Angel Investor Criteria – Interview with David Dotlich
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
David Dotlich is the founder and chairman of Pivot, one of the world’s largest providers of customized executive learning for senior leaders of Fortune 500 companies. David is also the author of several books including Why CEOs Fail, Transitions at the Top, and Head, Heart & Guts. On this episode, David discusses some of the key factors that make a good leader, as well as why introducing new leaders into a company culture rarely works unsupervised.
Angel Investor Criteria – Interview with David Dotlich
Welcome to The Successful Pitch podcast. Today I’m honored to have David Dotlich, who is an author of Transitions at the Top, and he’s the founder and chairman of Pivot, one of the world’s largest providers of customized executive learning for senior leaders of Fortune 500 companies. He’s the former executive VP of Honeywell and the former founder president of Oliver Wyman, a delta executive learning center.
Transitions at the Top: What Organizations Must Do to Make Sure New Leaders Succeed
He has written many other bestselling books besides Transitions at the Top. They all have a theme about leadership. We’re going to do a deep dive into that. As if that’s not enough, David’s also an angel investor. David, welcome to the show.
Thanks, John. I’m glad to be here.
I always like to ask my guest, how did you get involved in leadership? In your particular case, what was your first, the idea to write a book about this and how did you decide you’re going to teach people to become leaders?
I started out taking people across Africa. Believe it or not, leading tours and guides, driving from Johannesburg to London for four months across Africa. I was a head of the group and of buddy of mine were running the company. We found the stress of travelling across Africa was not nearly as difficult as the stress of living together. Fifteen people for four months.
In that experience, I learned that it’s really all about leadership, that getting people to work together and work as a team requires leading, leading effectively. From there, I went back to school and then joined a big company. In every situation, I could see there was really leadership that made the difference.
Even in company performance, when I look at how well a company performs, usually it can be attributed to effective leadership. I’m always amaze John, that analyst don’t have much of a clue of how you analyze and understand and evaluate what’s good leadership inside a company today. But to me, it’s leadership that makes the difference.
How do you define what a good leader is? Do you have any tips for that?
Obviously you’ve got to have the willingness of people to follow you. Without any followership or willingness to follow, you’re probably not leading. To me, a good leader is one who can get the followers thinking that they’re doing it themselves. That idea was first talked about by Eisenhower who said, “The mark of a good leader is that at the end of the day, people say, ‘We did it ourselves.'”
[Tweet “Angel Investor Criteria: get the followers thinking that they’re doing it themselves.”]
Not only is it followership, but it’s actually people thinking they’re doing it. Obviously it’s towards the goal, achieving your goal. In the study of leadership, there are many ways to do it. There is no one way to be a leader, there’s a lot of ways to do it.
You’ve worked with companies like Nike and Johnson & Johnson and PG&E, these huge companies that, you coached them on how to be better leaders and become smarter with their strategy. Have you noticed a consistency across all these different industries?
Yeah, I think there’s a real effort to find, for each company, what kind of leaders they have, given where the business, they think the business is going, what kind of leadership or leaders they will need. Frankly, in all of those companies you mentioned, the definition of what is good leadership keeps shifting and changing.
If you think about the diversity or you think about being more global, or you think about working in a matrix, these were things that weren’t important 20 or 30 years ago that are now top of mind in these companies. Thinking about what is good leadership, and you can do this in your own company no matter how big or small. What do we got and what do we need? To me, that’s what talent strategy today is all about.
[Tweet “Angel Investor Criteria: What do we have and what do we need?”]
I love that. What do we got and what do we need, we’re going to tweet that out. That’s great. Analyzing what are your current assets and what do we need to get to this goal, right?
Exactly, from a talent standpoint and from a people standpoint. I’m an entrepreneur. I’ve started and sold two big companies. I’ve learned that you have to be very honest with yourself about the talent that you have, and then be even more honest about what do you think you need to get where you want to go. The hard part is taking the steps necessary to get there, whether it’s feedback, coaching, confronting people, firing them, all those things, take guts.
It does.
That’s what it takes.
One of the things that all the investors that I talk to tell me is it’s so important who is on the team, even more that the idea. In other words, we invest in the jockey, not the horse. I’m guessing you have some thoughts on that as well.
Angel Investor Criteria: Am I willing to invest in this person?
Definitely agree with that. When somebody shows me a business plan, the first question I ask them and myself is, “Am I willing to invest in this person?” Did they really get it in terms of how important talent and people really are, or do they think it’s all about the product or the technology?
Let’s say we have some listeners, which I’m sure we do today, that want to recruit the best people for their team, whether it’s a CTO or just salespeople, what is it that you think makes somebody tell a compelling story that makes top talent want to work for that particular leader versus another option they probably have if they’re on top?
I think it’s about fit. A lot of times, there are many talented people out there that may not fit the culture you’re trying to create. It’s very important to ask yourself, what kind of culture do I want and am I striving to build? Then, how do I find the right people to fit that culture? Some cultures can be very autocratic and hierarchical and very successful. Some cultures can be very supportive and team oriented.
One of the things we’ve learned is that there’s not necessarily one way to be successful in business today. There’s a lot of different ways to do it. I think if you’re an entrepreneur, you’ve got to ask yourself, what is the culture I’m trying to create, and then how do I find the right people that will fit that culture? Obviously, they have to be talented around skills and have an ability to contribute that’s exemplary.
[Tweet “Angel Investor Criteria: there’s not necessarily one way to be successful in business.”]
If you’re someone that doesn’t like structure and doesn’t like hierarchy and that’s the culture of the company, whether it’s big or small, you’re going to be miserable, right?
You are. You’re going to be miserable.
If you’re somebody who really likes being able to throw out ideas and brainstorm and not have to be judge if you come up with something that doesn’t necessarily fly, that it’s a safe place to share your ideas without being judged, and fear of being thrown under the bus by your coworkers, then that’s a whole different kind of culture that attracts a different kind of person, I would assume.
Angel Investor Criteria: Be very honest with yourself about what kind of culture you’re trying to build.
Absolutely. It’s definitely true. In working with entrepreneurs, one of the things that I see a lot, is that entrepreneurs who really feel the stress of the business and end up being very directive. They like to make decisions, they feel the pressure of needing to perform, and so they take charge.
Yet what they say is that they want people to take responsibility for the business. They want people who held accountability. They want people who they don’t have to tell what to do. But then they end up telling them anyway. That’s what I mean about being very honest with yourself, about what kind of culture you’re trying to build, and then finding people that fit that culture. Don’t fool yourself.
l like what you just said there, David. This whole concept of, if you get stressed out as a leader and you’re realizing you’re under pressure to hit certain goals or whatever the pressure is, and then instead of trusting your team to be proactive and help you solve it, you start dictating instead of delegating.
Exactly. I say John, having been an entrepreneur for 20 years, that is the hardest thing to do, is to carry the responsibility for the PNL personally but yet be willing to empower and delegate and trust others.
We have another little tweet there, “Delegate, don’t dictate.”
[Tweet “Delegate Don’t Dictate.”]
Exactly. That’s right.
And the alliteration that you gave us, thank you for that. Let’s talk about Transitions at the Top. This is your 12th book? Is that right?
Yeah, right.
Congratulations. You’re certainly prolific. What made you want to write this one, and who is this written for?
I work with a lot of companies, John. What we see is a very common pattern, which is, “We’ve got to change as a company. Let’s go hire person A because that’s exactly the kind of person that we need to change the company.” Companies do this all the time. They go out to decide and say, “We need to be more entrepreneurial. Let’s go higher in entrepreneur.” Then they bring that person in.
Systematically, the culture begins to extinguish the very thing that they wanted to go higher and change the company for. This is something that happens over and over and over. We need to hire somebody who’s going to change us and then we end up changing them.
[Tweet “Angel Investor Criteria: We hire somebody to change us but we end up changing them.”]
We were asking the question, “Why do so many of these particularly large companies hire very expensive people to come in and join companies, and then after six months or a year, they depart?” Sometimes it’s really expensive, and often it’s a sense of failure on the part of the company and the person that they hired to join. That’s what the book is all about.
I think a classic example of that is when Michael Eisner was running Disney and hires Mike Ovitz.
Yeah, exactly.
That didn’t work out.
That’s the textbook case. Ovitz was probably example A. Nike did the same thing. Many companies bring in external CEOs feeling that they need change and the CEO will make it happen, but then the culture takes over. What we found in doing the research on the book is that there are a few myths that people operate under.
Angel Investor Criteria: That period of adjustment, that sink or swim time, is pretty critical and can be pretty expensive.
