In this episode, Josef and Rob talk about the Metaverse, and how important it is for founders and investors to learn about it.  They are joined by Tipatat Chennavasin, General Manager and Co-Founder of The Venture Reality Fund. Tipatat is a former founder, creative innovator, and VR/AR developer. His background in Metaverse runs deep, including the gaming industry, the first VR/AR-focused incubator, and his six-year old venture fund. He talks about the developing Metaverse, the idea of “the third place”, and the economic opportunity presented. Tipatat paints a picture of what the future will bring, and explains where the opportunity will lie for founders (and investors).

Who does Tipatat see executing? Jadu, a company that creates and sells utilitarian NFTs- virtual items that can be used in the Metaverse.

Full Transcript:

00:09

Welcome to the execution is King podcast where we talk to successful startup founders, investors and ecosystem builders to uncover insights and best practices for the next generation of great global startups. I’m Joseph Siebert. Today my co host is managing partner at Great North ventures, Rob Webber. Hey, Rob, how you doing today?

00:29

I’m doing great. It’s a pretty rocky out there with the ups and downs of the stock market as it relates to tech companies. But, you know, overall, I’m as bullish as ever on the startup space. And, you know, the ability to kind of change the future.

00:43

Yeah, and the next big thing I mean, at least all the hype on the horizon is Metaverse, that’s why I’m so excited for today’s episode. We have an expert in the field, this is going to be a great deep dive longer episode. I’m just really excited to learn a lot more. Rob, why do you think it’s important for founders and investors to educate themselves about the metaverse and the opportunity?

01:09

I think when you have these big, you know, market changing technology forces, you can be a casual observer and kind of develop like a fuzzy understanding of what might be possible or what the future might look like. But when you talk to someone who is spending the entire all their days, nights, weekends, over many years, really immersing themselves in one of these new technology trend areas. They can bring a lot of clarity and maybe eliminate some of that fuzziness. And I think this is such an important opportunity, not only for founders of startups, but also just anyone in the world. Because I think I do think in the next 10 to 20 years, you know this sort of movement towards the metaverse or this trend towards the metaverse is going to impact everything. It’s sort of like, like the internet data in the late 90s. Or like, you know, the iPhone and Android did in, in, let’s say 2007 through the next immediate years after. This is one of those kind of mega trends. And I think the opportunity to learn from someone who’s so knee deep into it to kind of bring clarity is just a really great opportunity. Well,

02:18

let’s get started. Today’s guest is Tim Potat innovation. He’s the general manager and co founder at the venture reality fund and he invests in VR, AR AI and the metaverse. Welcome to the podcast, Tim potete.

02:33

Thank you for having me excited to be here.

02:35

Great. So I know we’ve known each other for probably about 10 years to Potat. But for the benefit of our listeners, can you tell us about your background? And what led to you founding the VR fund?

02:47

Sure. So it’s a combination of things? Yeah, honestly, I’ve always been in love with gaming and animation and technology. And, you know, I think about things that have been evolving in my lifetime, and, you know, gaming kind of being this brand new thing. And then the internet being this brand new thing, and kind of wanting to be involved with it, and seeing how the world is changing through technology, and especially through entertainment, and tech, and media and technology. And so, you know, I did the.com, boom and bust. And then I worked in interactive entertainment and gaming for most of my career. And then when we’d met, I just started, you know, left the company to start my own mobile gaming company. And this was, you know, during the very early, well, earliest days of mobile gaming, but then it was interesting to kind of see how big that business became so quickly, and how the startup opportunity closed pretty quickly for small, you know, early stage startups, and then really thinking about what’s next? And what are the opportunities that come when there’s a huge shift, like the shift from mainframe to desktop computers, or desktop computers, internet, or, you know, desktop, to mobile, computers and smartphones. And so then, really, it was backing Oculus on their Kickstarter, really, you know, seeing John Carmack who, you know, the god of modern video games and 3d graphics and talking about, oh, hey, you know, VR might finally be a thing, we should check it out. And so I was like, okay, that’s worth like 250 bucks. Let’s check it out. Let’s see what it is. And then, you know, got the Kickstarter played with it. Then it was the next development kit, the DK to have positional tracking, playing with it. And again, my experience, you know, my background, I know, a little bit of programming and a little bit of art enough not to make super polished experiences, but enough to be dangerous, and, you know, hack together something that could be interesting. And so I started experimenting, playing with different ideas. Like if you could go anywhere in the world or anywhere in the universe, where would you want to go? And I was like, I really love the matrix. And I would love To be in the matrix, not just watch Neo, but be Neo need Morpheus, dodge bullets jump across buildings, I felt like yeah, that would be the coolest experience possible in VR. And so with some friends, built a little simple demo nights and weekends, just have some fun, and just to see what it would be like to live a movie, you know. And in the process of making a program, I accidentally cured myself of my real life fear of heights. And so that was my aha moment of like, wow, this is unlike anything I’ve ever experienced before. And that the ramifications of it not just for gaming and entertainment, but how we live, how we work, how we learn how we heal, that there is going to be so many things that you know, this type, this new computing revolution, will enable and enhance. And so that’s, you know, when I decided to go all in on the spatial computing VR AR technology, see what was possible. I ended up starting, you know, the first incubator that was focused on the VR AR space. And then that gave me a platform to really think about how a venture fund really focused at that at the forefront of this emerging space could be really valuable. And I was fortunate to partner with my partner marco de miras, and we started and launched a venture reality fund, gosh, six years ago now to create you know, the fund that invests in, you know, the future of computing and the future of the internet. So VR, AR AI and the metaverse

06:30

Have you come across any startups that are teaching people, Kung Fu,

06:34

actually, I’ve seen a couple that do games, and there’s a guided Tai Chi application. And I’ve seen other companies too, that are actually, you know, trying to solve phobias and productize, that that idea of, you know, treating people and doing these kinds of activities.

06:47

Yeah, not quite the plugin download of Neo, but super interesting.

06:53

The Matrix was my favorite movie in college. I’ve literally watched it, I think 30 or 40 times at least, it’s a great movie. Yeah.

07:02

It was just so eye opening. It just did so many things. I mean, it was fun. But the philosophy, yeah, the ideas that they brought out at the time. And, you know, what’s really interesting to like, back then, right, the internet was just starting out, they still use like, dial up modem sounds in the meeting, right? And it’s just like, but they were really prescient, and, you know, thinking about all these things, that would just become huge, huge issues. I don’t know, did you get to see resurrections? The new Matrix movie,

07:26

I don’t get, I think I watched it, you know, must not have been that memorable, because I think I watched it. And I can’t really remember I have to go back and check it out.

07:33

It’s hard to live up to something yet. But then when it was that impactful when it came out, I think has some interesting ideas. But it’s just not as fun or exciting as the matrix was. But the one cool thing that came out of it, I don’t know if you get to see this. I don’t know if we talked about this yet. But epic, you know, the makers of fortnight and Unreal Engine, their CTO, Kim libreria was actually one of the you know, on the special effects crew of the matrix got really close with the Warshawski Spass sisters and, and also, so what they did was they released this tech demo of the latest Unreal Engine five, that’s playable on the new like consoles, the PlayStation five and the Xbox X. And it’s, you know, this recreation of the matrix world. It’s almost like a little teaser of what a Grand Theft Auto could feel like in the matrix. And it’s just unbelievable. When you think about that progress of, you know, Pac Man 30 years ago to now honestly, the effects that the visual fidelity that they could do on a $500 piece of hardware is better than the visual effects in the matrix two and three movies like it’s crazy. And you’re just like, wow, we’ve come such a long way in such a short time. And this idea of like, virtual worlds being so realistic that you would believe it is not that far away.

08:46

So I have this feeling that really the metaverse started with gaming, you know, maybe as far back as even 40 years ago, or I can remember like, I don’t think I had Atari. My first system was a Sega eight bit. Maybe my parents had Atari or something. But like, it felt like to me like, we’ve had the metaverse for a while, but it was in 2d on a big council or whatever. And it’s been evolving. Does it feel that way to you? Because it feels like we’re just changing the how immersive the experiences it’s, you know, but it’s a lot of the same. Seems to be heavily influenced by gaming. Right?

09:17

Absolutely. I mean, just the idea of like, virtual worlds, right, like really, gaming has taken to that next generation. And, you know, with upgraded computer processing, it’s not just the visual fidelity, but the interaction fidelity, right, like the things that you can do now, but also to the scale that you can interact with other people, right. I think the thing that separates remede, the metaverse from traditional like online games and virtual worlds that we’ve seen in the past, is this idea that it’s not just for playing games and like leisure activities like gaming but encompass more hangout leisure activities. This idea of I’m not sure if you’re familiar with that idea of a third place where it’s like a public space where you hang out where your first and second spaces are your family your home And then your work or your school, but then the third place where you socialize and congregate, right? It used to be in the past like parks or malls. But now we do this more online. And then to have these like virtual worlds, where it’s not just centered around like gaming, but this is where you meet your friends, hang out with your friends, go to concerts, do these other activities. But then the biggest component that makes to me the metaverse truly the metaverse is this idea of economic opportunity. And that now people can make a living in the metaverse building experiences for other people, or even just playing the game, and then getting in world currency, but then being able to translate that into real world money that improves their real life situation, right? And what I’d say World of Warcraft had, like all of the previous little worlds had bits and pieces of this, but to bake it into the system, and then to bring it to mass scale. I think that’s the opportunity that really the metaverse does. So it’s not necessarily saying it is the first to do it. It’s about taking the best of these ideas, and then really making it mainstream.

10:58

It’s interesting. When you think about players and games and having an appetite for these more hangout spaces. I mean, you see it in everything from like, Twitch, which is like people just hanging out and watching other people play video games, to people going on to these online worlds and a cost playing NPCs. Right. They don’t need to be the hero at the center of it anymore. Like they’re they’re fine, just pretending to be a guard and white run and Skyrim you know, things like that. So that’s, that’s fascinating. And third place. I hadn’t heard about that before. You know, I wanted to kind of pick up this this his thought on the matrix, because, you know, of course, the the metaverse there, if we call it that was hiding this dystopian nightmare behind it right. You know, and that’s part of all the hype and the headlines. There’s Zuckerberg and the main shift for you know, Facebook, the creation of the parent company meta net ownership they’re trying to do to put their stamp on it. But also that, you know, people have criticized the metaverse and cast it in dystopian terms, right like this is this impending doom? So like, you know, between like this public perception where we’re at now, and where we’re actually heading, what do you think the world at large is getting wrong? And what do you think will be like the most surprised about over the next, like, three years or 10 to 20 years?

12:21

I think there’s so many different levels, or places where this can go. But I think fundamentally, right? Like, why I think that the metaverse is so much more interesting than the real world in so many ways is because the metaverse is not resource constrained, like the real world. And in the real world, like we know this, right, like, there definitely hasn’t have not been so many times, it’s based off, you know, where you were born, you know, who you know, within your like, little like, the area that you were born are the resources that you have accessible to you in the immediate area that you live. And what we see with the 2d Internet, you know, online world is it lowered the barriers to that immensely. But still not enough, right? There’s still so many people, there’s still this huge digital divide that’s happening. And, like fundamentally, right, like, we still have to get connectivity, you know, solve some of these fundamental underlying issues. But this idea that now, you know, before the internet, most of the people that made money from the internet were developers, people with CS degrees, right. And now we’re kind of seeing a shift. And now there’s the Creator economy and people that don’t have CS degrees, but people that are not coding, but people that are designing or creating content or artists and, you know, other people can make money from the internet now, right? And I think the metaverse is a continuation of that idea and expansion of that idea where now you know, the tools. The way to access and live in the metaverse will be much more natural than a keyboard or mouse or even a touchscreen. It’ll feel like the real world, right? Like you see a digital item and you just grab it and you know what to do with it. And that’s going to make that’s going to lower the barrier of entry for creators for people that are developing content in the metaverse and really democratize this idea that anyone can make money, provide value in the metaverse, right? I love this idea you brought up, you know, people playing NPCs, right? Well, people should get paid if they’re going to be NPCs. Right? Like, it’s almost like, can you imagine an online dinner theater, right? Or like, you know, a dungeon master in d&d controlling all of the different characters in your quest, but then you pay for that experience? Because it’s gonna be great, right? And I think that’s gonna be a new way we’re gonna think about, you know, what is theater? And what is video games, and it’s like, a merging of the two and creating these brand new experiences are just going to be amazing. Fantastic. And I look forward to that like it for me. Imagination is infinite. And that’s the only thing that’s constraining the metaverse, right? And that’s why to me that Metaverse world will win. Because again, there’s going to be infinite opportunity for everyone.

15:00

Wow, that’s, that’s pretty all encompassing. I think it you know, the closest I ever had this feeling was like, you know, maybe in the mid 90s, when you just had millions upon millions of consumers getting on the internet for the first time, and you had that sort of sense of the same feeling I get hearing you describe, you know, the sort of infinite potential of where we’re headed. And we try to sort this all out, I saw in your LinkedIn profile, you had this really great market map from 2017. Kind of categorizing the VR and AR space. I guess. I’m curious if you were to either update this now, how do you break down the different categories of the metaverse in terms of a market map?

