it a loss at this point. Very much lessons learned about doing international business. I did learn a lot. I’ve actually been back to China twice since that for other ventures. I think if anything, what’s my personal takeaway? It’s leverage opportunities even if they don’t turn out the way you’d like to, to be able to start to get comfortable with a new market or a new geography. Now, I feel very comfortable doing business in China. I’d have to find a different way to structure a deal. I guess, you really can’t plan for everything.
What a great thing to be able to say, “I feel comfortable doing business in China.” There’s not a lot of people today that can say that. That, in and of itself, makes you extremely marketable. Before I let you go, because the half hour is already up, it goes so fast with someone like you. What is a book you would like to recommend about business or personal that you think would be inspiring for entrepreneurs?
I’ve got two books, if I can do that.
Sure.
Book about Technology and Health: The Checklist Manifesto
Because they’re so different. One, it’s a business book that’s also a health care book called The Checklist Manifesto. This is about a six, seven year old book by Harvard physician, Atul Gawande. It’s got some amazing business lessons, life lessons. Simple but powerful. How you can use checklists to get business done, get health care done, improve results. Why I love it is, I actually first encountered it back when I was doing consulting to Boeing engineering teams. They were using this as part of a way to improve their engineering efforts. Interestingly, it comes full circle because the book is about health care, using checklist in health care to improve results.
Atul Gawande actually was inspired originally to write this book and develop this process based on checklists that Boeing, once upon a time, used, Boeing test pilots used back in the 1930s. It was this aerospace into health care back into aerospace where I first saw it. Things really come full circle. If you think about going after funding, launching a computer, whatever, making sure you’re following the basic checklist and not missing a step is critical. That’s the business side.
Ready Player One by Ernest Cline
The other one which is, it’s a fiction book that everyone needs to read because it will help redefine what business looks like. It’s a five year old book called Ready Player One by Ernest Cline. Again, it’s a fiction book but if you work in technology you need to read this. It’s intersection of media and culture, virtual reality and social networking. A couple years ago when Facebook acquired Oculus Rift, there were a bunch of people who popped up on Twitter and said, “Look guys, Ready Player One is happening here.” This book is just an amazing fun read. If you’re an 80s pop culture buff, it’d fall in there. I think it really points to where the future of social media, virtual reality, augmented reality and to some extent, life, is going. If you look at the buzz of the Pokemon Go over the past week, you see how people can get so excited about some of these technologies. We’re going to see a lor more of that.
I love it. We’ll put both of those books in the show notes for people. Dave, how can people follow you on social media? What’s your Twitter, and if somebody wants you to hire you to help them in a wide variety of things from China to health care, what’s the best way to follow you on social media?
My website which has my bio and ways to connect to me is BespokeStrategy.com. I live on Twitter and I was an early person on Twitter @DJWhelan. I think I’m @DJWhelan on every social media tool out there except for Snapchat where I missed the boat. I’m @BespokeStrategy on Snapchat. You can find me there. @DJWhelan will get to me almost everywhere.
Sounds great. Thanks again Dave, for being such a great guest.
Really appreciate it. Thanks for the opportunity.
Links Mentioned
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John Livesay Funding Strategist
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