One is, once we’ve hired this person, our job is done. All we have to do is get them to say yes. Another myth is, this person is really, we’re paying them a lot of money, he’s been successful in a lot of places, she really knows what she’s doing so she’ll be successful here, so we don’t have to worry about it. Or the third one is, why do we really need to help them? If they need help, they’ll ask for it.
What ends up happening, particularly when you bring somebody in, and this can be true on small companies as well, is that period of adjustment, that sink or swim time, is pretty critical and can be pretty expensive.
Let’s address each of those because I love it so much. This concept that you’re going to hire somebody to bring and change and then you try to make them change to fit your culture then nothing’s going to change. It’s almost like dating somebody and marrying them and say, “Now that you’re married, you have to change who you are even though the thing that I was attracted to in you, I don’t want you to do that anymore.”
Exactly.
That doesn’t lead to a successful life. This myth about, just because you’ve been successful on the past means you’re going to be successful in this situation. It’s almost like those warnings they give you when you invest in a mutual fund, right?
Right. Exactly.
Previous success doesn’t mean future.
Or we’re paying this person a lot of money, so he should know what to do.
And that they’re so smart, they don’t need any help. This whole onboarding process, I believe you’re probably a real expert on that from this learning center, aren’t you?
Yeah, we are, because a lot of times you got to get a conversation started about, not the person, but who are we. What is this person forcing us to think differently about and do differently? I was working with a big company in Europe that really wanted to hire a head of human resources to come in and bring together all the human resource functions in the business, which were highly decentralized.
Angel Investor Criteria: The person that is brought in from the outside, after a while, ends up getting blamed for trying to make change.
Large company, male executive committee, they went out and hire the female head of human resources to come in. She began in a very systematic way to bring all the functions together. Lo and behold, within three months, each of the business units were saying, “Wait a minute, we have our own human resources. Why is she trying to pull this all together?” On and on and on.
Pretty soon, the issue became her, not the strategy. This is pretty much how usually the script runs, is that the person that is brought in from the outside, after a while, ends up getting blamed for trying to make change.
Wow, it’s the very thing we hire you to do, we don’t like what you’re doing, and therefore you’re not a fit.
Yeah, and we thought we wanted it, but now that you’re doing it, we realize that’s not exactly what we want at all. Anyway, the book is about what can companies do to help people in this process of change. Some of it is having the right conversations.
Some of it is the senior leader or the CEO really getting involved in this process of understanding how people are transitioning in and out. It’s asking them how they’re doing. It’s having team conversations about the very issues that sometimes are most difficult to talk about. That’s what the book is all about.
I love it. Most people are afraid of change, aren’t they? Certainly, if somebody new comes in, they’re afraid they’re going to lose their job. Then they’re afraid, the excuse that nobody wants to hear is, “We’ve always done it this way, so why do we need to fix it if it’s not broken?” How do you help people with that?
I don’t think people are afraid of change, actually. I do think people really do like to learn. By and large, people embrace change if they understand the context and what it’s all about and what we’re trying to accomplish.
[Tweet “Angel Investor Criteria: People embrace change if they understand the context.”]
You really have to work to make change successful. You can’t just assume that people understand, particularly if you think about it. But in my experience, people don’t like change done to them, but they’re really open to change. They really are.
There you go. That’s a great distinction. I’m open to change but don’t try to change who I am, is that what you’re saying?
Yeah, or I’m open to change but include me in the change. I have my own ideas and thoughts as well. Everybody I need and almost every single company wants to make the company better. They want to do a good job. This is what drives us as people. Harnessing that energy is what leadership is all about.
You are the founder and chairman of Pivot, which recently sold to Korn Ferry. You have first hand experience about how you stay running your company. A lot of the founders fear that, “If investors come in, they’re going to want to replace me after I grow the company to a certain dollar amount because maybe they think I don’t have the skills to take it to the next level.” Do you have any tips for how do you stay running the company that you started and sold?
Pivot Leadership, a Korn Ferry Company
It’s a different skillset John, entirely. The skillset you need to build and drive a company and take responsibility for it end to end. You breathe, sleep your company all the time because you feel that emotional responsibility for it. It’s different than the skillset that you need to survive inside a big system. The first time I sold a company, I didn’t know that. I thought my job was to protect my baby, to make sure they didn’t carve it up, to tell them where they were wrong and how they needed to improve.
I thought my job was to really change the big system because we knew everything and we were doing everything right in our little company. When they bought it, I refused to drink any Kool Aid, anything that look like the Kool Aid. I wanted to change the big system. You know how that’s how that story ended.
You’re like David and Goliath a little bit there, right?
Yeah, exactly. This is what I mean by the skillset. The idea of working successfully in a large system requires a different set of skills. Getting along, negotiation, the long view, understanding where you have to compromise, working well with others, sharing responsibility for the business with others, all those things.
[Tweet “Angel Investor Criteria: Working successfully in a large system requires a different set of skills.”]
Let’s talk about that a little bit, because to me that’s what a really good leader does, is they don’t need to take all the credit all the time. Whether that’s a startup and attracting the right team. Don’t you think that if you have someone that’s willing to share the credit and acknowledge your contribution, that that’s how you create loyalty?
I do. I think you’re absolutely right. I think people suss out when a leader is really sincerely willing to share credit or just looking like they want to. Because our motives are pretty transparent to other people. You have to ask yourself, do I genuinely want others to get the credit or do I think it’s all about me? If you don’t answer that question honestly, then people will know. It’s really, you think it’s really all about you.
Right. Now, since you’ve done this twice successful and have written so many books on this, you’ve now become an angel investor yourself. Do you invest strictly by yourself or are you a part of an angel group?
Pretty much by myself. I’ve been asked to join a couple of angel groups but I’m pretty much going it on my own at the moment.
What kinds of things do you look for when you hear a pitch from someone?
Angel Investor Criteria: Typically, I invest more in leadership than almost anything else.
I’m really interested in a lot of things. Obviously I think having a solid business plan and being realistic about the prospects of the business are baseline. Having a realistic understanding of the competition in the market and the funding requirements is all baseline. I really look at, does the person have their ego under control?
Have they really managed themselves in such a way that they can handle the challenges that are going to come from growing a business? Do they really have a pretty good level of emotional intelligence that can work to attract people and grow the business and work well with others? Do they have a pretty good understanding of the fact that it really is about talent, not necessarily about product? Is it more than just lip service? Typically I invest, as I said, more in leadership than almost anything else.
Let’s do a deep dive into emotional intelligence, this EQ factor that not only makes you want to fit that particular culture but also attracts the right people. Can you give us your definition of emotional intelligence, and how have you developed such strong EQ yourself?
The assumption that I have good EQ is something I challenge myself on a lot. Because I have, like all of us, everybody has impulses. Sometimes it just feels good to speak out and say something, even though it doesn’t move the ball down the field. Self-regulation, I think is very important, a very important part of emotional intelligence. I can sit in a meeting and get bored and then all of a sudden I decide I’ll just throw something in a middle of the meeting to stir it up and make it more interesting and exciting for me. That is an emotional intelligence.
This self-regulation and impulse control is really important. I work with with CEOs a lot and I used to have a teenager. He’s now 20. It’s all about impulse control. This ability to manage your impulses in situations where you want to just act out is what is a big component of emotional intelligence. Self-regulation.
[Tweet “Angel Investor Criteria: High EQ requires impulse control.”]
Then this ability to read other people and understand what it is that they want and need. Not necessarily in a sales way of trying to just sell them so that you can meet their needs no matter what. It’s this capacity to intuit what is important to other people and be willing to focus and understand it and deal with it or address it is a big part of emotional intelligence. The studies on emotional intelligence have been very clear that if you want to develop it in your children or yourself, delayed gratification is really key.
This ability to not act immediately but to think about the long term. What are we trying to do or what are we trying to build? I think that’s true in a business or in a team, is thinking about what’s the bigger picture, the longer term, the delayed gratification. That’s a big part of emotional intelligence as well.
There’s really three elements: Impulse control, empathy, and delayed gratification.
[Tweet “Angel Investor Criteria: Impulse control, empathy, and delayed gratification.”]
And self-regulation.
Okay, got it.
If we go back to the research on emotional intelligence, it’s knowing yourself. Knowing your own motivation and being honest about what that’s all about, not deluding yourself.
And maybe not making decisions when you’re stressed out or tired or jet lagged or hungry or any that stuff, right?
Exactly.
It’s like, I need to take care of myself so that I can have some self-regulation. This delayed gratification stuff. We will get a reward when we do our homework, or we will get rewarded when we hit a certain sales goal if you’re leading a company, right?
Yeah. Or I want my way now, or I want this done instantly, whatever. Some of that, in times of crisis is important. But in general, it’s really managing yourself to think about what is the long term as well the short term.