15:43

Yeah, I mean, honestly, I stopped doing because it started being too complex, right. It was like, it was easy to manage when they’re like hundreds of companies. Now there are 1000s of companies that again, met this criteria of like, yeah, and they made over a million in revenue, or did they get millions and investor money? And yet, what were they working on it? I think the fundamental idea was to kind of show the different applications of these technologies and that it wasn’t just gaming, I think, yeah, most people when they think 3d online worlds and you know, VR AR technology, they immediately go to gaming and well, definitely, it’s one of the biggest opportunities. It’s clearly not the only one, right, like these technologies were developed originally for by the military for training and simulation, right? And it’s just like all the offshoots of that encompass so many different opportunities. And then I think it’s interesting to like, you know, when most people talk about the metaverse, you know, like, Zuckerberg and so many others like Tim Sweeney, and like Roblox, it’s definitely a consumer focused metaverse. But then you also hear Microsoft talking about an enterprise Metaverse, right? Or you hear Nvidia talking about their Omniverse, which is, you know, what their take on the enterprise in Metaverse and this idea that, you know, just as big as you know, playing and doing these, like, consumer foot facing things, right, there’s also going to be this huge opportunity for enterprise and b2b applications of online worlds with presence with people connecting and yeah, I mean, still hasn’t been cracked yet. But if we can get that experience, where virtual meetings, especially collaborative meetings, where you’re not just like presenting our PowerPoint, but we’re actually doing the work together, once those can really be done in a very, you know, productive way in the metaverse, then that’s going to have huge, like, environmental positive environmental impact, right. And we’re seeing this already in like a certain scale with Ford. You know, for car reviews, I used to fly all other people from all around the world to one location. So they can do an in person review of a car, look at the clay, physical sculpt of the car, you know, and they’d have to do this, it would take a long time to get everyone’s calendars together, fly everyone out there give people feedback. But for the past, even like, almost five years, now, they’ve been doing it virtually right, they put on the headsets, they can do it. And then they can make changes on the fly, right? And then they put everyone behind the wheel, see what they need to see adjust the things and it’s just like, okay, like when VR headsets in the VR equipment, and the software upgrade, it costs millions of dollars, it makes sense that it should be done for products that are, you know, cost millions of dollars to create. But now as all of that hardware and software gets cheaper and cheaper, then it’s gonna make sense to design more and more cheaper products in that way too. And I think what’s also interesting too, is to see like this idea of virtual production, right, like all of the major Hollywood films right now. And TV shows everything Yeah, Mandalorian, Lion King, you know, the Marvel movies, they all use VR AR tools in the process of making them. And you know, the idea of like, visualize the world, let the actor see. So they don’t have to just imagine everything, and then get the camera crew and the director is really like understanding and getting the right shot. All that kind of stuff. We’re gonna see kind of trickle down into the mainstream. And it’s going to be the way that more and more content and games are created. And that’s going to be kind of going back into like, what is the killer, like application of the metaverse and it’s creating content for the metaverse. Right? It’s kind of weird, but if you kind of think about it for computers, too, right, it was like, what was the killer app for the you know, the internet, obviously, right? But why? Well, it was not just for consuming the internet, but also for creating and continuing to develop on the internet, right? You need the computer and that’s why it became essential and that same way we’re gonna see like VR and AR especially because that’s the best way to create 3d content not just consume content but but but create 3d content. We’re gonna see it really kind of take off.

19:43

There’s a lot of opportunity, but there’s the with all the chaos there’s there can be a lot of confusion, right? I mean, we have multiple, you know, gigantic companies competing over the new device types. Of course, they got Oculus for Facebook now, Apple, Google snap and others. Building 3d glasses, then you’ve got other platforms for more of the operating system or other layers, like, you know, I guess you could put steam in that boat, or you could put, maybe maybe the gaming companies come up with their own. Of course, there’s, you know, elements of creation in Roblox or fortnight and their own sort of communities. But when you think about all this, if you’re running a startup or thinking about launching a startup, how do you decide, you know, which device to target? Which platform to launch on first? And then I guess, you know, do you have any, you know, any predictions on who the winners will be for some of these platforms? I mean, usually we don’t have I don’t, I don’t think anyone would, would believe we’re going to have seven different 3d glasses that end up hitting critical mass to millions of consumers around the world, or, or 10s of millions, it’s probably going to be a small number, right? Or how do you think about these forces in terms of, you know, how we get from where we’re at now to maybe a future with, you know, with other screens or other other form factors beyond what’s available today?

21:03

If you think historically, like, where it’s gone from, like, desktop computers to now smartphones, I think it’ll look a lot more similar to what happened with smartphones, right? I think Apple has really proven the right model. Everyone wants to be like Apple, right? It’s like, you want to own the hardware. But you also want to own the first party, you know, App Store, you get to approve what goes on there, and you get your cut. And then you also have some of the best applications like the browser, and some of these main fundamental applications, right, that people use it the messenger and things like that. Right. So I think that Apple model is what everyone’s eyeing, and you know, honestly, that’s why I think, you know, what, yeah, formerly Facebook, very much in that same way where they’re, like, they lost out on the mobile phone. And you know, they’re always kind of beholden to Apple. And so if, you know, if anything, right, like Apple’s switch of the pipe of privacy information, and that hurting, you know, not as quarterly revenue, like, you can see what impact it has when you don’t own the platform. And so, Oculus by x was, that was a $2 billion bet, which again, small bet Fermat at the time, to say, hey, is this the future? Could we be a part of it? And I think, you know, after, you know, the six, five years, since that’s happened, you know, they have the data, right? They’ve seen the usage, they see what other opportunities out there, and they realized, now’s the time to really double, triple, quadruple, you know, 10x down on that bed, and really try to own this next computing platform and the next internet. Now, can they do it? Will they do it? I mean, honestly, there’s a part of me that’s like, like, no one owns the internet today, right. But at the same time, when you’re the most used application on the internet, in a way, you kind of do own a lot of it for a lot of people. Right? And so I think we have to really be cognizant about that fact. And think about okay, yeah. And this is also why, you know, course apples investing, Microsoft, and all the major tech companies are investing, but also to like, don’t discount, you know, bite dance owners of tick tock, you know, they recently bought the PICO the Oculus equivalent in China, right. And so, you know, snap, and others have been talking about hardware and trying to be that hardware platform player and create an integrated, you know, hardware software product. And I think that’s gonna be That’s the dream, right? Like, that’s the goal. Now, if your startup, honestly, if you’re a hardware startup, it’s just so hard to do. It’s so expensive, I get Oculus hadn’t gotten bought by Mehta. Would there be this big? Could it be successful? No, probably not. Right? Like, it needs a lot of backing, it needs a lot of money, but also to it means that foresight of someone at Zuckerberg, even when it’s a loss, you still have to invest because again, 10 years down the line, you don’t want to be caught not being one of the major players in the nest ecosystem. Right. All that being said, I like the way I view it is startups in particular, right? It’s all about leveraging other people’s big investments, and then writing on top of that, and saying, okay, you know, what, like, yeah, make the apps for the next iPhone, right? Like, make the apps in VR, leverage the billions of dollars being invested by the apples and the matters and the Microsoft’s of the world, right? And really come up with that great use case, that application that’s going to get, you know, millions to billions of people excited about using this device day to day, right. Like, I think that’s the big opportunity.

24:25

I think for me, it’s hard to imagine with the advantages of Apple, Google, and maybe to a similar extent, even Microsoft, with their reach with developers, that how Facebook could overcome that with their relatively limited reach with developer communities, do you but of course they have a head start with Oculus being pretty developed and iterating on that. Where do you see developers hanging out now? And I guess, do you really feel like this is gonna work for meta and you think that Oculus is going to be be when Apple comes out with their 3d glasses? is our people just gonna, you know, are we gonna forget about Oculus? You know, and that cycle? I just because for me it’s, it’s hard to see it’s just seems like apples especially just so dominant as for developers that it’s, it seems like it’s it’s almost insurmountable it feels like even with even with starting well behind you know where the Oculus is already at right?

25:21

Yeah. Well, I think that’s the play that right like these shifts are the opportunity for that time, right? Remember before the iPhone, right? Everyone’s like, wow, Microsoft is dominating computer unless they are in the best position to create a, you know, pocket computer device, right? And what’s interesting is yeah, like Apple really took that opportunity and really flipped the script, right and really, you know, succeeded where others had failed before. And what I will say too, though, is today’s Apple, the same apple that did that? No, not saying that Apple can’t do it can’t pull it off. But it’s not a sure thing. Like, yeah, it was right. Like, it doesn’t have, you know, like, Tim Cook is amazing. But he is not Steve Jobs. Right. And in terms of like that Apple of today is not that like, you know, they haven’t really launched a significant new platform, right, like the smartwatch the Apple Watch, great product, but it’s not a platform, there’s not millions of developers making money off of that ecosystem. Now, that being said, Do I think like, I don’t discount, you know, Apple and their ability to do something significant, but at the same time, I would say to like, Facebook hat or not SRE has put in the work right, like 10 billion a year. Yeah, that’s, that’s more than Google would dare spend on this, like, you see Google abandoning projects left and right, right. So I think, you know, the fact that meta has built an ecosystem where there’s a billion dollar spent in the App Store, there’s over 100, developers making over a million dollars in revenue, and, you know, top developers making hundreds of million dollars in revenue. Yeah, I think they’ve done a good job of proving that this can be a thing, but at the same time, you know, you’re right, it’s still early, it’s still anyone’s game, right? It is that thing, like, they could be the palm, or the handspring, right. And it could be, you know, an apple, or it could be someone else, right? I think that’s what’s exciting. But if you’re a developer right now, and you want to play in the space, like you definitely have to pay attention to, like, you have to develop on the meta platform or a think about playing, you know, there’s, of course, a PC VR ecosystem that uses steam. But that form factor is very limited, that price point is very limited. And then of course, I will also say, you know, Playstation VR, and PlayStation VR two was Sony is going to be amazing. But that’s really game centric and consumer centric. So a lot of enterprise stuff are not available on that. And so, right now, you know, for better or worse, the meta is still probably the best platform. But again, like, yeah, you start off as a, you know, PC developer, then you become a Mac developer, you go where the platforms are, and I don’t see it fundamentally changing from the form factor. And so I don’t think it’d be too different developing for an apple, you know, mixed reality device than it was developing for him that a,

28:11

technically are most of the AR and VR projects, still using kind of these 3d engines that came out of the gaming space, primarily, like Unity, and epic and so forth. And I guess those are cross platform. So it would seem then this portability across these, if there ends up emerging a couple of, you know, two or three major hardware devices, that it’ll be easier for the developers, right.

28:34

Absolutely. Absolutely.

28:36

So, you know, we talked about some of these big shifts and thinking back to a few, you know, it’s kind of like, divided between software and hardware, like, Yahoo, Google came along, and it was search, right. And then later on, another big shift was social. And I think about that like, like, you know, that was ways of accessing this information that that weren’t that weren’t hardware, it was like software, right? So then we talk about form factors when everybody’s talking about virtual reality. And and AR, people are obviously fixated on headsets and, you know, Google Glass and all that. And people are more fixed on that hardware being kind of like that, that catalyst for that big shift to happen. From what you’ve seen, if you had to bet on one. What do you think will be driving that big shift a piece of software and a change in paradigm shift there or the right piece of hardware?

29:34

I mean, honestly, it’s tough. It’s like both of them are important. And both of them will, and huge improvements in both will lead to brand new, huge or bigger opportunities, right? Like you’d say, like the internet. before smartphones, internet was still huge. It was still a great opportunity, right? Like when it was just connected desktop computers and laptops. But when it got the better form factor of a smartphone, and their apps and yet web two was created and it was much more easier with the interface that changed the game and made, you know the internet, everything, right? And so in that same way, I kind of feel like Metaverse will be the same way or thing where, with a PC and a desktop or game console or a mobile device, you can connect to the metaverse today, and you still get a pretty good experience. But man, when it’s in a very light, comfortable VR AR System, and not just what you see, but also the interaction and how you touch and how you move in the world, and how you play those experiences, that’s when oh my gosh, it’s gonna be billions of people. And the next big trend truly will be the dream fulfilled, right?

30:36

Speaking of, uh, you know, like, the tactile stuff and things you touch. Have you ever, like destroyed anything or hurt yourself for somebody using one of those VR headsets?

30:49

So funny. So fortunately, I have not, although I just today saw an article where it was like home insurance claims had jumped up 30%. And they’re attributing a lot of that to VR and the rise in popularity in the VR. This is from The Guardian. So like a reputable news source. But I found that hilarious for Yeah, you definitely have to watch out. Ceiling fans and TVs. Yeah, I mean, you see pictures on Reddit all the time about these things happening, but I’m very good and very lucky to have enough space. Yeah, and a dedicated space to use for my VR AR activities.

31:24

Yeah, that’s the exact article I was talking about. It said it was like 650 pounds was the average amount of damage, which is like $883. And all I can picture is those little kid videos, whip in the week controller straight into the screen, you know.

31:41

So speaking of week controllers, I know you’ve invested in you know, several the real breakout consumer VR entertainment apps, you know, ranging from BT games, which Mehta acquired rec room, and so forth. If you think about, you know, the the trends impacting in particular VR gaming, I guess, look at AR gaming with the success of like, Pokemon Go, I thought Pokemon Go is dead, by the way by 10 and 12 year old boys, they’re like playing it more than they ever did. I don’t know what they had some update that came out. But when you see the games that are really influencing the culture, what are what are the what are they doing? Or what are the trends that are really catching on right now.

32:24

So it’s really interesting, like, again, I kind of would, on right back to like, the history of games isn’t about so much about the display. It’s not necessarily about the TV. But it’s about the input, right? The joysticks, right? Like it was a bigger jump from, you know, going to a digital pad and a couple buttons to having the dual analog sticks, right, that it was going from a regular CRT, to HDTV, right in terms of like experiences, the types of experiences that you’re gonna do. And so in that same way, you have to really think about that for VR, where sure everyone looks at the headset, and like, oh, my gosh, the immersion, you feel like you’re there. But then it’s that those gesture controls that one to one, you know, delivering on the promise of the week, right, like we saw with the Wii, and they have a cute bowling game. And I only got this amazing to actually do the thing. But then it’s like the tech was kind of clunky. And then when the people try to make like an actual like a sword fighting game or something, it kind of like fell apart. But then with these true gesture controls all of that now as possible, and then seeing it in a real 3d world and being fully immersed in it makes it all that much more compelling. And so I think it’s like people that are really getting it. Start with a VR first game concept and VR first interaction design. And they’re not just trying to create, hey, the VR version of this popular PC game, they’re really creating their own lane or their own Avenue, or they’re taking more cues from physical games, like the things that you do in the real world with real gestures. Then they are thinking about, what buttons are they pressing right? And so that’s why, you know, beat Sabre, I think you did it the best and has the most success. They did that combination of Yo, easy to pick up hard to master. But there’s no button presses except for to select the menu, like you’re swinging and it’s all about control. And then they also realize to how to make the movements feel good. Like I feel like that understanding of, okay, you don’t want to just do one motion over and over like the Wii and spam it. And you really want to encourage people to move in a way that makes their bodies feel good, right? I think that’s something that I never would have thought of, you know, initially when you’re thinking about a video game, but now it really makes a difference. And I think beat Sabre of the myriad of things they did, right that that to me, has helped with the longevity and why it didn’t just become a cool flash in the pan kind of thing and it’s still the most popular game in VR.