[Tweet “Angel Investor Criteria: Think about what is the long term as well the short term.”]
Are you geographically agnostic or do you only like to invest in companies and founders that are near where you live?
I’m geographically agnostic. I live on both coasts so it doesn’t really matter to me because I’m all over the place.
How long do you typically know someone and what kind of due diligence do you, as an individual, put your founders through before you invest?
Typically three months, six months. I really like to get to know people and I like to be involved personally as well in the business, as an adviser.
You typically contribute more than just your money. It’s your contacts, your strategy, your insights. Because when you get leadership right, the growth takes off. That’s the big real takeaway.
Exactly, yeah.
I’m a good leader, but so what? It’s like, that’s everything because that’s the talent, that’s the team and when you have a motivated team that’s in sync … There’s such a huge cost of turnover, isn’t there, David?
Angel Investor Criteria: If you can really develop and keep your people and grow them, that’s the ideal state.
Absolutely. It’s just like the turnover customer. It’s so much easier to keep the customer than find a new one. The same thing is true of people. If you can really develop and keep your people and grow them, that’s the ideal state.
I would also say John, I think one of the hardest things about leadership too is dealing with performers who are averaged and well-intentioned and really willing to work hard but yet you know getting into the next level is going to require a different level of talent. Sometimes that’s very hard for leaders to phase into.
Let’s talk about that, because I have a lot of clients that have that very same challenge, specifically with salespeople not hitting their numbers. “They’re trying and I really like them. They’ve been successful in the past but they’re not consistent. I don’t know what to do to fix it.” Do you have any advice for that?
I think you got to step back and ask yourself, what’s going on here? Is it the context? Sometimes salespeople have a bad year for a lot of good reasons. Is it the person? Sometimes people are really functioning beyond their level of capability, that’s true. You have to honestly say this person’s capability to grow to another level of performance, we’re not going to get there. Honestly, that’s the big part of what you have to address.
Angel Investor Criteria: The other thing is you have to ask yourself, “Is it me as the leader? What am I doing to create the environment where this person is not performing?”
The other thing is you have to ask yourself, “Is it me as the leader? What am I doing to create the environment where this person is not performing?” Ask yourself that. I think you have to step back and think about it realistically. My default is to try to develop and grow the person. Is there something I can do to help this person grow? Is there an experience or is there a coach, a program, a challenge I can give them? Is there feedback? All these things can help grow a person and help them develop.
But at the end of the day, you have to cut your losses too. As an entrepreneur, you learn that. If I’m thinking about the good of the business and I’ve tried everything else, I got to cut my losses. In my experience, it’s often been not soon enough. I’ve often waited too long to take that step.
That’s great advice. Normally, I ask my guest to recommend books for the listeners. Besides obviously, Transitions at the Top, you have 11 other books, so I’m not going to even ask you to recommend anybody else’s books. Can you pick one or two of your other books besides Transitions at the Top that we could put in the show notes, that you can recommend to our listeners about running a small business and getting funded?
Why CEOs Fail: The 11 Behaviors That Can Derail Your Climb to the Top and How to Manage Them
Yeah, there’s one book that is sold, probably the best seller of all the books I’ve written. It’s called Why CEOs Fail. What this book discusses are the dark side of our personality. All of us, we have a dark side of our personality. Things we’re not proud of that we do when we’re stressed out or when we’re overworked or tired. It might come out in terms of being impatient or being melodramatic or sometimes being detail-focused.
This book describes these things and talks about what you can do as a leader, to manage your, what we call your derailers or your shadow side. The point is, when you know you get to be the CEO, you’re shadow casts a wide dark space over everybody. I used to work for the CEO of a company and we would ask his secretary, “What’s the weather report today?” She’d say, “It’s sunny. It’s raining. It’s cloudy.”
Because we knew, as the CEO, he was sometimes what we call his derailers would just take over. Why CEOs Fail talks about what you can do to manage those parts of your personality that can affect your business and your performance of your whole company, and what you can do about it.
That’s great. I would ask you, is there one particular thing, is it rest and is it a lot of these emotional intelligence that we talked about earlier as one of the ways to deal with it?
I think it’s asking people and staying open to the feedback that they give you.
Great.
In other words, what do you do that makes it challenging for other people to perform? One of the things I often tell my clients is get them together and ask them, “What are two or three things I can do to be a better leader?” and then leave the room.
Nice.
Let them work on it for 20 minutes and then come back and start a conversation about what are you doing that keeps them from being as productive as they need to be and how could you be more effective? Sometimes you get information you don’t normally have and you find out what’s in your shadow side.
It all goes to that culture you’re talking about, which is creating a safe space to let people do that.
Exactly. That’s exactly right. What I tell CEOs is the higher you go, your jokes get funnier, your insights get brighter, your ideas get smarter. It just happens magically. Overcoming that, you got to give people permission to tell you, “Here’s what I really think.”
Great. That’s a great one. Why CEO’s Fail in addition to Transitions at the Top. What’s the other one you want to share?
The other one I would say is the book called Head, Heart and Guts.
Great title.
Head, Heart and Guts: How the World’s Best Companies Develop Complete Leaders
What this means is as a leader, you’ve got to be smart. You got to have a strategy and a good sense of direction. You’ve got to have heart, which is what we’ve talked about, this emotional intelligence or this ability to connect with people and read them and relate to them and empathize. Then you have to have the guts to take the tough calls, to act with integrity, unyielding integrity sometimes. That takes guts. You have to have all three. If you think John, about the leaders you know, usually you can say they’re one of those three. They lead primarily with one of those three. Good leadership is having all three.
The guts to say no to bad clients, even though you might need the money. That’s the a tough decision in addition to letting go of somebody who’s not working out.
Yeah, or the guts to let somebody go who’s really performing but doesn’t live the values that you’re trying to create in your business.
Right, because then that sends a message to everybody else which is you can be a jerk if you bring in the numbers and that totally changes the culture.
Or the guts to not take business that doesn’t fit your strategy.
There you go. We don’t that, that’s not our specialty. You’ll just be miserable if you take the wrong client even if the money is good.
We need the revenue, let’s do it, but it’s not going to take us where we want to go as a company.
The long term vision, I love it. David, this has been great. How can people follow you? What is your Twitter handle and all that good stuff?
It’s just @daviddotlich. I’m on Twitter.
That’s easy. Obviously you have a great LinkedIn profile and they can find you that way. It’s been a pleasure having you on the show. I love your insights about what makes a good leader, emotional intelligence, and most of all, what you look for when you listen to a pitch is how much does a person focus on talent instead of the product. Thanks again.
Thank you John. It’s been fun. Take care.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
@DavidDotlich on Twitter
Why CEOs Fail by David Dotlich
Head, Heart & Guts by David Dotlich
Transitions at the Top by David Dotlich
Crack The Funding Code!
Register now for the free webinar
The Successful Pitch – Book Trailer
Share The Show
Did you enjoy the show? I’d love it if you subscribed today and left us a 5-star review!
-
- Click this link
- Click on the ‘Subscribe’ button below the artwork
- Go to the ‘Ratings and Reviews’ section
- Click on ‘Write a Review’
Journey to Entrepreneurship – Interview with Kurt Theobald
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Kurt Theobald is the CEO of Classy Llama, a full-service ecommerce agency. He has failed countless times, but has always gotten back up to try again. Failure doesn’t define you and the journey to entrepreneurship is often a journey of self-discovery as well. Kurt discusses company culture, the importance of people, and so much more on this episode!
Journey to Entrepreneurship – Interview with Kurt Theobald
Hi. Welcome to The Successful Pitch podcast. Today’s guest is Kurt Theobald. Kurt is the CEO and co-founder of Classy Llama, an Inc 5000 eCommerce agency that has already done $5 million in revenue. I found out about him from a wonderful blog he did on the three points of wisdom. He said, “Entrepreneurs should create shiny new things. The edgier the better.” Reality disagrees. Kurt is going to tell us all about that. Kurt, welcome to the show.
Thanks a lot, John. I’m glad to be here.
Tell me about what you’ve learned about valuable work often lies hidden, that you have to dig deeper. You said you’ve cut your teeth on ten previous business, all of which died. You said you went too far. What do you mean by that? What happened that you’ve learned from ten things not working that’s made, now you are so successful?
Journey to entrepreneurship: I’m just going to do something that’s not as cool, I’m going to do it really, really well.
I think there is a culture in the entrepreneurship circles, there’s this culture that drives towards you’ve got to do the next big thing. I tried to do the next big thing so many times. I realized that sometimes, doing something that’s not cool but it’s in a niche where there’s a real need, sometimes that can work a lot better and a lot faster than pursuing the next big thing.
That’s where I got my traction, is I’m just going to do something that’s not as cool, I’m going to do it really, really well. That works out pretty well because a lot of people that don’t do things really, really well in those uncool niches. That’s worked really well for us.
Talk about what’s considered a cool thing versus an uncool thing.
The cool things are the things that will publicly change the way that people do things. A lot of times it’s going to be consumer facing. There’s this whole market where you’re serving businesses that people don’t really see. That’s just not cool because nobody hears or knows about it. When you’re doing something that’s going to change the behavior of the consumer, it’s going to reshape the world in some way, these are the big things that people want to do.
They want to change the nature of energy or the way that people buy things or a big new way to play video games. Virtual reality, how to apply that? There’s all these big things that are being developed that honestly, it probably has lots to do with how much they hit the news, honestly. The more they hit the news, the cooler they are.
Your willingness to do “the uncool things” sometimes require some sacrifices. Tell us about what you and your partner, Erik, had to do as far as just the office space? You have to be almost like MacGyver sometimes.
That is true. It’s probably true of both cool and uncool things. It may just be a common part of successful entrepreneurship. It’s the willingness to go through difficult circumstances. Things like you hear a lot of entrepreneurs started in a garage. We started in a garage. It’s a common thing.
Journey to entrepreneurship: It’s the willingness to go through difficult circumstances. You hear a lot of entrepreneurs started in a garage. We started in a garage.
I remember in the early days with our business, we had a two-car garage in my house that we were using as an office. In the winters, we have this thin 6 mil plastic hanging up by the garage door to try to create some barrier for heat. I had a wood fire stove in the adjacent room and that was all we have for heat. It got really cold in the winter. The guys are trying to code and their hands are shaking because it’s so cold.
In the summers, we took a panel out of the two-car garage door and put three quarters of that panel, we put in this particle board and then put an AC unit in there to try to keep it cool enough, which also didn’t worked very well. We we’re too hot in summers, too cold in the winters. I guess it’s part of being an entrepreneur and cutting your costs to the quick. You just bear through it because you believe in what you’re doing.
You really have to have tenacity and grit and passion to survive those kinds of things, otherwise you’re like, “It’s not worth it.” You have to believe in what you’re doing and that you really want to work for yourself and have a big why of why you’re doing this. Even if it’s “uncool”. I just think that’s so valuable. Congratulations on exceeding $5 million. So few startups ever get to $1 million, let alone 5. What is it that you could share as the motivation factor beyond just making money that makes you so successful, that makes your clients at Classy Llama want to keep working with you?
I think that from the very beginning, you mentioned that very important why, I actually started a professional journal back in 2004 towards the end of the year. That’s now about twelve years ago or eleven and a half years ago. At the very beginning of that journal, I expressed that who I am as an entrepreneur, it’s part of my DNA.
[Tweet “To do anything other than be an entrepreneur is to betray who I am.”]
To do anything other than be an entrepreneur or to, when I fail, when I fall down, to not get back up and keep going is to betray who I am, and that I will not do. That powerful why and that foundation, it really makes it to where you’ve made, as a friend of mine says, a diffision. A diffision means, like incision is to cut, like an incision as to cut into. Diffision is to cut away. You’re cutting away all other options and you have one path, and you have to stay in that path.
I love that.
Journey to entrepreneurship: You have to cut away all the other options so that you really only do have one path to keep going.
I made a diffision according to who I am and I have to stay on that path because I’ve cut away all other options. It’s like scuttling the ship from the, I think it was Cortez or whatever, that scuttled the boats. Now, they only have one way to go. They can’t go back, they had to go forward. That’s so important because there’s so much pain involved with entrepreneurship that you have to cut away all the other options so that you really only do have one path to keep going. Because you never would have done this if you knew how difficult it was going to be. It’s just important to have that frame of mind. This is the only way to go.
It’s so valuable. What you said there, if you don’t come back from failure, you’re betraying who you really are. Failure might be something that happens but it doesn’t define you and it certainly doesn’t stop you from trying again.
I think it’s very important to clarify that who I am isn’t necessarily who’s someone else is. My walking in that was appropriate, where someone else who, they’re more of a supporter or they come alongside, they’re more consultative, whatever it is. Different people have different strengths. If you put someone who’s not an entrepreneur and they go, “I want to be the American entrepreneur because of what other people have said about me, rather than who I really am,” it can really get them in a mess.
[Tweet “Journey to entrepreneurship: Different people have different strengths.”]
This whole thing you talked about is, the journey of entrepreneurship is really a journey of self-discovery, which I think is so important because whether you’re pitching yourself to a client or an investor, they’re buying you much more so than the idea or your skills, don’t you think?
Especially in an early stage of a business, they’re investing in you, not this idea. The difficult thing about business is not getting a good idea. There’s lots of people that have good ideas. The difficult thing is executing that idea and bring it to fruition and making the smart choices and being able to receive good feedback and not be too proud to receive the wisdom from others and have the fortitude to endure through the pain that is going to be required to get to the finish line.
Journey to entrepreneurship: Have the fortitude to endure because it almost always takes longer than you expect it will for it to be successful.
Because it almost always takes longer than you expect it will for it to be successful. You hear about these huge successes that happened overnight. Usually, there’s a long story before those successes. Secondly, those are super rare even if they do happen. You got to invest in people that are going to be able to endure, going to have humility to receive quality feedback and have the wisdom themselves to be able to guide an idea to quality fruition.
The willingness to be coachable and not think you have all the answers and not even ask for help is so important to realize that you don’t have to know everything and you can use your resources and your network to get insights and give you a different perspective. Because we can become so myopic on thinking, we only see one way out of this. We always have other moves. Let’s talk about your big point about be careful who you accept wisdom from and how you choose your mentors and advisers. Not just by how successful they’ve been, but are they a cultural fit with your philosophies. Can you speak to that?
Something that I’ve learned by just interacted with different people, and there’s a lot of successful people out there, according to the world standards of what success is. A lot of people with a lot of money out there. But, that doesn’t necessarily mean you want to learn from them how to become wealthy. A lot of people say that’s the objective of entrepreneurship, is I want a lot of money.
The challenge is the way you get that money in the end will determine the quality of your life in all other aspects. If you’re learning from someone who has a bunch of money, has been divorced three times, works 80 hours a week and has for the past 30 years, is that the way you want your life to look? Is that what kind of money you want to have?
[Tweet “Journey to entrepreneurship: Be careful who you take wisdom and money from.”]
Because money can own you or you can own money. If you take wisdom from those who have learned how to become the slave to money and they have a lot of it but they’re still a slave to it, that’s no life to live. Just look to the advisers that have a life that looks like the life that you actually want to have. Not just in the sum of money that they have or the make and model of their car. Look at his family, look at their relationships, look for the deeper things in their life because those are the things that really has staying power.
I love that. That’s so important, because otherwise you’ll burn out. If you don’t have a balance going on and a reason to have some other life outside of what your business is, people think, “I’ll just put that all in the back burner and they’ll still be there when I finally become rich and successful and then I’ll be happy.” You have to figure out a way to be happy during this whole process.
I think what ends up happening is they say, “Once I’m rich, then I can take …” I think what happens is that other parts of them atrophy. By the time they actually get rich, that’s the slavery, that’s all they have. Suddenly their lives are about building and growing. As Dr. Seuss says, the biggering and biggering and biggering. That’s what it’s all about at that point and they’ve lost the context, they’ve lost the sensitivity to the other things that are so much richer in life.
As you get more and more successful in this success that you now have, how do you find the right people to join your team that have this mindset?
[Tweet “Journey to entrepreneurship: Right experience, soft skills, and cultural alignment.”]
It adds a third variable in any interaction when I’m evaluating people for the team. They have to have the right experience, they have to have the right soft skills. The third thing they have to have is the right cultural alignment. That’s really difficult to find all three things.
Let’s take a little deep dive into each one. Obviously, the experience is pretty obvious. You need somebody to be a creative director or know technical stuff about eCommerce since that’s what you do for people and you want them to prove that they know how to do that. Tell us what you mean by soft skills, is that emotional intelligence?
Journey to entrepreneurship: There’s things that you learn through osmosis and through relationship and culture, you learn those soft skills.
By soft skills, I mean things like their ability to communicate effectively, to write things down in a way that’s coherent. Maybe this extends somewhat from a culture, but just to be able to like be generally responsible for showing up on time and showing up in meetings when they say they’re going to and scheduling their time. Just some fundamentals life skills, time management, communication, those kinds of things that you don’t go to necessarily a class to learn them. There’s things that you learn through osmosis and through relationship and whatever the culture that’s around you, you learn those soft skills.