34:54

You know, that’s the first thing that I think about when I pick up a classic NAS controller So you play it for like five minutes. And then it’s like blisters. And like, I don’t remember that, you know, back in the day. But nowadays, you notice immediately,

35:09

yeah, I was thinking about because I, we sold our business, which is kind of ad tech for the gaming, mobile gaming space really, back, I don’t know, about five years ago. And I remember at that time, I spent a lot of time with game publishers and developers around the world. And it seemed to be this common understanding that unity as a game engine was sort of surpassing epic as a game engine on the 3d side, because they were less fixated on like, on just having the absolute best graphics in the games from their engine, but making it easier, more approachable and easier to develop games. And I don’t know if this is true or not, I’m not a developer. But I wonder if that sort of changed, because then fortnight came out? And it was like, okay, you know, maybe the visual graphics do matter. But I don’t know, I guess it kind of stuck with me that, like the the actual experience matters more than, you know, say you’re in high def doesn’t really matter. If you go to 4k or, you know, it’s more that it’s more of that experience that matters the most.

36:09

Yeah, I mean, I think fundamentally, right? When you’re talking about a game, it’s the interactivity that makes it different, right. And it’s like, I and this is the thing for VR, boisterous. It’s not about the visual fidelity, it’s about the interaction fidelity, and making sure that it’s rich and an ending, right, like, that’s what you really want. And that’s, typically, those types of experiences do better. But that’s not to say that visuals aren’t important, and you can’t, you know, underestimate how impactful it can be when done right. But just saying, especially when you’re a small startup, and you only have so much budget to spend, it’s like I would put much more on the interaction side. But yeah, it’s really interesting that you say what you say about like, yeah, epic, unreal, it’s really changed so much since Yeah, we were actively in that space, like, yeah, I startups. And, you know, I think fortnight proof, not necessarily not just that visual fidelity is important. But also to that they’re crazy engine that was built for that digital stuff could be performing well, on a mobile device. I think that was kind of the always, like, people always was like, Oh, he can’t, it’s hard to learn unreal, and it’s so much trickier. And I think that was the thing that unity had, at least when I was looking at engines was like, oh, so easy to just like Google and find a tutorial on unity. And it was, yeah, they spent a whole bunch of time creating really nice accessible tools for small one to five person teams. Whereas the epic was more like, oh, we come from triple A and 100 person teams. And that’s kind of like, what you really need for epic, or for the Unreal Engine. And I feel like it’s a combination of unity wanting to be more like Unreal and unreal, real, like they need to be more like Unity, or at least, you know, Unity back in the day. And it’s kind of like equaled out in so many different ways. It’s kind of strange to see now. But one thing that’s really cool, though, are that’s really impressive, just to see, like the quality of games in both engines, right? Where you’re just like, wow, and especially like running on mobile phone hardware, or like, you know, even like basic, you know, the quest type hardware, like, wow, you’re getting really cool, really amazing experiences on pretty inexpensive. Hardware. It’s cool.

38:09

I don’t know, I remember the first time I saw Infinity Blade, you remember this game, it was like the visual, just how stunning it was. I think this was like apples Game of the Year, and probably like, what 2010 are way back. But I remember I didn’t play it very long. I’m still I don’t really go out to discover new games that much anymore. I you know, I’m like a typical suburban dad in the Twin Cities, whatever. But there’s like still a couple games from five years ago. And we were in the game space like I played. There’s this little numbers game called merge that Zynga publishes. And it like gets me in my Zen state where it’s just like a really simple numbers game. And I am so addicted to and I still don’t know, I don’t know why, I think and it’s not the visual studies. This is really like, it’s like rearranging dominoes. It has that kind of appeal. But I play it over and over again. I usually listen to a podcast and then I just play the super simple game from Zynga. And I don’t know why five years later, I’m still playing it. I can’t explain it. There’s something about that. The interaction pattern that just, it’s doing something to my brain. It kinda I know. And I don’t know, I’ve started to read some research on just some of the neurosciences around gaming. Have you read this book? The gamers brain from I think it was Celia Houghton, okay,

39:22

I need to check it out. Okay, so exactly you’re talking about fundamentally though, but

39:25

she was director of UX at Epic working on fortnight, but she’s actually a psychologist and neuroscientist. I are not psychologist I think that I think she’s a neuroscientist. It’s actually a really hard book to read. So this isn’t going to be like a bestseller. But it goes from like the neuroscience and then it gives you practical UX design. It goes from like, like it’s it’s chapters are organized around like neuroscience, like facts and like scientific kind of information, and then application to gaming and I’m like, oh my god, it’s so hard to follow though because it’s like, so I’m not I’m not that I’m not a neuroscientist, so it’s hard to but I checked that one out. It’s really it’s pretty cool seeing like a neuroscience kind of view. And she worked on fortnight. So she’s got a, she’s been thinking a lot about, you know, the brain and the impact on you know, and how it relates to gaming. Right. So

40:15

what you’re describing, and again, I could be putting words, your message, let me know what you think. But like, for me, too, like when I play games, and you get like this level of mastery of the game, that almost you get into like a second state of it. And it’s flow state, right? It’s this experience of like, your brain kind of goes on autopilot, and you just start doing really, really well. And it’s almost like a meditative trance. But it’s super nice to get into, right. It’s like, it’s interesting, like, pianists or musicians, right, with, like, when they’re really in the flow state, you know, they feel like they meld with what they’re doing. And when you’re playing a video game, too, you can get that same kind of sense. And I get the most in beat Sabre, I don’t know, if you actually played it, or, like play it, play it and get to that level where you can start doing like, expert difficulty. And it’s funny, I’ll see blocks, and my brain can’t process it. But my body responds, and, and then I do it. And it’s weird. It’s like, I didn’t think I was gonna do it. Subconsciously, something switched. They’re controlling my body, but it’s that flow state, and that, like, things happening on that subconscious, and it’s very satisfying, right? If it’s such a great feeling.

41:23

Yeah, I played games, since I was probably like five years old, and I’ll 42. So there again, like, I don’t like to play newer games with my kids, cuz I’m not ever gonna get to that flow state, I think you’re you like very eloquently put it. For me, I like to get my kids, you know, into like, the 90s games where I’m like, I you know, it’s just like, it’s like muscle memory. It’s like, it feels so good to play those games. And maybe that’s a factor of also just getting older, where I know you have the brain, you have a tendency to learn more slowly. Now, I think you can address that by, you know, there’s certainly ways to kind of try to maintain an ability to keep learning, but I think I think the natural tendency is you’re going to learn at a slower pace as you age, right?

42:04

Yeah. Going back to what we were talking about before, if you haven’t yet, play half life Alyx on a VR, like a bit, you need a high end gaming PC to play it, but you can actually stream it wirelessly to your quest headset. Or if you have, you know, the PC VR headset. But that is like playing a game from 10 years in the future. Like it’s, you know, triple A quality visuals, but with a full rich experience and like the interactions that you’re doing. It’s so good. And it’s funny. I have a bunch of friends that are gamers, you know, love gaming love VR. And they’re like, oh, have you played half like, Alex, what do you think? Oh my gosh, it’s amazing. I couldn’t play it. Because it was too scary. I had to stop. And it was like the immersion was too good. They couldn’t overcome it. But it was just like, wow, like, it definitely is that like, as someone that grew up playing Pac Man playing Atari and all that kind of stuff. You’re just like, wow, this is the future. Like, this is the masterwork of what video games will be are becoming and you’re like, it’s the Citizen Kane. I think. Like, I feel like, for me, yeah, there’s certain pivotal video game moments, right? It was definitely like, for me, it was like, Yeah, you know, Super Mario. And then it was like, Yeah, Halo, or like Doom and Quake, and then you know, Grand Theft Auto. And now I feel like everything’s kind of been based off of like, these paradigms I’ve been created now polished for like a decade and a half life Alyx builds on top of a lot of that by bringing it into full VR, full immersion. And you know, and again, Valve builds the hardware, right? Like, they love this stuff. They’re not just trying to cash in on this, and half life out. And half life, honestly, was one of those epic video game franchises, right, that brought story into like, you know, first person shooter type games, and it’s like to see them, do it for VR and do it in VR, and say, like, this is the pinnacle of video game, all of our knowledge and to be able to like experience that is so satisfying.

44:02

I gotta check that out. I haven’t seen that yet. I do actually have the I have a nice PC with the like Oculus plugged into it. So I can I’ll check that. Check it out on that,

44:10

dude. And then we’ll be on another podcast just talking about your experience. Yeah, we’ll do kids in it, too.

44:17

We’ll definitely try that. So I have a I keep thinking about though, with Compute paradigm shifts. I mean, usually there’s the thing that happens, I think, where things really get to like I keep thinking about when do we get to a billion people wearing an Oculus like headset? So I had the Oculus Rift when it came out, I think probably maybe a little after when you bought it probably I got it. I got the wired one. It was expensive. He had a really nice computer. And then like two years late, my kids stopped playing it by the way, they were just like, oh, whatever, just sat there and then all of a sudden their friends got that quest to for like a quarter of the cost that you don’t need a PC and you go wow, okay, you can see this. You know, if the cost keeps dropping, you know, maybe that is what ultimately is that what gets us to a billion devices, you know, on a billion different humans, like how do we get to the? How do we get anywhere near the kind of penetration of the smartphone with these 3d glasses? Or is it? Is it something else beyond the 3d glasses? Like how do we? Is it going to be that ubiquitous? Or how do we get to that? And when does that happen? I’ve been wanting that I think for people who are really into VR and AR, we’ve probably been wanting this to happen for like, over, like, for 20 years, or at least 10 years now. But like, is this like, Could this happen in the next two or three years? Or is, is this ever gonna happen?

45:28

So the way I think about is less about the technology and more about the function it provides right in your life. And we can say like, Okay, we know, video game consoles, right, like devices that people buy, just to play video games, that’s about hundreds of millions of devices, right? Like the top selling, you know, gaming console 100,000,200 million, right? Now, it becomes not just an entertainment device, but a productivity device, like a desktop or laptop computer, then that’s like, a billion to 2 billion devices, right? But now, if it becomes a communication device, something that you need to connect with other people, that’s when you get into like smartphone territory, and then everyone needs that. And that’s when you get into like the, you know, 7 billion 10 billion device more more devices than people on the planet, right? Because you have to have a work phone and a person. But that that is how I think about and then you’re like, okay, can VR AR become these things? Right? And it’s like I will say, very clearly like, Yeah, I think Oculus has proven that we’re past the tipping point, it can be a gaming device. So I think going from 10 million now to 100 million. Possible, right? Not not guaranteed, but but possible, right? It’s very simple. Like, I think the bigger verse was going to zero to 10 million was much harder to prove right now can kind of go from entertainment device to productivity device. And like we talked about, like, you know, some of these user use applications that we’ve seen, to me point to yes, absolutely. Right. Now, can it become a communication device, something that will want with us all day, every day? And I think AR could do that? Right? Like, I think there are some, you know, ideas and applications of AR, that could make it happen. Now, I think the problem that we’re getting to is like to make all that happen, too, there has to be fundamental improvements in form factor, and technology and hardware technology that enables these use cases. Right. And we aren’t quite there yet. But I think it’s very clear, like it’s no longer a leap of faith to imagine that. And I think that we’re seeing these technologies. Less so probably, I’m optic side, I’d like to get like AR glasses that give you the full field of view, but still feel like you know, regular glasses, there’s still some physics we have to conquer. But for so many of the other things that we have to do like to have high quality visuals. Well, with 5g, we can stream from the cloud will be low latency. And that will make at least let the computing hardware and the battery life work a little bit better. Right, like so I think there are so many things that’s definitely on the roadmap. And I think within our lifetimes, we’re going to see it we’re going to see, yeah, hundreds of millions of people using these devices daily. Yeah, well, we get to billions. I think it’ll be once you get to 100 million, then it’s a straight shot. And like I said to the driver of that will be the metaverse and creating content for the metaverse, right? If building 3d worlds was as easy as playing with Legos, everyone could do it. Right. If it didn’t feel like CAD, if you didn’t have to go to, you know, a gaming score or design school for like two years to learn how to, you know, 3d model and level design, you know how to use unreal, but instead, you just got a Lego set. And you just put it together? And you could rearrange it right? Like, yes, VR, AR will make it feel like that.

48:58

Right? If it was as easy as capturing a photo for Instagram or creating a tic tock video, you know, then we would have the I mean, we would have so many creators, we it would pull the whole market, right?

49:09

Yeah, exactly. Like, yeah, well, how new 3d sensing technology will also have AI. So you when you take a picture, now, it could be a 3d game character, you know, and, you know, is that possible today? No. But are there startups working on that? And is it within? You know, five years horizon? Probably, right.

49:28

Alright, Joseph, I’m out of the venture business. I’m going to go launch a VR startup on sold AR. We’re away and it’s been great being on the podcast. No, just kidding. Anyway, so I think you have a lot of clarity that I think we’re there’s a lot of us thinking about this, but I think you’re thinking very deeply about it. So really appreciate you joining us on the podcast today. I think Joseph has one closing question which maybe we can ask before this last closing, but around the execution, we try to weave that in.