Let’s talk a little side note, side road there because I think what you said is so interesting. Just about the basics of being on time. I had another guest who wrote a book about managing millennials. That’s anywhere between 16 and 36 at the moment. Some of the baby boomers are having so much trouble managing millennials because they have a different mindset of what they think about work.
If you don’t tell someone what your expectations are that they show up on time, then they’re going to think it’s loosy goosy. Then you can’t get mad at them if you haven’t been very clear at the beginning, “This is what we need from you.” Do you have any insights as to how important it is to set the tone and expectations right from the get-go or even before you hire someone to make sure that’s a fit?
That’s actually really important. I feel like when you’re in the interview process, you’re not just evaluating whether they are right for the team. You’re actually setting context. You’re setting the table for what and that the foundation for what it will be like, provided they actually do get selected and join the team.
Setting those early expectations around, “We expect you to be personally responsible.” That’s like tying your shoes in our organization. It’s a fundamental. You got to tie your shoes before you run the race. Just being able to manage your own time, to communicate effectively, these are the tying the shoe things in our organization.
[Tweet “Journey to entrepreneurship: Tie your shoes before you run the race.”]
I love that. You have to tie your own shoes before you run the race. We’re going to tweet that out. That’s great. Now, let’s talk about your culture alignment. How much time did you spend defining what the culture was so that you could decide what you wanted to have and what makes your culture unique?
The culture, my understanding of the culture and what I want to design and create into the culture, has been an evolution over a number of years. Early on, I really felt like I have this vision for what I want the culture to look like. I’ve had a lot of jobs and I’ve experienced a lot of different cultures. I didn’t like any of them that I experienced, there’s a lot of things I didn’t like. I had this thing I wanted to create. I built out a presentation and I built out a vision for it. There’s a lot of good to that.
I was able to articulate it and express it. It attracted people. However, what I learned through experience is that you can’t just write down the culture you want to have but if the people in your organization that make the culture what it actually is. You can write it down and that’s what it theoretically is.
Journey to entrepreneurship: Your culture actually is the sum of the interweaving of the thread of all the people in your organization and what they make it.
What your culture actually is, is a product of the sum of the interweaving of the thread of all the people in your organization and what they make it. You can still design a culture. “This is the culture I want,” but then what you have to do is you have to go out and you got to find people that don’t just look at the cultural state and go, “I like that. That’s great.” But rather, you find out, are these the kinds of people that are going to contribute into this culture? Do they bring this culture to the organization?
Because that is the only way to really make it happen. You can guide a little bit here and there, but ultimately, the people you bring together have to make the culture what it is. It’s really all about that culture alignment, making sure you don’t just like the culture but you align with it. You’re going to be a contributor to the culture. I tell people, I may be in a position where I’m the last line of defense for the culture. But all of us, all of us need to be culture bastions. We are the propagators of the culture, every one of us.
[Tweet “Journey to entrepreneurship: We are the propagators of the culture.”]
Wow. That’s really walking your talk, isn’t it? Giving a people a sense that the tapestry needs all of the threads to make it work. When you make people feel like they’re part of something, acknowledged and needed, then you get their passion to work in all kinds of situations. Because they love that. That’s what people are looking for much more than just a paycheck, is a sense of acknowledgement, appreciation and contributing and making a difference.
I think, if you can create a culture where that is the thing that people want to come to work for, it gives them a reason to get up in the morning, gives them a personal sense of pursuance, you’ve really done something well. My suspicion is that’s the reason you’ve been so successful now, been able to achieve the revenue you have.
[Tweet “Journey to entrepreneurship: Revenue is a by-product of what really matters.”]
I agree. Revenue and all, these are reflections. They’re by-products of what really matters. To speak to what you’re saying, all that I have done is I really try to be careful to honor each person that I’ve interviewed. To evaluate, is this going to be good for them to come into this environment? Are they going to be able to contribute to this environment and how are they going to thrive in this environment?
I want each person that comes into the organization to be able to be fully themselves, to not have to check part of themselves out of the door when they come in. Speaking of millennials, I think this is so important to capturing the hearts of millennials. I look at the millennial generation and there are things I really appreciate and things that I think are things that they struggle with. That’s true with any generation.
Journey to entrepreneurship: Millennials really thrive on and demand authenticity and they thrive on being independent.
One of the things I love about millennials is that they really thrive on and demand authenticity and they thrive on being independent in their thinking and really valuing, “I want to be able to express myself and be who I am.” I love that.
I want to make sure to protect that, because when you do that and you make sure that you got the right people in your organization that they can just be themselves and it’s going to work, suddenly you no longer have to draw passion out of them. You don’t have to draw it out of them. It will naturally organically come from them because they’re just being who they are. You don’t want to force it anymore, you don’t have to draw it anymore. It comes from their core. It makes everything a lot simpler.
I’ve never heard anybody express it quite like that. If you have somebody who’s just “phoning it in” and doesn’t get to express themselves and has to feel like they’re a robot and has to tone down their personality and their vision and their comments because they’re not appreciated or wanted, then there’s no way there you’re going to be passionate about your vision.
If you encourage them to be authentic so you don’t have to be one person at work and one person off work and just looking at the clock until you can get off work to be yourself, then they’re passionate about their whole life and passionate about their day. They’re probably not going to leave at the next offer that’s just slightly more money because they’re motivated by more than money.
I can speak from experience, watching this happen. First of all, the retention level at Classy Llama, and now Nucleus Commerce, it’s the second company I started, is just phenomenal. People stay. I really believe it’s because they are able to be fully themselves here. The second thing is, we haven’t compromised on our team growth.
Journey to entrepreneurship: When there’s an opportunity to grow, we don’t get loose on our standards in order to take advantage of the growth opportunity.
When there’s an opportunity to grow, we don’t get loose on our standards in order to take advantage of the growth opportunity. Rather we limit our growth to how quickly we can find quality people. This is wisdom you can find from Jim Collins and others.
I’ve seen the benefits of it in than people want to stay because they know that they’re being honored in who else is coming into the environment. They get to work with great people and they get to be fully themselves in the space that they’re in. That makes a space that they want to stay in.
One of the big costs that’s hidden and really doesn’t get itemized is the cost of attrition and turnover. It’s hard to put a dollar amount on it. When you have to start from scratch and retrain somebody and get them to start developing relationships with the clients from the get-go, that’s a big hit on your productivity, which affects your bottom line. If you can attract and retain good people, that is gold right there. That’s a big, big part of being successful, financially, emotionally, every way.
I think that a lot of times, there’s too limited a view on the compounding effect where you can look at money and you say, “If I got a 5% return on money every year, after 20 years, it’s way bigger than 100%,” which is 5×20. It’s true of time. A lot of people don’t realize that time is a resource that compounds. How you invest your time now and the return you get now is something that can compound.
The other thing is people. The investment you make in people and in building that team. If they stay with you and the team stays together, it’s like a sports team. The longer a sports team stays together and stays united, the more effective they’re going to get because they just start learning each other.
[Tweet “Journey to entrepreneurship: Invest in people and in building your team.”]
They learn the game better, yes. But they also learn each other better and that’s strength of the fabric, as we’re calling it, grows and you become more effective together in what you’re doing as well as more effective as a team. I can’t underscore how powerful that is.
I watched these private equity companies come in and they buy up other companies, or even public companies, whatever. They come in and they buy in, they buy these companies and they insert, they’re impose their culture on them. I see all of the good people scatter. People are falling off left and right, they’re quitting. I’m going, that company that bought that organization doesn’t understand that the most valuable thing in that company is leaving, and it’s the people.
Let’s talk about also the importance of saying no to the wrong client as well. You can’t just take any client even if you need the money because that can be a nightmare as well. A drain on your time, your employees’ morale and end up maybe even costing you money. Have you had that experience?
Journey to entrepreneurship: You have to draw a line and say, “These are the ones we’ll take and these are the ones that we won’t.”
Yeah, many times. Honestly, that flows from that same thing of we have standards and we stick to our standards. Our culture standards and who we work with as a client early. Especially early, it’s just so painful because you’ve got only so many opportunities and you need the revenue. You have to draw a line somewhere though and say, “These are the ones we’ll take and these are the ones that we won’t.” I think I can say confidently that in my business, I’ve never turned away a client and regretted it. I have many times accepted a client and regretted it.
There we go. There’s the line, everybody. You never regret saying no but you’ve often … We can say yes and regret it. It’s very much like dating too. I think people respect you if you’re not desperate and say, “Look, this is who we work with. This is who we’re for, this is who we’re not for and we’re not so desperate that we’re just going to take anybody’s money.” It’s not a dictatorship. When you work with us, it’s a collaborative situation. We may not be a good fit for you. It’s not just a one way street of you deciding whether you’re going to hire us or not.
I think a lot of it has to do with the willingness, where people want success before it’s time. When they’re engage with these different clients, they’re saying, “I can accept these fewer clients and I can live on a really lean budget and rough it for a little bit longer in order to be principled in who I am expecting as clients.” Or, “I can say yes to more and try to grab that success before it’s time.” It’s just that lure of impatience. Let success happen when it’s time. You focus on living by the right principles and the right standards and doing things the right way and success will come when it’s time. You just do the hard work, success will come when it’s time.
[Tweet “Journey to entrepreneurship: Do the hard work. Success comes when it’s time.”]
Nice. Let’s talk about who your ideal clients are, both for Classy Llama and Nucleus.
Classy Llama typically works with companies that are generating, let’s just say $1 to $50 million in online sales. They’re looking for a partner relationship and they’re focused on or they’re needing help or wanting to build on the Magento platforms. We’re focused on that piece of technology, that’s a key niche for us. We’ve been building on the Magento platform since it came out in early 2008. We have focused on it, we pushed everything else off our plate and focused exclusively on it since being gold partners with Magento, which is the highest level of partnership you can have.
Anyway, we’re deeply invested in Magento, we know it very well. We look to help. It’s established eCommerce companies or well-funded, sometimes well-funded startups as well, get going in their eCommerce businesses on the Magento platform. The Nucleus Commerce actually serves the same market. It just does it in a different way. We sell software extensions that help people specifically that are getting on Magento 2.0, which just came out recently. We’re one of the early providers of additional software that enhances the functionality and offering of the Magento 2.0 platform.
Fantastic. I love how much symbiotic relationship there is there, that the extension of the second company totally fits the knowledge you learn from the first. Is there any book that you recommend for our listeners to read about life or business that you found specifically inspirational or helpful?
Good to Great: Why Some Companies Make the Leap And Others Don’t
Two books. One is Good to Great by Jim Collins. It’s got some really great fundamentals there. What I love about it is it’s all data driven. There’s a lot of things that are data driven. Like, “That’s data driven but it doesn’t really smack of true because you can make any data look like anything.” I read what he found and I feel like this was a true blue, data driven exploration because it’s found a lot of unexpected, surprising truth that isn’t popular.
When I see something that’s not popular, and I see the data behind of them like, “Okay, that’s not popular and I know it’s true, and so I trust it.” I really believe they did good work with the Good to Great book.
I would actually offer up for young entrepreneurs that are just getting started, I’d offer up a book that I wrote called Finding Truth at the Bottom. It really outlines three keys to being effective, to being productive. It also really tries to combat certain common paradigms that I think are really confused about what the expectations are, around what it looks like to be an entrepreneur, to run a business.
Finding Truth At the Bottom (Leadership In the Round, Vol. 1)
I just think there’s some common held lies about what that means. This book really tries to combat that. It’s a simple read. It’s relatively short. I know a lot of people have really gotten a lot a value out of it.
Fantastic. How can people follow you on social media? What’s your Twitter handle, all that good stuff?
My Twitter handle is easy. It’s just @KurtTheobald. I’m on LinkedIn, /in/KTheobald. Those are the two key interface points on the business front that I use.
Fantastic. Kurt, it’s been a pleasure having you share your wisdom of how you’ve been so successful. Not just in revenue, but creating a culture that attracts and retains the people who not only share your vision, but contribute to it.
I appreciate the opportunity, John. I hope I helps a lot of people.
Fantastic. Thanks again.
Thank you. Bye.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Classy Llama Website
Nucleus Commerce Website
@kurttheobaldon on Twitter
Kurt Theobald on Linkedin
Finding Truth At the Bottom by Kurt Theobald
Good to Great by Jim Collins
Crack The Funding Code!
Register now for the free webinar
Fox 11 News Los Angeles John Livesay The Successful Pitch book
Share The Show
Did you enjoy the show? I’d love it if you subscribed today and left us a 5-star review!
-
- Click this link
- Click on the ‘Subscribe’ button below the artwork
- Go to the ‘Ratings and Reviews’ section
- Click on ‘Write a Review’
How to Close A 15M Round – Interview with Mark Bidwell
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Mark Bidwell helps traditional organizations become more innovative and entrepreneurial in the digital economy. He helps to lead intrapreneurial change in market-leading companies such as BP Oil, the Hay Group, Syngenta, and more. Mark is also the co-host of the Innovation Ecosystem podcast, where he interviews thought leaders who are disrupting out-of-date methods, turning them into experiential growth. Mark talks about his work with Syngenta as well as how to get on the investor’s ‘good side’ on this episode.
How to Close A 15M Round – Interview with Mark Bidwell
Hi. Welcome to The Successful Pitch podcast. I’m thrilled to have today’s guest, Mark Bidwell, on with us because Mark has so much to tell us about innovation, fund raising, pitching. He actually has his own podcast called The Innovation Ecosystem podcast. He spent much of his 20 year career seeking out people and resources to help them innovate and grow businesses. He’s worked at BP, The Hay Group, which is part of Korn Ferry.
Most recently, Syngenta, where he led the creation and development of a $2 billion specialty crop business unit. He learns from other people’s experience. With his Innovation Ecosystem podcast, he brings fresh insights and perspectives and tools that you can use to get yourself funded fast.He is here to talk about how to close a 15M round, among other things. Mark, welcome to the show.
Thank you very much, John. It’s a great pleasure to be here.
You are calling in from?
From Switzerland.
Switzerland. I love it, how global the world has become. Mark, I always ask my guest to take us back to what made you decide to pursue your career. Did you know in college that you wanted to get into business and investing and raising money for startups?
No. I didn’t, actually. I’m an anthropologist by training, and the reason I studied that was because I just love reading books about different cultures and explorers and travelers. I found once I graduated that it didn’t really qualify me to do anything. I followed my father into business. He was in the food business. I worked for his home delivery supermarket startup in London. This was in 1990. From there, I got approached by British Petroleum.
I thought startup is good but actually, to get a decent graduate trainee program under my belt with a large corporation, which BP was and still is, would have made a little bit more sense to me. I joined them, was there for three years. Then I found myself in consulting because consulting I think is a great way of learning, getting a lot of exposure to a lot of industries and lot of disciplines very, very quickly. I really enjoyed that.
How to Close a 15M Round: I was in the right place at the right time and continued to help innovate in a number of different roles.
That’s where I started getting interested in innovation, business model innovation, because the consulting industry, as a business or as an industry, isn’t a particularly exciting business model. Because to make more money, you either have to work harder or charge more, and you reach a ceiling on both of those. I got involved in thinking about what other assets did this company, The Hay Group, have that they could make available to their clients?
I’ve found myself launching an internet business in the mid 90s in Europe, which was quite hard work back then. It’s hard to think of it, but it was. 20 years ago the world was very different. That got me into thinking more about business models, more about technology. I ended up going to work for the CEO in Philadelphia to help drive this program.
Finally then, family came along and we relocated from the US back to Europe, to Switzerland. I joined Syngenta to open up their biofuels business. That one thing led to another. I was in the right place at the right time and continued to help innovate in a number of different roles. I guess, I’m an accidental executive to be honest with you, John. It was never really my plan but I was continually being offered really interesting opportunities.
That took me to a place where, at the end of last year, the end of 2014, I decided there weren’t the opportunities available in that company any longer. I thought now is the time to go out on my own. That’s when I left, set up as an entrepreneur. I became chairman of one company and on the board of another company, and I’m building a business related to, but not specifically around Innovation Ecosystem. Really, helping companies and individuals become more entrepreneurial, essentially.
Wow. Let’s take a deep dive a little bit, if you don’t mind, because it’s such a fascinating story. This $2 billion Syngenta. Tell us about what that was like because it’s being an intrapreneur, it sounds like to me. You’re within this big corporate structure, but you’re being very entrepreneurial within it. Is that accurate?
Absolutely. Syngenta is the largest agri business in the world. In the previous role to that, to leading the specialty crops unit, I was looking after a portfolio of products, which were coming off patent. I was lucky enough to have a great team and a couple of quite good ideas that we were able to implement, which resulted in some really significant value creation for shareholders.
What normally happens when a product comes off patent is that the price collapses overnight, or in agriculture, it might take a couple of years. In certain pharmaceuticals it collapses overnight. Literally, as the trucks leave the Israeli manufacturing facilities at one minute past 12 full of your product. It’s an extraordinary industry.
How to Close a 15M Round: I was able to take all the previous experiences of creating the conditions for innovation and apply them across a team of many hundreds of people around the world.