49:57

Yeah, I’m sitting here just thinking about Taking my general iPhone and using the LiDAR, on the back to scan myself, do you think there’s much of a market yet for, you know, like, immersive podcast experiences where you just are standing behind the guy talking for like, half an hour?

50:17

Not yet, but there will be but imagine to not only, you know, will you see that, what you said what you say, will be created as graphics in the real world that you could play with and interact with. And so it’ll be like, you know, a real time, you know, infographic as well, right? Like, AI will understand what you’re saying, and then give you the visuals to go with what you’re saying to make it more impactful. Right.

50:38

That’ll be fantastic. I like to ask all of our guests who come on here, you know, title a podcast, execution is king. You’ve got such depth of knowledge. And as an investor, you know, you really have a great picture of you know, what’s going on currently in the AR VR, AI Metaverse market. So right now who do you see executing? Maybe it’s a startup, maybe it’s an individual. Maybe it’s someone flying under the radar? Maybe it’s somebody everybody knows, like, Google, right. But who do you really see performing?

51:12

It’s a great question. And I think you’re absolutely right, like, ideas are a dime a dozen. It’s all about the execution. And I think more so especially in the XR metaphors and the web three spaces, right, especially when they all kind of converge. And so then I really want to highlight a company that we had just invested in called chatter. So they create AR, NF Ts, and you know, a lot of buzz words, a lot of stuff going on there. But what’s really interesting is, it comes back to the execution. It’s not about the ideas. A lot of people have similar ish ideas. But the fact is, like, you know, they raise money there, they had tech, and they were an AR, holographic startup, working with like celebrities to create holograms and volumetric captured little videos that up on their phone. And then they realized, you know, the NFT opportunity was happening. And one of the things that they realized, you know, people were buying these profile pictures and lefties, and then they were wanting to interact with, you know, different Metaverse worlds, right? And what they really cared about this idea of like, well, NFT is not just as a profile picture, not just as an art collectible, though, if it had used what if was a utilitarian NFT? What if you could actually buy something and then use it in these different virtual worlds. And instead of just thinking about this idea, and trying to pitch people, they just built it, and sold virtual hoverboards and jet packs, and did over 4 million in sales and the FT dropped for these virtual goods that they could visualize an AR and that the people could try it in different virtual world platforms. And, you know, because they proved it out, then investors double down and wanted to invest in them, right? It wasn’t like, they came to us and said, Hey, we have this idea for something. Invest in us. They’re like, No, no, they executed, they’re like, Hey, we have this idea. It doesn’t cost a lot of money to make these things nowadays, we’re just gonna do it. Try it. And when it succeeded, investors lined up to really double down and so they did a $7 million raise. And I think it’s, it’s, it’s funny, I meet so many people, that I love that they encompass a couple things, you know, they did a pivot, you know, they went into an even crazier space, you know, from AR, which was very early into this crazy NFT space. But through execution, they prove that, you know, they could stand out from the crowd of people that are just sitting there talking about it.

53:31

Well, this is fantastic. having you on the podcast, Tim Potat. Thanks so much for joining us.

53:37

Thank you so much for having me really enjoyed this conversation. And yeah, for being back on after Rob, you’ve either played Half Life Alyx or have decided to start your own VR startup.

53:49

Okay. Yeah, sounds great. Awesome. Thanks for joining us. Thanks.

Welcome back to the Great North Ventures newsletter! We have a couple of big raises to report, along with updates and job listings from our portfolio.

Branch has raised $75M in Series C funding. With $133M raised to date, Branch has grown 2,000% in the last three years and has had 700% year-over-year platform growth in 2021. Funds will be used to double their headcount from the current 120, and to expand to a second location in Tampa.

Atif Siddiqi, CEO of Branch, joined Rob Weber and Josef Siebert on the podcast before the round was announced. We talked fundraising, deciding when to pivot, and knowing when to call on your mom to bust heads and get your Nintendo games back.

Full episode here: “Execution is King: Interview with Atif Siddiqi”

Dispatch has raised $50M in Series C funding. This is one of our very first investments from Fund I! “Dispatch said it has grown revenue at about 175% year-over-year in each of the past two years and it has doubled its headcount in that time frame.”

The round will support Dispatch’s expansion into 50 more markets across the country, and enable continued growth of its delivery management software for both customers and drivers.

Y Combinator’s latest batch of startups presented this week. Winter 2022 Demo Day had 394 startups presenting to over 1500 investors. This is the first year where every accelerator participant startup received the new standard deal from YC. The deal includes $125k in exchange for 7% equity in the startup, plus a new $375K SAFE note with favorable terms for YC. 

The move has garnered mixed reactions with some claiming that microfunds and angels will be pushed out of these deals, and others praising the move as major pressure relief for founders coming out of YC. 

What is certain is that the additional $375K will affect seed investors around the world, as top startups won’t have to raise immediately out of the program. Of 3650 total YC alumni, 2498 are in the US, and 4 YC alumni in Minnesota: LEAH Labs, Novel, Fanchatter, and Pyrls.

Portfolio News

Omnia Fishing is new to the Great North Ventures portfolio! Read more here: “Omnia Fishing Raises $4 Million“

“Branch raises $75M to help workers get paid faster“

“Logistics startup Dispatch raises $50M, will double geographic presence“

“Inhabitr moves HQ to West Coast, adds key California markets“

“NoiseAware taps Kevin Locraft as CEO” 

“Pittsburgh fintech firm partners with The Retirement Learning Center” [IRALOGIX]

135 Open Positions

See all open positions on the Great North Ventures careers page

Dispatch is hiring for 49 positions

Structural is hiring for 1 position

FactoryFix is hiring for 5 positions

TeamGenius is hiring for 6 position

PrintWithMe is hiring for 11 positions

Parallax is hiring for 7 positions

Branch is hiring for 12 positions

Inhabitr is hiring for 3 positions

PartySlate is hiring for 9 positions

Flywheel is hiring for 2 positions

Skillit is hiring for 1 position

NextGem is hiring for 2 positions

Backhouse Brands is hiring for 1 position

Yardstik is hiring for 9 positions

Micruity is hiring for 6 positions

Omnia Fishing is hiring for 11 positions

Omnia Fishing, a new Great North investment, has raised a $4M round! Omnia is the fastest-growing online store in the fishing tackle industry. Omnia’s sales grew 400% in 2021 and are currently on a similar pace this year.

Omnia Fishing is the first e-commerce store that allows anglers to find, buy, and organize their fishing gear based on the bodies of water they fish with a “shop-by-lake”​ concept. Its user-generated content strategy, in the form of real-time fishing reports, is proving valuable to fisherman who can make tackle decisions based on real-time data and catch more fish.

“We’re seeing such tremendous growth in both sales, users, and user generated content in the form of fishing reports,” said Omnia CEO and Co-Founder Matt Johnson. “Consumers are purchasing and indicating what gear worked on the lakes they fished in order to help other anglers purchase the right tackle with confidence. These fishing report authors receive free tackle credits when they help someone shop for tackle. The rate of submission and conversion is exceeding our expectations.” 

Read the full release from Omnia for more details.

In this episode, Rob and Josef talk about the newly launched venture studio project that’s a social app for trading card collectors. 

They are joined by Atif Siddiqi, Founder and CEO of Branch. Atif is a former EIR of Idealab, a venture studio that has generated multiple unicorns. Branch came out of Atif’s time at Idealab, and has grown substantially after relocating to Minneapolis. Branch helps businesses modernize their payment methods to empower working Americans. Atif shares the insight that led to Branch’s successful pivot, and gives operating and fundraising advice.

Who does Atif see executing? Marc Lore.

Full Transcript:

00:00

Welcome to the execution is King podcast where we talk to successful startup founders, investors and ecosystem builders to uncover insights and best practices for the next generation of great global startups. Today, my co host is managing partner of Great North ventures, Rob Webber. Hey, Rob, how you doing today?

00:19

I’m doing fantastic. I’m writing on a high Oh, why is that? We just recently announced coming out of stealth mode, our funds first venture Studio project, which is next gem, it’s a social app for the trading card collectors out there. And I’m a huge Trading Card Collectors. So it’s, I’m especially passionate about this one, my brother Ryan and I have been big on and off sorta collectors, we picked it up again, maybe 10 or 15 years ago, but as kids, we were big time Trading Card Collectors.

00:50

It’s really exciting with the venture Studio, you know, like you and your brother Ryan have this great focus and knowledge about when it comes to product management. That’s something that I that I’ve dabbled in a little bit, but I really don’t know what to look for in a great product manager, or what to like how to create that product myself. Really.

01:10

Yeah, I think the timing is really interesting as our guest today, Atif is actually came out of a one of the leading global venture studios Idealab out of Los Angeles, which is where he’s from, you know, Idealab is, is had some of the biggest successes, they invented, paid search with their overture business, which everybody knows how much of Google’s revenue comes from search traffic, they kind of ripped off the idea from from idea labs Overture and there, but that was a multi billion dollar unicorn outcome. And and there’s many others, of course, but and I think that’s one of the things I’m really excited about the conversation with him today is he’s you know, just an incredibly strong product driven leader. I think there are a variety of founders come from all kinds of functional backgrounds. But I have to say one thing that really I get jazzed about is when I get to work as an investor, when I get to participate along the journey of a really strong product driven founder. It’s just It gets me really excited. So I think this is gonna be a great episode.

02:11

All right, well, let’s get to it. Atif Siddiqi is the CEO and founder of branch. Welcome to the podcast, Atif. Thanks for having me.

02:22

I think for our first question today for Atif, I’d like to just start back, let’s go a little bit before even your the founding of branch, your current company and talk about your path into entrepreneurship. What were you doing as a teenager or as you know, college and beyond and, and maybe spend a couple of minutes talking about how you became a founder and what led to sort of branch maybe the origin story?

02:49

Sure, I’ll go even be before my teenage years when I was younger, my first entrepreneurial pursuit was renting out my Nintendo video games to the neighborhood kids. And I had a quite a good business going until, you know, one day we had a couple bad apples that didn’t return games. And you know, had to send in the muscle, which was my mom to go recover them. And so that was that. But for me, I started getting involved in various product roles at startups in Los Angeles, and went to business school with a goal in mind that I wanted to start something and just get better business background. And while I was at business school, I linked up with an entrepreneur, a serial entrepreneur in Pasadena, California, and Bill Gross, who was the founder and CEO by deal lab. And it was really there where after I graduated, he they started a new entrepreneur residence program. And for those of you not familiar with Idealab, it’s a big technology studio and incubator where they take early stage ideas and really guide them along their journey. And that’s where branch was really born. It was a you know, as the e ir ideal lab, I was able to create this as a with a with a mission in mind of helping working Americans grow financially, and I could dig into that journey as well.

04:11

I think it’s just incredible idea lab. It’s one of the most successful venture studios of all time, having hatched, you know, some of the biggest companies that have ever come out of a studio. And with our great North venture studio, it was really a source of inspiration. When you see how some of the advantages that can come out of a studio model. It was really kind of influential, and thinking about how we would launch our own. So do you want to maybe fast forward to today and just tell us more about I know there was a kind of a pivot to the overall the brand story, maybe you can walk us through the initial value proposition and what you set out to build and then walk us through kind of that pivot and where you’re at today?

04:54

Definitely. So a branch really, we sought out our mission of branch was to To help working Americans grow financially, and this was really born through my own, you know, firsthand experience as an hourly worker, on the front lines, where, you know, a lot of these workers were looking for ways to, you know, improve their cash flow. And so when we first started product looks fundamentally different than when we are today, like most startups, twists and turns along the way. And it was really about helping these workers pick up shifts at the companies they already worked at, to earn more income. And ultimately, you know, I think what we found was the reason they needed more income was because their income was very volatile, right, it was hard for them to manage cash flow. And so when we looked at, you know, this problem, and came across the cash flow concerns for these workers, I think one of our strengths was, we were plugged in to all the HR systems at the workplace. So we knew when the worker, how many hours they may work, how much they made. And ultimately, we had this crazy idea, probably a year and a half, two years into our journey with brands where we said, like, hey, if cash was such an issue, how about we just provide these workers small amounts of capital on our balance sheet? It was pretty risky before. And you know, but they’ve already heard it with the hopes that we get it back. And we did that little test. And, and quickly, we found about three months, we surpassed all growth than we saw in the previous two years. Right. And so we knew we were definitely on to something here, we tapped into a really strong sentiment problem that we’re solving for workers. And that’s when we started really digging into okay, what are the financial services and what is their financial lives of these workers and, you know, have really created now a suite of services to improve financial services for hourly and gig workers.

06:50

I think it’s such an inspiring business, I must be really easy to get out of bed, like when you think about the past decades, and how larger financial institutions just screwed over low income workers, you know, with high interest, payday loans, or, you know, high APR, credit cards, and just like the realtor just clean up this sort of predatory behavior, like there’s nothing worse than, you know, an industry that preys on the low income, right.

07:17

I remember, in college, I had a good friend who worked for a payday loan place. And I had an interesting discussion about the ethics of it, because, you know, they had a good point, their boss was like, we’re providing a service that these people need. These people need access to cash. But on the flip side, yeah, incredibly predatory.

07:37

Yeah, incredibly predatory. And I think one of the big insights were also branch was, again, like, how do we provide these services to this demographic in an equitable way. And really, we had to take a hard, long look at, you know, a business model that hopefully aligned with the interests of the user. And so as part of the pivot, we also pivoted from a b2b SaaS platform to a financial service platform that’s consumption based off of interchange revenue. So the products free to both sides, both the companies they work for as well as the worker. And we found a way to, you know, off the interchange and for your listeners aren’t familiar with interchange is it’s, anytime you go take your debit card and goes swipe at a merchant, that merchant pays a fee to MasterCard, and MasterCard splits that fee with us, right. And so looking at our mission, and our goal, it was a nice way to not only create a product and service that aligns with the user, but also a business model. So as they grow and hopefully have more money in their accounts, where along that ride to and are growing with them.