Now, in our business we are able to change that dynamic completely with a completely different strategy, related to the characteristics of the product we were looking after. As a result, we are able to raise prices for two subsequent years, patent, which was unheard of in the industry. As a result of that, I was lucky enough to be offered an opportunity to form a new business unit and grow that out. It ended up as about $2.3 billion dollar business unit.
This was servicing or looking after probably 40 different crops around the world, growing in every part of the planet, essentially. It was a hugely exciting, challenging, scary role for four years. What I was able to do John, was to take all the previous experiences of creating the conditions for innovation and apply them across a team of many hundreds of people around the world. We are fortunate enough to generate some quite exciting results as well.
It’s amazing. Were you solving a particular problem of world hunger with all these crops? Or what was it that caused that incredible growth?
I guess what we did was we thought far more about the grower and what their issues were and what their problems were. A lot of these growers were based in subtropical or in tropical environments where they were … In agriculture, I think it’s the largest employer in the world, agriculture. I think it’s something at 17% of the world’s population are directly or indirectly employed by agriculture or supported by agriculture.
How to Close a 15M Round: Their issues really are not often how do they grow their crop, but it’s how do they actually ensure that long-term, they have a business so they can hand over to their children.
A lot of growers, you come from the US, there are some fantastically, wealthy industrialized, professionalized growers. They reckon there’s about 100 million professionalized growers around the world. There’s something like 500 or 600 million smallholders who are living, not quite hand to mouth, but whose family in their extended families rely on crops. What we did was we look and try to understand, what are there issues?
Their issues really are not often how do they grow their crop, but it’s how do they market their crop, how do they fund the investment in their crop, how do they actually ensure that long-term, they have a business so they can hand over to their children.
We took a very holistic view and we are able to then look at what’s available in the market and pull together a number of different solutions, which could be financial solutions. It could be traceability solutions, it could be new business models, and bundle them around our core products. That enabled us to grow our market share, as well as create more value for the overall value chain.
That’s such a huge takeaway, is you looked at something and figured out a way to see it in a different angle, an innovative way to look at something to solve a big problem, it seems like to me. Now, you’ve taken that skillset and that experience and have applied it to other things. Since this is all about how to make a successful pitch and one of the things investors look for is, obviously, rapid growth. Can you talk to us about your … Congratulations on this fifteen million series B that you’ve just closed.
This is in agriculture. It’s an architect company based in Canada. There are number of different ways that you can look at this industry. I looked at it with the management team and we figured out that this is what … The most compelling way of thinking about this is as a platform play. This company and the technology that we have enables other organizations or other products become far more efficacious and successful and perform far better in the field with our ingredient, if you like, which is the technology.
It’s almost like in Intel Inside. If you look at it that way, you’re able to tell a story to investors, which is around, “This isn’t about how much product we can actually sell to farmers, but it’s about actually we can enable a whole new category of products to become far more mainstream in the world of agriculture. Literally around the world but starting in North America and moving very quickly to Europe.” It’s using a different lens.
[Tweet “How to Close a 15M Round: We used an analogy that investors could understand.”]
I think what we did was we looked at the pharmaceutical industry and said, “Look, this is really where the biosimilars were ten years ago, which are now a huge business for a lot of big pharmaceutical companies.” Ten years ago, they were just a very very small subsegments. We used an analogy that investors could understand and say, “Look, here we are at the beginning of this curve in this industry. By the way, this is a $70 or $80 billion industry.” There aren’t many companies like ours out there, at this stage, with this technology, with this potential in front of us.
You did a couple of things there that I want to really summarize for the listeners, which is when you’re pitching, no matter whether it’s a seed round, a series A round, or in this case a series B round for $15 million, you need to paint a picture and not talk about just numbers and how something works.
Instead use analogies, see things through a different lens and then talk about how big the market is. What you’re doing is describing something that’s very disruptive, it sounds like to me, when you talked about it almost being like Intel, right?
[Tweet “How to Close a 15M Round: you need to paint a picture.”]
Yeah, absolutely. When you got a huge market opportunity in front of you, like we have, it is important to get people of a glimmer of how they can actually take advantage of that in a leveraged way. Because to build out a really significant organization with a direct salesforce, with all the standard marketing, it’s going to take an enormous amount of resource.
This is about finding a way to accelerate that growth and scale that growth, leveraging some of the other dynamics in the industry that potentially some of these investors weren’t necessarily aware of. Most investors in this space have been looking at drones, they’re looking at precision agriculture, looking at water and very few of them are actually looking at this space.
Being able to bring this space into mainstream and give them a glimpse of how it could grow into something significant, was really what we, the management team in particular, the CEO did very well to close this funding. It was probably 40% oversubscribed. We were very happy with how it developed.
[Tweet “Give investors a glimpse of the future with you”]
Wow. So you’ve really became irresistible and you had a multiple fear of missing out thing happening. You were able to select which investors you wanted to work with.
Absolutely. Now, you and your listeners will know, it’s not easy. It’s getting the first, the lead investor, which takes a lot longer than one hopes. Once that group is in place, then a number of others do fall in partly because of fear of missing out, partly because they don’t want to do a lot of the work associated with being a lead investor, and partly because you get developing more confidence and you are able to communicate with more confidence once you got the first anchor tenant on the term sheet, essentially.
Now, were you involved with the previous rounds before you got to the series B?
No, I wasn’t.
Got it.
This is the first institutional round, essentially.
Got it. Do you have any tips for the listeners on how to get that first lead investor with a pitch that makes them feel willing to be the first one? Are there incentives to being a lead investor that you give?
I think it does come back to two tips I give. Firstly, be prepared for a lot of knock backs. It’s rather like interviewing for a job, I guess. I haven’t done this for a long, long time. I do remember when I did it, that the first few interviews are an opportunity for you to polish your message and to get comfortable and confident and to hit your stride. I think it’s the same with raising money.
[Tweet “Be resilient when you pitch”]
You’re going to get a lot of pushbacks and people, for whatever reason, are not interested in you either because of timing, either because of that sectoral focus, or because they’re looking at different bite sizes or different stages. Be prepared, be resilient, be prepared to expand a lot of shoe leather in dialing for these leads. I think the second things is, understand what they’re looking for.
It’s not about you, it’s about them and their issues and how can you actually meet their needs and give them something that they genuinely want. I think, often it’s going in and selling too hard without actually listening. There’s a reason we’ve got two ears and one mouth. It’s important to remember that.
It’s all about putting yourself in the investor’s shoes, having empathy for them, as opposed to just saying what you need all the time. Is that accurate?
Absolutely.
Some of that has to do with your own due diligence and doing a deep dive on that person’s LinkedIn profile, what other investments they’ve made, any potential people you might have in common, things like that I think really help get the rapport going, get the trust going, which is all needed to get someone to take a leap of faith with you.
Absolutely. It’s a human business at the end of the day. It’s them feeling comfortable with you. Something very subtle happens here. Unless you ask them at the beginning, not necessarily using these words, but unless you are demonstrating an interest in what their needs are, then you can come up with the most compelling pitch.
[Tweet “Investing is a human business.”]
There’s always going to be something in the back of their minds saying, “They’re not really interested in me, they’re just telling a good story.” I think it’s really important to, somehow or other, demonstrate a level of empathy and interest in how can you help them, even though obviously, the dynamic is exactly the other way around. Particularly they’re sitting across from a well funded, prestigious venture capitalist.
There’s a lot of intimidation going on in the relationship because they feel they hold all the cards. I think, as you go in looking for money, have the energy that says, “I want to actually help this person.” If helping them means that they’re not going to invest in me, then that’s okay. It’s very, very subtle.
My personal belief is this is a hugely important distinction because it changes how you approach the meeting, how you hold yourself in the meeting, how you actually engage with them. Both of at a physical level, but also at a subliminal level as well, if that make sense.
Oh my gosh, Mark. I love what you just said. No one’s ever said it quite like that. What I hear you saying is you need to think of yourself as a brand and they’re a brand, and you’re equals. That you each have something of value. You may not have the same amount of money in your bank account. But as far as intelligence and integrity and character and vision, you have something to offer to them.
I’m guessing that what investors are looking for, in other words, how you can help them is by giving them an incredible opportunity and a return on their investment in a way that they hadn’t thought of. Will that be something they would want?
How to Close a 15M Round: You want people who are locked in for the journey and who have that level of mutual trust.
Absolutely. Let’s be honest, any investor in a fast-growth company, it’s a difficult journey between the management team and the investors. It’s not going to be easy. You want people who are locked in for the journey and who have that level of mutual trust.