08:40

Yeah, that’s awesome. I wanted to kind of just change gears a little bit. So when we first met, I don’t know how long ago this was probably now like, over five years, I imagined my bear. Yeah, yeah. So the, I mean, it was one of these things. When I first met you, I thought, like, immediately, it was like a two minute thing as like, when we started talking about like, product, it was just like, immediately, I just felt like, oh my gosh, you’re someone I want to be around. And I guess for me, I like working with all kinds of different founders. But like the, the founders who are can are really strong at product management, product design, and just, you know, kind of have that kind of compelling vision, but can back it up with execution on the product side, those are the ones those are the founders that like really stand out to me. Of course, like when you’re dealing in the enterprise world, you have a lot of founders that have more of a sales driven mentality, especially historically, and I think, you know, the changing landscape of not only, you know, enterprise software, but also FinTech, you’re seeing the consumerization which is really resonates with me with sort of coming from social gaming and the kind of background my brother and I had, so I was curious what kind of what was sort of the inspiration for you, you know, are there either books or people you’ve met or how did you develop this? Like insane you know, product management kind of competency, your product leadership competency?

10:01

Yeah, I think it’s one being around good leaders in different product roles. But more importantly, it’s failing a lot. Let’s be honest, like, the only way you learn really in this game is you go out, you execute, you learn, and those things stick with you. And probably like our my product philosophy has always been just like, you have to keep shipping. Right? I think one thing that’s very underrated, just in general, and for startup founders is momentum. And when you ship product, you’re learning you’re testing, you’re iterating, and you’re building momentum. And that momentum just starts compounding, right, and you start yourself getting traction and growth. And that’s really, really powerful. Because nothing is more exciting than, you know, that feeling of just pulling you the markets pulling you and your product is getting better. And, you know, it’s really funny, I just had a team meeting, where I reiterated, like, you know, the sense of the RE Halfmann quote, right, if you are not embarrassed by your first product, you ship too late. And I put on a big slide, like the first branch logo, which was really embarrassing. And I just made it in Photoshop, but that was on the App Store. And luckily, today we have a great design team that is fix that. But like, yeah, that was embarrassing, but it was out there in the world. And so I would give that advice, like, just keep shipping.

11:18

I totally agree with you like and there was this, I just I’ve been rereading the book super founders when they did research on basically unicorn founders. And one of the common, one of the outliers versus all founders who received venture funding is just this like this, like serial entrepreneurship. And it’s not even just tech. And it’s not even just being successful. Like the most successful unicorn founders have this sort of pattern of like serial, like, they’re serial entrepreneurs and builders, it’s like part of who they are, you know, and I think it kind of reminded me when I was 15, talking about that really crappy MVP product, or really low fidelity, low quality, I grew up kind of lower income. And my first website I built in 1995. You know, this is like, I don’t know, I feel really old. Now. That’s a while ago, but it was, it was this really misaligned directory website. So like, I didn’t know how to format, you know, like web publishing that well. So if you looked at the directory, it kind of started to slant as you as you scroll down the page. And it’s because I didn’t know how to do like proper alignment on like, using like, whatever web publishing tools at the time. But hey, it served the bill, you know, we got the site published, we got the application done, you could do a little bit of scripting, I was never that good, you know. And then we got the we got got some customers, we got a lot of traffic and off to the races, you know, we’re able to take those early works, and iterate and iterate and, you know, about over like 10 or 15 years, we were able to bootstrap to like a 70 million annual run rate. And that was that business. And it was like, but it was just the team. It was really just a hobbyist approach tinkering, very simple. There was nothing perfect or magical about that, you know, the MVP of my web publishing days, but it was like, you know, I think that’s how great businesses start, though. You could go look at the first version of Uber and you go, that’s Uber, like, What the hell is it the wayback machine where you can look at like, often find like old photos of like the biggest homeruns and in tech, and it’s just incredible to see.

13:11

So a lot of people in startup land talk about you know, failing quickly and often, but out a lot of people talk about like recognizing when to stop failing. You mentioned coming across this period of growth that exceeded your past two years growth. How to exactly did you know when to pivot? Are there inflection points or what did you recognize where you were just like this is this is the point. We need to make this decision and pivot.

13:34

Yeah, for us. The big inflection point was really when we started saying active usage taking off and customers started, you know, and users started pinging us both good and bad about this new feature around earned wage access. You know, they they’re had requests and how do we can make it better and that’s when we felt really you know, we talked a lot about product market fit as founders and startups and we did feel the market really pushed the product forward and accelerate that product or to help to build momentum. And that’s when we knew we really tapped into a strong sentiment in the market and continue to iterate around building better financial services for this demographic.

14:21

So I know one of the common links between us as we both have companies kind of scaled starting in the Twin Cities. And I guess I understand you’ve got you’ve moved to more of a remote first approach with your team. Can you talk about, you know, what it’s been like, kind of scaling outside of, you know, like a primary tech or what would be historically thought of as like a primary Tech Center, like, you know, the Bay Area or maybe New York or Boston or something like that. What’s that been like? And then also making that transition from kind of the primarily like an in first team to more of a remote first team.

14:54

Yeah, so you know, coming to Minneapolis, maybe to give your listeners a story. Originally from Los Angeles. We He moved here as part of the TechStars target retail accelerator. We were part of that first class in 2016. Had no ties to Minneapolis prior. And so, you know, one of my challenges was like, how do I build a network? How do I, you know, start meeting people in the area. And what was great is one, there’s great investors like Rob and others that were able to do some of that. Yeah. And early on, it was a lot of recruiting through our network. And we found really great talent. You know, one of the things that we found about Minneapolis is great place for b2b software, you know, people that know how to sell into companies, how to implement it on the customer success side market. And so we started building out a core team there. And then, you know, obviously, fast were the pandemic, like many companies that reevaluate kind of, you know, what that hiring looks like, in that period. And, you know, we were really fortunate where we saw some tail winds from the pandemic, and our team was actually growing pretty rapidly. And so, you know, we had to adjust to this remote first culture and for us, you know, that meant a little bit different ways we operate, you know, asynchronous communication, documents, everything, and it’s worked out really well, for us, we’re, you know, now we’ve been able to recruit talent all over the country. I forgot the latest on how many people we have. But I think it’s, you know, upwards of more than 1520 states around the country, and we’ve been able to grow and move really fast. But ultimately, I think it comes down to like just the mindset and culture and making sure that, you know, you recognize kind of the adjustments you can make as a remote first team.

16:40

So you went through a period of growth, while you were adjusting to remote first culture? That’s right.

16:46

Yeah. You know, I think when you look at kind of our product, and helping workers on the frontlines, be it hourly workers, gig workers, you know, these were working Americans that even during the pandemic, they were keeping stores stocked to the, you know, they were delivering food. And so we definitely saw acceleration in certain key verticals. And we’ve developed new products along the way, like our digital tips product, which was used by a lot of quick service restaurants doing delivery. And so we were hiring out all around the country during that time.

17:21

I wanted to kind of switch gears and talk about how startups raise money from venture capitalists. I guess from the outside looking in, it seems like you’ve been able to raise capital fairly quickly and efficiently. But can you maybe describe more, not so much like, the names and who invested but more of the process? I know, I read this book the other day from Ryan Breslow, I think is how you pronounce his name. He’s got a payment startup. And I it’s called fundraising. And he kind of describes his fundraising process, actually a really short book, but I thought it was, I felt like a lot of founders. My experience is that it’s often a process breakdown. Like they’re not really, they’re not treating fundraising like a well, maybe there’s not really it’s more of like ad hoc. And I’m curious if you develop more of a process? Or how would any advice you would give to founders, as they’re thinking about raising from, from VC?

18:14

Yeah, it definitely is a process. And, you know, I think for me, one of the things that I always taken away with relationships with investors is just making sure that you’re intellectually honest about what you know, and what you don’t know. Right, and the things you don’t know, you can go figure out at, you know, with additional capital, and that’s why that’s why you’re raising money. So know why you’re raising in the first place. And it helps us build credibility, because the more you figure out what you don’t know, you go back, and you have new data, and that helps build credibility, you accomplish, the milestones you set out. And that kind of compounds that relationship as well, over time, and one of the things that’s helped, for me, especially early on, that really early stages is almost over communicating, I would do weekly updates to my network. And it was a great way to also build accountability to your team in this culture of like, hey, if I say I’m going to do something, I’m going to do it. And that was really great, too. And then, you know, over time, that goes to monthly updates, and quarterly whatnot with your investor group. But you also have to make it easy for investors to help you right and others to help you and people generally want to help and be helpful, but you know, these updates that you can provide, just lets them build, I think a series of dots that they can connect over time and show that momentum and growth.

19:37

I’ve been playing around with tick tock lately, and one of my first videos was about this whole notion of you know, don’t be transactional. I think I’m really bad at tick tock, by the way, but it was, I think the average marriage in America is 8.2 years and like for successful VC backed companies, especially the funds that come in early stage, like a seed round, that you know, They often are in your, you know, with you for seven, or maybe nine to 10 years or more. And so that means the average VC investment last longer than the average marriage. And this is why you got to think about, you know, building relationships, I don’t think, I think this industry, maybe with the, you know, you could get lost in the noise of reading all the big venture rounds that are happening on TechCrunch, or whatever. And, but you know, it’s so important, I think, to be authentic and build real relationships. And it goes both ways. Like the founders, I think you want to get to know the VCs and make sure they’re the right partner for you, and vice versa. But I think there’s, I feel like if I could change one thing about a founders fundraise, I’m very much relationship driven. I’m not transactional, I can’t stand it when a founder reaches out to me, right at the moment, they want to raise for the first time they say, Here’s my pitch deck, it’s like, whoa, whoa, whoa, like, you know, slow down, we’re gonna get married here. Like, maybe we’ll get married here, but we got to date first, you know, like, so anyway?

21:00

Definitely. No, it is. Yeah, very tight relationship. And I will say that, you know, for founder’s at least, it is a great time to get found, right. There are many opportunities, especially the early stage for capital, there’s Angel syndicates and networks you could tap into, there’s accelerator programs, a slew of accelerator programs like TechStars, the Y Combinator is 500, Angel 500. Startups. So those are also great places to be don’t have a network starting out, they, you know, you kind of have built in networks to some of those accelerator programs as well.

21:31

Yeah. You know, it’s for me, it’s, you know, I don’t know, I’m a big Twitter user, like, I can engage with a lot more people over Twitter than I can say, I have, you know, in person meetings. So I find like, you know, that’s a great way I think to, you know, for founders, especially as Pete, I think VCs are more open about it used to be, you got to move the barrier to raise money, you got to be based there. And that like, that was already trending towards being thrown out the window. But then especially in the wake of COVID is like, it truly doesn’t matter. I don’t think where you’re at in the world. It’s just, you know, built, find ways to build relationships. And but anyway, you came out of, you know, as an EIR out of IDEA Lab, what did you see the pros and cons of sort of working within a venture studio? Because that’s a whole different framework in terms of resources that you might have. And I know there’s not like, just like, there’s no, no two VCs are exactly the same. I’m sure there’s even a greater difference between the various incubators and venture studios around the world. But maybe if you could talk about them more generally, like what were some of the advantages or disadvantages.

22:33

So ideal, I’ve just backing up a bit traditionally, you know, a lot of the ideas and companies that came out of IDEA Lab were were created by Bill Gross, right. And then Bill had four management teams and operational teams around these ideas to go out and execute. Over time, I think one of the things they saw was like, there was value in bringing entrepreneurs in house and letting them go out and form these teams themselves. And they would be the first check in because they had an early view into the company. And so I came in on the ladder, kind of part of the IDEA Lab strategy with company formation. I think for me, as a solo founder, it was really great. Because, one, they had resources that can help get products off the ground. So think design resources, supplemental engineering resources. And then also, you know, as the company did start growing some of the help around some of the, you know, general administrative aspects of running a company, like I didn’t have to worry about legal, HR accounting, and I can focus solely on product building, talking to customers and solving problems for customers. And so I thought for me, you know, that was really instrumental. And then, yeah, you know, thinking about networks, right? Oftentimes, these venture studios will be the first institutional capital into the business. And that, again, builds a network and some validation that you can go out and execute and grow pretty quickly at the early stages.

24:03

Yeah, I think that’s so that’s so interesting, because I think it’s something like the media doesn’t really talk a lot about. And I think, when they celebrate successful founders, or whatever business or startups, which is just like being a founder really means you have to have general knowledge across all functional areas, you know, within your founding team, or you got to be able to quickly acquire that because you’re, you’re going to be the CFO, the head of the General Counsel, the CTO, the VP of sales, you’re going to be the head of ops, you’re gonna be everything. And so I think that’s where a venture Studio, you know, having launched our latest startup, our first venture studio startup next jam, you know, like I had never done any of that and probably, you know, 20 years because the bootstrap startup we had, you know, we got all that done and so we were able to take that on for the next jam team as a fund and, man, it wasn’t fun though. I like have to say like, that’s it’s just it feels like such remedial work. And of course, the tools that are better tools that startups have now to make it make it a little bit easier. And that you see, a lot of first time founders especially really struggle with some of the things like, what legal structure like, you know, how many startups do I see that start as an LLC, and I think, man, you need to find a new attorney like, but you know, but I think that’s where i The other thing is, though, that knowledge is more freely available than 10 or 20 years ago, if all the just explosion of resources, both through social and just like, you know, all the online content for supporting founders, but I think that they had that opportunity with the studio, I think that that can be a real advantage.

25:35

That’s one thing, it’s one thing to have the knowledge but then it’s another thing when you know, you find yourself in the middle of a pandemic, and you have to shift your entire huge 15 State team to remote first while adding five other states worth of employees. Like it’s one thing to have a little bit of HR, but you guys must have a rockstar HR.

25:57

We do. Yeah, no, we have a great People Operations integrate people later.

26:00

Yeah, I was gonna say like, just setting up payroll like think how much time an average founder spends setting up payroll? Like it’s, it’s kind of a i You gotta it’s just, it’s, it’s not going to add value. It’s not going to make your product and you better, right, but you have the right way.

26:15

So we’d like to end the podcast, you know, our whole title is execution is king. And we love to get lines on people who may maybe they’ve been recognized before, maybe they haven’t. But is there anybody that you see executing, whether it’s an individual at a startup, or maybe it’s just a start up itself? But somebody maybe they’re flying under the radar? Maybe it’s you know, maybe it’s Disney or something like I mentioned our last guest, two guests ago, when a fox, maybe it’s someone huge like that, but just somebody that you’d really see performing?

26:50

Yeah, I’ve been a big fan, especially after he bought the Timberwolves Mark Lore. He’s, you know, across many different industries, continue to execute. And in fact, just, you know, more ambitious, I think it is new endeavors, whether that’s the new city he’s building or, you know, the new, I believe food delivery, kind of startup. Yeah. So, yeah, I think when it comes to execution, and a great CEO, its Mark comes to mind. Yeah, I

27:19

think we’re, we’ll see maybe we’ll get Mark Lore on his podcast cast. I think yeah, pretty. Yeah, definitely. I would agree with you. He’s, you know, we had a prior guest on who bootstrap at the age of 27. Bootstrap to start up to 50 million in annual revenue from down in Miami. When I thought man, it’d be interesting to talk to someone like Mark who did it the exact opposite way. His startups have raised just a tremendous amount of capital right out of the gate. And especially in this world, where you talk about like, the MVP, and you know, starting very, you know, very iteratively but I think there are there are certain times where a bit or businesses that are better off just having more resources to start with and building to scale from day one. It’s not I not everyone has to have a group thing. There’s multiple ways to build a company, right?

28:06

There should be a term for that like coin person or something. Thanks so much for joining us on the podcast today. Atif. We really enjoyed having you. Likewise. Oh,

28:17

this is great. Appreciate it.

In this episode, Rob and Josef talk about bootstrapping. Rob shares his experience bootstrapping to $70M in revenue by age 32 with his startup, NativeX. 

They are joined by Michael Martocci, who is the Founder and CEO of SwagUp. SwagUp is a company that sells curated swag packages to startups. Michael has bootstrapped his company to $50M in revenue by age 27. He gives advice on bootstrapping and when to hire devs. He also outlines how to build an e-commerce site with free software, which he did himself, reaching $3M in sales after 18 months of operating without a developer.

 Who does Michael see executing? Ramp.

Full Transcript:

00:00

Welcome to the execution is King podcast where we talk to successful startup founders, investors and ecosystem builders to uncover insights and best practices for the next generation of great global startups. Today, my co host is Rob Weber, managing partner of Great North ventures. Today we’re going to be talking about bootstrapping. Now, the phrase was originally meant to be sarcastic, right, describing this physically impossible action of reaching down to your own boots to lift yourself up. But entrepreneurs and founders have embraced the phrase. And today it means building your company without taking outside funding. So for instance, like Rob, you and your brother Ryan, bootstrap your company, right?

00:44

Yeah, we had the classic dorm room startup, we had been, you know, building ecommerce, businesses and internet businesses in the 90s as teenagers. And by the time we went off to college, and were in the dorm rooms, we had this idea to create this publishing business around PC software, which eventually took us into mobile apps, with iPhone and Android. So as a 16 year journey, I was pretty proud of what we were able to accomplish from age 20 to age 32. At our peak year of what was native X at the time, we were at 70 million in annual revenue, having never raised anything but a small angel round. And we had 170 employees in Minnesota in San Francisco. I learned a lot about building businesses, you know, through through those years and pretty exciting to be a part of I think, for a lot of the people who are a part of the early team, especially, you know, there’s something really magical when you can scale a company like that.

01:43

Yeah, and our guest today, Michael Mark Tachi followed a similar path, he bootstrapped his company swag up, up to $15 million. And he just turned 27 years old.

01:55

For those people who know me, I’m pretty active on Twitter, Robert J. Weber. And I follow Jonathan treble from print with me, he was on an earlier episode of our podcast, and Jonathan’s a really scrappy founder, you could hear that in the episode that we had him on. And he tweeted about this company swag up, that was rated 23 Out of the Inc 5000 for fastest growing companies in America. And he was 26 Now 27, and at this $50 million run rate, I was so impressed, I had to reach out to Michael and after a little bit of back and forth on Twitter, he decided he joined us for the podcast, I thought it was super cool. You know, here, I thought we had a unique story that we are these young founders that got to this kind of scale. And Michael is five or six years younger than us at the scale. He’s already yet.

02:44

Michael mark. Tachi is CEO and founder of swag up. Welcome to the podcast, Michael.

02:49

Thanks for having me. You. We have a VP of sourcing and merchandising from the Twin Cities area and you guys say swag up the same way?

02:56

Maybe? Is it a little Canadian to it? Or how does that how does that come up? Come out?

03:01

Yeah, I don’t know. A little like Midwest like Twin Cities Twain, you know.

03:05

Nice, nice. I used to travel out globally. And it would, I would either a lot of people in like Europe around the world would say we sounded Canadian up here. But then sometimes I would also joke around with friends and like the Nordic countries that, you know, at least from a latitude where we’re close, we can be brothers or something. I don’t know. But anyway, kind of the first question I had, there are many founders who decide to bootstrap their startup. I’d love to learn more about your story. Predict, you know, kind of pre dating swag up? What were some of the things that you did to prepare yourself for swag up and just tell us more about kind of what everything leading up to swag up for starters.

03:45

Yeah, yeah, I mean, you’re always like that quintessential kind of like entrepreneurial kid. You know, I always love making money for the sake of making money. I don’t know what it was. But there was a there’s a picture of me I’m like four or five years old, standing outside my mom’s house growing up like reselling our groceries to our neighbors, you know, on a little you know, picnic table with a little sign that’s like yogurts, five cents and ICE T 10 cents. And so it was it was a good business because the cost basis was zero. So he couldn’t really lose on that. But that just like snowballed into lots of different stuff. So like I used to set up a little table at the bus stop like baseball cards so that when when kids would come off the bus nothing come by and like shop through my assortment. And you know, I’d gather a few kids to, you know, shovel snow from different neighbor’s houses to make some money. And so I just always like that enterprising type of personality. Yeah, I used to play video games on my computer, but they were like the games where you make money. It’s like lemonade tycoon and roller RollerCoaster Tycoon stuff. But then I actually run 13 I got really into finance. I ended up buying my first stock. Ford at the time, because I like the Mustang. And my mom was at Morgan Stanley for 33 years and her boyfriend at the time was like a big, big wealth manager. And so I got really kind of engrossed If you’re managing money, and you’re learning about s one filings and 10, KS, and you know, discounted cash flow analysis, all that kind of stuff. So I ended actually ended up going to school for finance. I had an internship when I was 18, at a hedge fund, actually commodity trading hedge fund that was based in Illinois, just outside of Chicago. So I got really into that, and then, but it kind of became a distraction. Because deep down I always was like that entrepreneurial kid. And I kind of like suppress that a bit because of this, like artificial desire to go into finance, because it seemed kind of interesting and exciting. And then one of my buddies from high school reached out to me while I was at school, and he’s like, hey, you know, I want to, I want to build an app, I have this problem where I can’t find kids at Rutgers University to play basketball with and I was at William and Mary in Virginia. So we weren’t at the same school. But we were friends in high school, and we have like little side businesses and stuff. And he’s like, you know, like, do you want to do this with me? And I was like, Yeah, sure, whatever, screw it. And we got like this Indian development firm, and we designed and prototype the app, and we work together on it. And we ended up launching it on my campus. And it was like mildly successful, we got like a few 1000 kids from the school to use it and stuff like that, we didn’t really know what we were doing. But in the process of launching that on campus, we wanted to get custom flags to put up in the dorm rooms and like on the walls and fraternity houses and stuff to promote it. And so that was like my first foray into trying to source custom printed materials. So I ended up finding a supplier. The US suppliers wanted, like $130 for the flag, and I found Alibaba and got them for $8 from from an overseas supplier. So at the time, I was like, Okay, we have this app. But why don’t we just get a little side business going sell resell these custom flags and banners from from overseas manufacturers. So that like I said, that was kind of like my first eye opening into the world of custom printing, we ended up starting to do some, like T shirts for fraternities as well, like, we would do flags and T shirts as like a bundle deal and sell to them. So I always kind of had this in the back of my mind. So I ended up actually dropping out of school became business partners with an NFL player very randomly, because I was just like, when I got back into the entrepreneurial spirit, I was like, you know, I don’t want to be in finance anymore. I don’t want to stay at the school anymore. I don’t really care about the degree. So I had this opportunity to partner up with him. And you know, we’re again, even there, we’re doing fitness training programs and stuff, but we’re bundling them with like custom branded shaker cups and resistance bands. So I was still flexing that like ability to source these products. And I ended up going to a VC firm in New York City for like four months after working with the NFL player for over a year. And you know, just being around startups, you just saw how much they care about community and brand building and how swag plays a central role in it. And you everyone was doing it very differently. It was a very kind of stuck in the 2000s type of, you know, industry and supply chain. And just kind of bringing two and two together. Like I think these high growth companies are really looking for a more interesting better way to do it and buy from a brand that really resonates for them. And that was kind of like the initial spark for diving deeper into it.

07:58

That’s really interesting. So you have this entrepreneurial tendency going way back to even four and five years old. I’m curious, did you also have graphic design or software development skills prior to starting swag up? Or did you I think I read in a blog somewhere that I think one of your pieces of advice for new founders was trying to rely on more like freelancers as much as possible. Was that more how you got to kind of the technical side of swag up off the ground? Or did you have some of the technical skills too?

08:29

Yeah, I mean, you the proliferation of like these, no code tooling has really made it much easier to get stuff off the ground. So you know, I, I’m a relatively good visual kind of designer type person can kind of say, Does this look good? Does this not look good. And that was a great kind of skill set to have. So then I just built the first website on Wix. And the reason I liked Wix so much is one, it’s super cheap. But two, it’s also super flexible, like, you can literally start with a blank white slate and design exactly how you want. And it was good enough, you know, we ended up using that Wix site for like two and a half years, you know, and we and all we did was, instead of trying to build out some sort of like catalogue experience, or E commerce experience, I use that type form. And the reason I like tight formula is because when you can embed it as an iframe on the site, so it looks native and natural to the page. And it’s a very visual form experience. So you can actually use like imagery. You can even do calculators or things like add up the pricing. So there’s like this dynamic kind of logic that you can use in type form that allows you to almost be a software engineer without really being an engineer. So I was like, critical. I had enough critical thinking and creativity to kind of like put different tools together to make it feel like like a productized experience. But I didn’t need to really rely on on third parties mean the business didn’t really take any money to get off the ground. I think when I started the business I had like 25k saved up 30k or so. And we did end up like using it because I hired like a buddy of mine that lived down the street and we pay him and you had we had an office It was a stupid expense at the time. But you know, I think having the resourcefulness to, you know, teach yourself a lot of stuffs, you know, is super viable in those early days so that you can just kind of not have to rely on other people. And just and just make it happen for the first few months, because you just want to see in the beginning, like, do people even care about this idea? Like, is there enough traction there to make us want to dive deeper. And if you just go straight ahead to being like, hey, well, I don’t have resources, and I don’t know how to design and I don’t know how to do this or that, then you immediately like, relinquish power, and you have to give it to somebody else. And you say, hey, I need to raise money now. Right? Right off the bat, because I can’t do anything without people. And it’s like a very, it’s this, just this trap mentality, though, that if you always kind of have that mindset, like I can’t do it, I need other people, I need other people, that mentality will stay with you, as the company grows, you have too many employees, too many people that don’t take ownership, all that kind of stuff. So like, it’s always been embedded in our mentality, like, you have to be able to figure it out yourself, take ownership, just make it happen, learn things, etc.

11:00

That’s something I see all the time with people with startup ideas, you know, we’re like, I’ve got to raise money. So I can hire developer to build this thing. And I mean, how long did you go before you actually hired a developer?

11:13

About 18 months, and we had already done, like, over $3 million in sales without any technical talent, you know, we used we use that same kind of no code setup, it was. So what it was was, you had a Wix website type form was embedded, I built some Google advertising, you know, sem campaigns to get people in the door. And I use Zapier to connect everything to Trello. And Trello became like this back end kind of project management order management system. And then we have like Google Sheets and stuff to kind of make, you know, presentations and like quotes and stuff like that. I even made like this really big like pricing spreadsheet where it had all of our skews, and then you’d put in how many units you want, and how many colors it is. And then it would spit out what the price should be. So that when we hired like a second salesperson, they could just go in there and make their own pricing. And then we had like these templates that you can make a quote in Google Sheets that like okay, line item, price, line, item price, here’s our addresses our number, and you just like download that PDF, and send it to people. So we did that process to like six and a half million dollars of sales. And you know, it wasn’t great, but it didn’t stop us from like testing and validating that there’s actually interest and you can build a business around it. You know,

12:23

that’s fantastic. Because all of these tools that you mentioned, I mean, have free levels, right, like Trello, Zapier, I mean up to a certain amount of connections with Zapier and up to I forget where Trello starts charging, but that’s fantastic.

12:38

You can reach out to these companies, even the ones that are more expensive and say, Hey, I’m a startup, do you have a startup program or something and a lot of times they do, it’s like, you know, intercom, for example, intercom is very expensive. It’s like, I think right now, we were paying like $1,600 a month for like the chat feature and the different automation that they have. But the startup plan was like $99 a month, you know, it’s like 1/15 of the cost for all their feature set. And they’ll let you use it for like, a year or two years, until you have like more than 50 employees. So there’s so many of these AI platforms out there now, too. They give you discounts on different services from different vendors and stuff as well. So there’s really it doesn’t cost much to utilize even best in class like software platforms when when you’re starting out.

13:20

So on the customer acquisition side, I think you mentioned initially used sem as kind of a main driver for customer adoption. Did that start to change over time as you had success? And I guess, as you scaled up?