A bad outcome is that you, for whatever reason, you raise money but there isn’t that level of trust because at the first opportunity, it’s going to blow up. That’s bad for everyone. Again, a lot of this is how you approach the meeting and it’s got to feel right. It’s not a marriage, but think about it as a long-term relationship. I think it’s going to make life a lot easier.
That’s fantastic. Now, you also have some insights about pitching for money from large corporations. Is that right?
Yes. In my last role with Syngenta, I was looking after a lot of new products and new research and development compounds that cost anything up to a quarter of a billion dollars to get to market. Often, they require significant investment in infrastructure and assets.
I got quite a lot of experience taking big projects with many hundreds and millions of dollars of capital in front of the executives, the leaders and the boards. Even though you know the individuals and you got a better sense of the politics and the relationships, it is, in many respects, the same process. It’s being totally clear what you want out of the conversation and what their needs are and the extent at which you can match the two.
[Tweet “The why is more important than the what.”]
I think the other piece here, I think the why is really important as well as just the what. I think it’s trying to connect with, trying to paint a picture of what’s possible here longer term beyond the financials is quite a useful way of thinking about it. Because it makes the conversation a little bit less dry and a little bit more engaging emotionally. Because at the end of the day, these decisions for public companies are big decisions and people need to feel they can trust you as an individual.
I love what you said. It’s important to have your numbers but you have to paint a picture and give people a sense of why this is important to you and why you’re passionate about it.
Absolutely. The Simon Sinek TED talk, which is all about the importance of the why. It’s easy to forget this because we’re all business people who go and then we talk about numbers and stuff. In actual fact, comes back to what I said early on, if you can engage people at the emotional level and get them to understand why you’re doing this, I think it’s far more powerful than the what. It’s a precursor obviously for the what, but it is actually far more powerful. It moves people, John.
[Tweet “Engage people at the emotional level. Get them to understand why you’re doing this.”]
Yes. That begs the question, which is what is your why to start The Innovation Ecosystem podcast?
It’s a really good question. I’ve been doing this work in large organizations for almost, well probably over 20 years actually, John. I’ve made lots and lots of mistakes, learned a huge amount, I got a few scars on my back. But I began to figure out how to do this. I figured it all out for myself in the sense of there were no real resources, no go to people, no places where you can educate yourself in this stuff. It’s not easy and it depends on the organization you’re in.
Coming out of the corporate world, one of the things that I was very keen to do was to make available these kinds of resources, these kinds of insights, these kinds of experiences, to people who are doing these kinds of jobs in organizations as I was. Entrepreneurs in large mature industries with long product life cycles, how can you actually help them move the needle, have an impact beyond what they’re expected to do in their day-to-day jobs?
How to Close a 15M Round: I wanted to make available these resources, insights, experiences to people.
Because there’s a lot people, particularly as you got millennials coming into the workforce, who have been wanting to leave their mark on organizations. They’re looking for purposeful work. I really wanted to resource these kinds of individuals because there’s a lot of people out there with insights and distinctions and materials. That’s my why.
I’ve teamed up with a friend of mine who’s got a business providing information to corporations and lots of links with business schools. What we’re doing is we’re interviewing a number of thought leaders in the area of innovation, change, leadership. One of your previous guest, Guy Spier, is an interviewee. Now, he runs a hedge fund.
We’re also interviewing a number of high performers. A hedge fund manager, a concert pianist, we’ve got an explorer on, and then we’ve also got some CEOs and some executives and entrepreneurs, all talking, John, about innovation, change and leadership.
Europe is not quite as advanced as North America in the podcasting world, so we’re working to create a number of digital assets such that people can consume this not just verbally over podcast, but they can download and read transcripts and that they’ve got nice designs. We’re also creating videos of the podcast as well. People can consume them in multiple ways such that if they’ve got a need for this, there’s not a technological barrier, if you like.
It doesn’t surprise me that you’re being innovate in the podcasting world and bringing things to Switzerland and Europe that haven’t been done before by incorporating not just the audio, but the transcript and the video. Good for you. Let me ask you, what about your speaking? Because I know you’re an incredible speaker. I’ve watched some of your talks online on your website. What are your favorite topics and who’s your ideal audience to speak to?
Thanks, John. It’s not something that comes easy to me, but I’m getting a bit more practice. What I like doing is, I’ve done a number of talks to organizations and industries that are mature, slow moving, regulated. It could be a banking company, a bank, it could be a glass manufacturer. Companies that have similar characteristics to the agricultural business that I came from before.
How to Close a 15M Round: What is the mindset of the entrepreneur? How do you need to think? How do you need to articulate your purpose? How do you need to make decisions?
Just helping them understand the journey that we went on over the four years, building out this $2 billion business. One of the relevant topics that they can take away, what are their takeaways? Then we’d worked with the leadership teams and start thinking about other certain things that they, as leaders, are doing that they’re getting in the way of innovation, for instance. That’s one area.
Then the other one is entrepreneurship. I’m doing a number of talks. I will have given a number, by the time this goes out to your audience, on what is the mindset of the entrepreneur? How do you need to think? How do you need to articulate your purpose? How do you need to make decisions?
Secondly, as an entrepreneur or as a leader of entrepreneurs, how do you actually want to create this space for your team to come up with innovation ideas, to explore new concepts, in a reasonably safe environment without the fear of failure, which characterizes a lot of innovation in large organizations. Those are two topics, if you like, that I’ve got a lot of energy around.
That’s fantastic. This whole concept of helping people get over the fear of failure, whether you’re an intrapreneur or entrepreneur, is desperately needed. I’m sure it’s a topic that has everyone riveted to listen to. Mark, what inspires you? What books do you like to recommend to listeners?
Sam Walton, Made in America
I do read quite a lot actually, John. Let me think. I’m just looking around my office at the moment. I guess, biographies, first of all. The first business book that I ever read was Sam Walton’s Biography, Made in America, which actually oddly enough, I took that book and reread it before I developed the post patent defense for this product I was talking about. Because the way he thinks and the way he executes and the way he identifies his core source of differentiation was fundamental for how we transformed this product. Biographies.
I read a lot of books on, I suppose, personal development and professional development books. One of the great ones that I’ve read the other day was this book by Cal Newport called Deep Work, which I found really interesting, particularly in this always on, over-scheduled world that we live in. This is about how do you actually start focusing and do really good work in a way that enables you to really differentiate yourself from the vast majority of people who are multitasking, thinking they can get stuff done.
Deep Work: Rules for Focused Success in a Distracted World
The signs is very clear now. We are not wired for multitasking and you do need to create space and focus to actually dig into stuff, to deliver deep work in a way that is value adding. Those are some examples. I’ve got probably more books piled up that I need to read, surrounding me than I have done at any point in my career.
I think that Deep Work is a great suggestion. We’re going to put all your recommendations in the show notes for people to be able to click and buy the book or look at it. This whole concept of multitasking being a myth is another great message to put out to people. If you want to be productive and focused, pick one thing to get done before you go on to try to complete a bunch of other things.
Mark, there’s many ways that people can follow you on social media and you have multiple websites. Tell us all the ways that people can follow what you’re doing, subscribe to your podcast, etc.
I’ve just put up a new website, which is MarkBidwell.com. Then the podcast is InnovationEcoSystem.net. By the time this goes out, I think a book project that I’m working on will be pretty mature as well.
Hopefully, there’ll be a number of resources, beyond the podcast interviews, that people will be able to get access to and take advantage of. I guess most importantly, come back with some feedback to us. I’m also on LinkedIn and I’m on Twitter as well.
What’s your Twitter handle?
My handle is @MarkEHB and the other one is @InnovEcoSys. I’ll give those both to you so you could put them in the show notes so that people can spell them correctly.
Fantastic. Mark, it’s been a pleasure. I can’t thank you enough for giving us your insights on how important it is to position yourself from the standpoint of what can you do for the investors instead of being someone who’s just asking for something and really focusing in on building trust and painting a picture. Thanks again.
Not at all, John. It’s has been a great pleasure. I love your podcast. I’m very pleased that we’ve managed to meet. Let me know how I can help in any way.
Links Mentioned
The Innovation Ecosystem podcast
J Robinett Enterprises
John Livesay Funding Strategist
Mark Bidwell Website
Syngenta – United States Website
Made in America by Sam Walton
Deep Work by Cal Newport
Crack The Funding Code!
Register now for the free webinar
Fox 11 News Los Angeles John Livesay The Successful Pitch book
Share The Show
Did you enjoy the show? I’d love it if you subscribed today and left us a 5-star review!
-
- Click this link
- Click on the ‘Subscribe’ button below the artwork
- Go to the ‘Ratings and Reviews’ section
- Click on ‘Write a Review’