13:34

Yeah, for sure. I mean, today, about 70% of our business comes from organic and direct traffic and sources. But in the beginning, it’s like it, you know, first off, to really validate something, you need to just go out into the random world and see if people care about it, you know, because it’s very easy. You know, it’s very easy to start something and just ask your friends to buy from you ask your parents to buy from us, like people you know, to buy, they’ll buy at a pity, but it’s not necessary. It’s not necessarily validating that people care enough to like use this if they have no idea who you are. And you do want to use your connection to get a few sales off the ground, because that gives you credibility, you learn how to operate all that stuff. So I’m not saying like don’t do that. But at the same time, you want to just go out randomly, like nobody knew who was behind those Google ads or behind that site. And they still cared enough to like actually put their information in and go down the funnel basically. So that’s what I wanted. I wanted to make sure that random people would care enough and and we tried different things. We tried Google ads, we tried Facebook ads and what was good as I taught myself, you know, digital advertising when I worked with the NFL player, because we were doing like these fitness training programs. And you know, what’s great about fitness training programs is they have no cost or digital program. So it’s just a pure marketing kind of arbitrage. So we’re doing lots of Facebook advertising and stuff and that’s how I kind of learned about multivariable testing and all this kind of stuff. So again, back to the idea is like, you know when you’re starting out like have the curiosity and resourcefulness that kind of figures out stuff stuff out on your own. And the Google Ads worked, you know, like the initial ads worked well, at the time, that idea of like swag packs like, which is what we really centered our positioning around for the first few years, and we still kind of do. There wasn’t even a known concept like people, there was no competition for it. It was getting like minimal, you know, a few 100 searches a month or something. And we just went after some of those, like longer tail keywords. I didn’t, I didn’t try to bid on, you know, promotional products or swag, because they’re just, you pay too much per click for them. So I tried to figure out like, what what would people actually search for, that would eventually lead them down the path of wanting what we have without being so direct? Like, you know, because those are, there’s two wildly competitive those spaces.

15:42

One of the things I had read on your blog was, you attribute a lot of your success to just staying focused. And that was one thing you would share with other founders. Can you elaborate on some of the decisions you had to make where you had to maybe there was that opportunity to be, you know, to widen your focus or be less focused? And maybe things that you didn’t do? Or, or maybe examples where you were, you know, you stayed very focused?

16:08

Yeah. I mean, it’s still a problem today, especially as you hire more people, because then it’s not only the company’s vision and goals need to be focused, but then you need to make sure that all your leadership and you know, every the focus is kind of driving down throughout the organization. And I think that’s one of the hardest parts of scaling is helping people stay aligned and moving in the right direction. But in the early days, like, so when I when I first learned about the custom printing, and I, you know, we started like that side business with like reselling stuff from from China, we had a little website, it’s like, cheap, custom printing. com is an E commerce site. And, you know, we did like 40 or 50k a year or something off of it. But what I realized there was just, you’re not going to build a business on the premise of like, work cheaper, like, that’s not interesting enough, and the products themselves, you know, it’s just like flags and banners like there was it, you couldn’t come to cheap customs, calm and be like, wow, like, these people are specifically different and distinguished in this specific thing. And we need to be using them for that. And that was something I had in the back of my mind when we started swag up, I was like, How can we niche down to a point where people really, really understand like, wow, these people are the best in the world at this one thing. And we know if we need this one thing, we can go to swagga for it. And in the beginning, the very beginning was just a matter of like, oh, focus on startups, like brand, the experience and design in a way that’s resonates with them and curate the selection so that you eliminate kind of decision fatigue and the whole kind of paradox of choice mentality. And that was good, and it attracted some people, but it wasn’t enough of like, wow, like, they’re truly like changing the game. And and one of our first big orders was for swag packs, like this company was like, hey, we want to put together 100 New Hire kits. And it was a $10,000 order. And it was like a sweatshirt and a shirt and a tote and a bottle and notebook, etc, that every new employee was going to get the same thing. And I was like, there’s so many ways that a company could use these kits. These packs, it could be for welcoming new customers, it could be for venture companies sending it to their portfolio Yoko’s, it could be new employees, it could be work anniversaries, there’s just so many reasons why you might want to send kind of this bundle this preset uniform to people especially in like this idea of remote work, like, you want to have this uniform consistent experience for people across the globe. And I was just like, there’s no way to make this happen easily for a company. If you think about the process, it’s like, you got to find the packaging supplier, the apparel supplier, the hard goods, handled the design, work, pay different vendors coordinate all the logistics, I was like, if we can become this end to end solution for this specific problem, we’re gonna grow incredibly quickly. So that was that was a big moment of discipline and focus, because we didn’t know it at the surface level at the time. It’s like it felt limiting. It’s like, Oh, are we not going to take on like these bulk orders and become more of an all encompassing so I company? Are we are we just going to focus on these kits, like is that a big enough market? Do people care about it enough. And ever since we did that the business just exploded, you know, we went from doing a three to 4000 a month to like 30,000 50,000 100,000. And it was the genesis of really like our growth trajectory. And it was because we said, hey, we’re gonna be the best in the world at this at this one thing. But this, you know, this plays out on a daily basis. Now, you know, we like to think about the swag pack concept as a mousetrap that allows us to get in the door with a lot of companies. And we’ve worked with over 4000 companies in the last four and a half years. And obviously, as you deal with these four and a half 1000 companies, they you know, they constantly asked like, what if you did that, could we do a swag store for employees where every employee gets like points and credits and system? Could you integrate with this system. So every day, you’re kind of faced with these, you know, challenges and we used to actually do stores for companies, we would set up like the Shopify store, we manage their inventory and send it to their employees and stuff. But we realized pretty quickly, it’s just like, we’re not set up to manage that. Like it’s a way to manual process. It gets in the way of a scale we dealing with like the core problem that we’re solving that is already a large market. So we ended up just dropping that and not doing it anymore. So there’s, there’s a lot of stuff like that that pops up on a daily basis where it’s like these are these look like shiny, good opportunities, and they would definitely bring in revenue. But I’m, I’m of the belief that if you can do something at a B plus level at scale, that’s way better than trying to do everything and try or try to be the best at everything. So other things, too, is like, Okay, we do swipe packs for companies, and we handle for new hires, and all these different use cases. But we also don’t try to be like this really customized boutique tea, like, let’s design everything really special, like, let’s use the most unique products all the time, because you can’t provide that level of experience to everyone at scale, you know, so I’m always about like, I’d rather have a B plus consistent repeatable experience than try to be a plus at everything, or try to be your C at a million different things, you know.

20:51

So whenever I’ve ordered swag, you know, I don’t I don’t want to pump anybody that I go through. But say you go to like, for imprint. And you get into that. I think you mentioned like decision paralysis or something like that, right? It’s just kind of overwhelming choices and things like that. So that was kind of interesting. You talking about niching? Down, Right, and focusing on just these this Bita b2b target. Whereas like the b2c focus for selling swag, it seems like that’s a pretty crowded space. Did you focus at all on b2c? Or did you go straight to servicing these kind of businesses or other businesses? Did you start out servicing individuals?

21:36

No, it was always businesses like and specifically, like high growth startups was the initial target when I don’t know what that percentage is. But it’s got to be like 70% plus of our business comes from software companies, you know, just kind of were where we focus. So we’ve always had like, very large average order values as well, which, which allows us, which is great, because it allows us to invest in marketing if we need to, in a way that’s really profitable. Because if you have 8000 $9,000, average order values, or you know, or they’re spending over 20k A year annually, you can you can afford to spend $1,000, to acquire a customer doesn’t matter, you know, whereas when you do these b2c, you’re going after crowded keywords, crowded markets, only to get $500 Order $600 orders, and then you have to have like either a really scalable e commerce experience, or like a large customer support team to manage those relationships and deal with the subsequent issues that are going to arise afterwards. So you know, I’ve always been a fan of kind of go where the money is, you know, and you know, there’s a lot more money in enterprise type companies and, you know, high growth startups, and they’re, and they’re also willing to pay a premium to get their time back. And we were very much around my calculi make this an end to end experience for them and embed ourselves in like their workflows, and really provide them value versus just being a transactional company that sells them a t shirt, because when you sell somebody a t shirt, now it’s all about price. It’s like, you know, which ways can I get this t shirt for cheaper, and we always wanted to take ourselves out of the price conversation. It’s very, it’s very rare that somebody comes to us and like, Hey, I don’t want to use swag up because I can get this shirt for, you know, 20 cents cheaper somewhere else. It’s like, well, that’s not why you’re coming to us, you’re coming to us, because you’re looking for help dealing with this process. From from end to end, you need help with the storage and the distribution logistics, you want us to help you figure out which items to do. So yeah, it’s just it was a more appealing market and approach for me the way that we kind of went after

23:33

I find it just inspiring, like, I’m sitting here like, oh, man, I’ve kind of just starting with SEO and like looking at running ads and like what can I take? And what kind of business could I service? You know, it’s almost it’s industry agnostic, this approach that you took, you can almost spin up any another number of businesses using that same approach that you went with not saying they’d be anywhere near as successful, of course, but

24:00

I think it’s really interesting because I I purchased from a for my my prior business that we bootstrapped pretty successfully, we ordered a lot of swag over the years for employees or for customers, and, as always, sort of the old school players. But when I think about that, the by targeting startups your net, you have the potential for pretty high net revenue retention, because these startups are growth companies. So if you can land them and keep them happy, you know, they’re, you know, you have the chance to just keep growing on the back of their own success. And that can happen in other categories. It’s not just startups or other, you know, industries that are maybe have a characteristic where the whole industries, there’s sort of like the rising tides side of it. But also I think startups are probably generally going to be more early adopters of maybe higher expectations for tools they want to use. And I know you have like you have API’s or some of these like No, no code tools, like startups are going to appreciate that a lot more than if you’re targeting some like upper midwest. arcade business that’s been growing by 5% a year for 50 for a generation, and, you know, they’re just kind of set in their ways. Like, that’s probably not a great customer to target industry, that’s been around a long time.

25:12

Ya know, it was a very deliberate decision to work with these types of companies, you know, they were looking, as I said, they value their time a lot, there’s a lot of very high opportunity costs in high growth environments. And like you said, you’re placing a bet on them to grow. I mean, we even had conversations of like, we’d make more money if we just started an investment fund investing in the companies that are working with us, because we know how fast they’re growing? We know that they really care about being deliberate about the employee experience and the customer experience? But yeah, I mean, I almost liken it to a tax, you know, like us working with these high growth startups, it’s almost like we’re getting a tax on the startup ecosystem, you know, not maybe not as big attacks, as like AWS, like at AWS is a tax, you know, like they’re taking like a 1%, you know, take rate on all startup revenue, basically, by handling kind of the cloud for all these companies. And we’re, we’re same thing like, every company needs swag, for some reason, you know, and we want to make sure that we’re the vendor with them, and we’re growing with them. Have you come

26:10

across any other places where you’ve spotted these kind of inefficiencies, like the inefficiencies that you saw, in your own experience? Ordering swag. But have you spotted anything else when it comes, particularly to serving startups? Like you mentioned, AWS is basically attacks. So I would say that they’re running at pretty damn good efficiency, if they’ve reached that level. But do you see any other places where there’s, there’s kind of money on the table left, specifically, dealing with like startups?

26:44

I don’t know. I mean, my mind races every single day with ideas and opportunities. I mean, I think, in general, though, that there’s just a lot of opportunities to digitize the physical world, in general, both from a marketing standpoint, and a product standpoint, you know, I have a friend that, you know, it’s a successful kind of tech entrepreneur, and they’re their newest business, these are these guys sold their last business for $2 billion. Their latest business is a pest control company, and they’re digitizing it, they’re operationalizing it, they’re building out your complex digital marketing programs that are sophisticated at the level of like technology companies, and they’re taking, you know, they’re going into new markets and standing them up for like, $200,000. They’re doing, you know, unique, like routing systems to make sure that the right people go follow up on the leads at the right time. Like, I just think there’s a lot of room to take legacy type businesses that are, you know, that haven’t changed much. And there’s a physical component to them, and utilize technology to make them much more efficient, and then utilize like, true innovative marketing strategy to get in front of, you know, customers cheaply at scale that, you know, traditional companies are not usually great at.

27:53

So Michael Kennedy to change gears a little bit, you know, in the last few months in the you know, during this COVID time period, there’s been a real, a lot of constraints on supply chain. I’m curious, with E commerce, businesses or your business, have you? Have you had any really major hiccups, just in terms of your supply chain and servicing your customers?

28:15

Yeah, for sure. I mean, we’re in an interesting position where it’s not as bad as like some direct to consumer ecommerce brands, because we don’t have inventory. So we’re very much like a just in time manufacturing type situation where our customers want to place a certain order, then we accept that order. And then we handle it with our supplier base and our supply chain. So we’re able to kind of be insulated from, you know, inventory risk and demand forecasting to a degree because these direct if you think about like a direct to consumer ecommerce brand, if their production times have gone from 60 days to 120 days, and you know, the turnaround time on the ocean went from, you know, 50 days to 100 days, instead of trying to plan forecasting and demand for the next 100 days, you have to plan for almost like a full year. Now, if you get that wrong, and you overbuy Are you under buy, you’re in a situation, because you don’t have that you’re not nimble enough to fix that, you know, and you can either be left with no stock to sell, or you have too much stock and you can’t afford to kind of carry that inventory costs. So, you know, I feel for a lot of other e commerce entrepreneurs that had to kind of deal with that, especially if they don’t have good handle on their data and an on demand, especially as like, digital marketing got more expensive, and it became harder to track the customer with like the whole Apple and Facebook stuff going on. But for us where it impacted us was that, okay, it’s great that we don’t have you know, pay for inventory ahead of time, but we still need that production process to run smoothly. And where it used to take us like three weeks from start to finish the finish like a project and on all the components of the order. Now it’s more like five weeks, you know, and so it’s just taking longer to run through projects and your customers get antsy. They’re okay, it’s been three weeks. Where’s my order? You know what The status what’s going to be the date, the we and also we don’t have great visibility sometimes as to exactly when the order is going to be ready. And then the other part too is, you know, we run, we ran into a lot of issues of like stock outs in the sense of like, okay, we thought we could sell you 500 kits or 500 bottles that are this bottle. But actually, we can’t, the supplier no longer has it. Because you know, what ended up happening at the beginning of the pandemic was the suppliers, a lot of them got nervous about the industry. And they started to hedge their bets by selling PPE instead. So they sold sanitizer and masks and stuff. And they weren’t placing the large inventory buys of their core products. So a lot of them is like demand starts to rebound a bit, or at least for us demand never kind of took a hit because we fill the certain need that always persisted, especially in a pandemic, we found ourselves with, like more demand than they can handle from a stock standpoint, and there was a lot of issues there that we had to then deal with reworking the order, figure out what alternative to put in there do have to credit the customer that we didn’t really have workflows built out for that kind of stuff, because that wasn’t really a problem for us in the past. So it’s definitely been a very challenging, like operating environment to provide like a really high quality customer service, at scale during all these disruptions. And then you also have labor, labor disruptions to it, can you hire people for the warehouse, can your vendors hire people for their production facilities, it takes a while to hire them. And then those people are also much more expensive. Now it’s a higher from an hourly standpoint, where I think going into the pandemic, we started people at like 12 $13 in the facility, now it’s like $16, with people going up to like $25 an hour for some more senior, hourly. So it’s definitely more expensive to operate the business and things take a little bit longer. But there’s also an element of like, being able to pass some of those costs of the customer as well. And also customers have started to become conditioned over the last year that, you know, expect that things are going to be challenging. You know, there, you know, in the beginning, the first six months, people didn’t know why things were taking longer. They didn’t know why they had very high expectations. And I think we piss some people off. But as the pandemic kind of continued, they started to realize, like, oh, I tried to order this thing from Wayfarer, and it took six weeks, and I tried to get this thing from, you know, Home Depot, and they don’t have any more stock. And I think people just started to like, settle into the reality of like, you know, things are screwed up. It’s not just like a side thing. It’s like all over the place. So

32:22

Michael, just in terms of founders who are thinking about bootstrapping, a startup, are there any other just, you know, one or two major takeaways or advice you would give to them?

32:32

Yeah, I mean, I think some of them mistakes kind of that we made. And if I was like, bootstrapping, again, you know, how I think about it is mostly related to people, you know, I think that the, you start to realize, you know, because this is like the first real major scale business that I’ve run, but you and I’m still young, you realize that people are everything, you know, if you have really strong people and leaders, you know, you get a ton of leverage, you can trust them to go run and build like mini empires within the company. And then when you’re Bootstrap, I think the the impetus is typically like hire a lot of middle level people, you know, try to get deals, like where people are willing to take less, and you’re better off just getting some bodies in the door, how them like, become arms and legs for you and scale that way. But going back, I’d much rather be like, much more hesitant about hiring and invest a lot more in 1234 great people than having 20. People that kind of constantly have to be told, like, Hey, this is what’s important, this is what to do. Like I didn’t really get a lot of leverage in the first couple years. So I would say like, yeah, it can be scary to like, invest heavily in getting great talent. But at the same time, you’re not making you know, if somebody is $200,000 salary or $150,000 salary, you’re not committing that to like a year, it’s like you know, things don’t work out in a few months, then you cut ties, and you move on. And you start to realize that they’re not cost these are people are investments, you know, getting great people are going to be accretive to the business and very quickly prove their worth and be impactful to the company. And sometimes it’s like a trap if you never make those investments to those people because you can never get out of the holes and get out of your problems. So I wish we would have just like brought in, you know, more seasoned people sooner and bit the bullet on that. And then besides that, it’s just like, constantly, you know, constantly be scrappy, and be aware of what your expenses are, you know, it’s very, it’s easy to kind of, you know, I brought in a finance partner suit are very quickly as well, like Artem, he’s one of he’s one of our partners, and he was the first exec that I hired. And I was like if cash flow is going to be so important to us, like I need somebody looking at it day in and day out and you know, optimizing for it. So I felt confident that I can focus on the growth of the business and he would have kind of the safety net figured out how to make sure the cash is in a good spot. If not, what do we have to do? And that gave me that peace of mind to just keep focusing on growth and that I had kind of the yin and yang partner to focus on kind of the downside. So I think you’ll sooner or later getting somebody that can own that, if that’s not your your thing. And watch that so that you don’t feel like you have to constantly be on top of it every single day, or else you’re gonna go crazy, but but also just being aware of what the expenses are, even if you bring in someone like that, it’s not like, oh, oh, I just pay the bill at the end of the month or something, or you should just let me know, it’s like, no, like, what are we actually spending money on? And? And does it actually help the customer in any way? And if not, like, why are we? Why are we spending on it? So we’ve always been very, like frugal, you know, even till today. And even when we write, you know, if, if and when we raise money from investors, like, we’re still gonna be the same scrappy, frugal company that we that we always were and and that’s, you know, Amazon’s very much like that, too. You know, they’re one of the largest companies in the world. At this point. They have plenty of capital. But they’re, they’ve always been so frugal and scrappy, because that’s kind of like their humble beginnings, like they didn’t raise a lot of money when they first started.

35:49

I like to ask every guest on the podcast, Michael, what’s a company or who’s a person that you really see executing? This might be somebody under the radar, or it might be Amazon, for instance, but someone some piece of execution that you really see being great that you want to call attention to?

36:08

Yeah, well, I’ll bring up to two examples. First off from a company and like founder standpoint that I really admire company called ramp, they’re pretty, pretty well known your fin tech company out in New York City, they’re worth about two or 3 billion. At this point, they’ve only been around for like three years. So I’m pretty close with Kareem, the CTO, and they just move incredibly quickly. They’re really deliberate about how they structure teams, the types of people they hire, you know, getting people that are at like the inflection curve of their growth, like they’re very high potential, what maybe they haven’t been put in a spot to really fully maximize that potential have the autonomy to to go with it. So they’re really deliberate about trying to find those types of really high potential people and then putting them in a place where they have autonomy, and power to directly contribute to to the outcomes. And that allows them to just move really fast, there’s no bureaucracy, there’s no, there’s very limited kind of layering of people where you have to go through them to get to this approval or communicate, they just kind of run in parallel. And I’ve, you know, I’ve really found that to be impressive, and something I try to emulate in how we build out a team structure. And then, and then on the other side, there’s a book that I read, so not necessarily specific, a company, but a book called amped it up that just came out from Frank’s Luqman, that’s the CEO of snowflake, and then before that ServiceNow and data domain, and it’s really kind of like the blueprint for how to build a high performance culture that just executes at a very high level, and how to be a leader in that environment to hold people accountable, set the proper expectations, set people up for success, how to make hard decisions, all that kind of stuff. And I think that, you know, if you can get to that level, quickly, in your career, you’ll you’ll just be in a much better spot because I think a lot of young founders averse, kind of scared to make big bold moves. And that’s kind of what you know, Frank’s learned over the last 2030 years leading companies is that, you know, you have to kind of trust your gut, you have to make strong decisions that you know, that that are right for the business, you have to, you know, set people up for success and help them. And that book was a really good guiding kind of principles for me to, to think about how to lead the company, especially as we scale.

38:22

Well, fantastic. You know, we really appreciate your advice and bootstrapping and the guidance for young founders and building teams and hopefully they can reach where you are at this point with swag up but you know, fingers crossed for them. Thank you so much. We’re so happy to have you on the podcast, Michael.

38:41

Yep. Thanks for having me on. Appreciate it.

Yardstik is a technology company offering screening, verification, and training solutions tailored to gig marketplaces and SaaS platforms.

Yardstik is new to the Great North Ventures Fund II portfolio.

The company announced on Feb. 3rd, 2022 a $8 million Series A raise led by Grotech Ventures with participation from Great North Ventures and continued funding from existing investors Rally Ventures and Crosslink Capital.

Read more here.

Visit the Yardstik website.

NextGem has $1.8M+ raised and $2B+ in trading card assets

The first Great North venture studio startup, has come out of stealth! The company has come out of stealth mode with $1.8M in pre-seed funding, and 3,500+ trading card enthusiasts signed up for the service and with over $2 Billion in trading card assets.

The startup has attracted value-add partners and investors including the first software developer at Uber, Ryan McKillen, fantasy sports analyst for ESPN, Matthew Berry, fantasy sports guru Paul Charchian, former Minnesota Twin Corey Koskie, and many successful founders and entrepreneurs. Co-investors include SK Ventures, Groove Capital, and Gopher Angels.

NextGem, is the first social app built for card enthusiasts to find and share rare and valuable cards right on their smartphones. The app uses AI recognition to capture professional-grade images with smartphone cameras to showcase the world’s best trading cards, unlocking previously inaccessible card collections.

NextGem’s mission is to foster, develop and bring together the world’s most passionate trading card community, by reimagining the way people collect and discover trading cards through innovative social technologies. Users can manage trading card collections and find rare “gem” cards that are difficult to track down. They can connect instantly with community members, share card images across Instagram, eBay, and more, and leverage knowledge from experts to become a more savvy card investor. 

“Tens of millions of fans are passionately collecting sports cards worldwide with the annual online resale market already in the billions, showing strong growth rates, with room to grow considerably from non-sports cards. Long-term, fan experiences will blur between collectibles and real-world fan experiences, further driving interest in new digital platforms such as NextGem.”

– James DonFrancesco, President and Co-Founder, NextGem

NextGem is similar to Detroit based StockX, a platform for collectible sneakers that is planning a multi-billion dollar IPO, but it is is targeting the booming $13.8B trading card market. In addition to the social platform, the NextGem AI camera scanner, ‘Gemma’, provides 4K high definition inspection capabilities, and automated post-processing. The tool can help with authentication and establishing value. Fraud is an expensive hazard of the industry, as seen with the loss recently suffered by YouTube star Logan Paul in a $3.5M Pokemon card scam.

NextGem is the first company created in the Great North Ventures venture studio. In the venture studio, startup opportunities and markets are evaluated, teams built, MVPs spun up, and experiments run to iterate products until product/market fit is achieved. Startups co-created in the venture studio continue to receive fundraising support and board oversight after they launch. 

“After validating the idea, we were able to build a great team around the product and attract significant interest to close the investment round. Significant interest is coming from well-known figures in the sports community, at a local and national level, and from other early-stage investors who recognize the opportunity for returns that comes from getting in early to a quality deal, where the market is huge, the product solves a real need, and the team and tech are built to take it on.”

– Ryan Weber, Managing Partner, Great North Ventures

NextGem is currently accepting users on a waitlist for the app. If you’d like a sneak preview, contact us via Twitter for an access code.

The NextGem team includes serial entrepreneurs and tech veterans with experience at Apple, Best Buy, Branch, Drip, and DraftCountdown who are driven to explore future state opportunities in Web3 and have the unique opportunity to power a social commerce platform built with a member-first mindset.

The NextGem team is: 

James DonFrancesco – James is a co-founder and President, and a former executive product leader and agile consultant. James was brought in to manage a team of 10+ developers, using his years of experience and expertise from previous positions at Apple, Best Buy, and Bremer Bank. James also has 6+ years of experience at Precognitive Research building custom iOS apps as Co-Founder and Head of Product.

Jason Martin – Jason Martin is a co-founder and Head of Growth. Jason brings a decade of B2C growth experience at some of Minnesota’s fastest-growing VC-backed startups, Branch, Leadpages, and Drip. He has led go-to-market strategies from pre-revenue to scale and has extensive experience driving customer demand in the fintech, alternative investment, and collectibles space.

Scott Wright – Scott is a co-founder and Head of Community. Scott is the founder of Draft Countdown where he cultivated a passionate following for two decades. An authority in the NFL Draft field he has been featured as an expert analyst on radio, television, print on outlets such as NFL Network, The New York Times, USA Today, NBC Sports, FOX Sports, Forbes, and even the Madden video game.  He is also a lifelong collector dating back to his days setting up a table at card shows as a 10-year-old. 

Dave Anderson – Dave is a co-founder. Dave is immersed in the collectibles industry, from managing a multi-million dollar collection to being on the ground at trade shows around the country.  Through this experience, Dave has developed key relationships with prominent figures across the community. 

Welcome back to the Great North Ventures newsletter! We have some great funding news, insights for founders and investors from our partners, and a former Yahoo and Disney exec on our podcast, Una Fox!

FactoryFix has raised a $10M Series A. The company has grown it’s revenue by over 400% in the past year, and expanded its talent network to more than 300,000. Grotech Ventures led the round which included Great North Ventures, Revolution’s Rise of the Rest Seed Fund, Hyde Park Venture Partners, Capital Midwest, and JFF Labs.

“The manufacturing industry in the US is buzzing right now. Every company we talk to has turned down business at some point because they didn’t have enough qualified people to fulfill the order,” said CEO Patrick O’Rahilly. 

If you’re interested in a humorous take on the state of American manufacturing, check out FactoryFix’s off-beat, “The Office” style YouTube comedy series. 

In Episode 9 of “Execution is King” we feature Una Fox, a Chief Global Data & Analytics Officer and former Yahoo and Disney exec. Una provides great guidance for founders on what it means to really be data-driven, and how to build that into your venture from the beginning. 

“You know, startup a founder might be thinking, ‘Well, there’s only two of us here. What does that mean?’ It means that you have to bring the data to any discussion and stand up, any meeting when you’re getting together.” 

Who does Una see executing? A VR wellness company called Tripp.

Visit the Great North Ventures website for some fresh insights from our Managing Partners.

Pradip Madan talks about the outlook for Rapid Consumer Detection Technologies in 2022. Spoiler alert: The outlook is good. 

Rob Weber talks through whether founders should start with a native mobile app or a web app. Spoiler alert: the title gives it away. “Start With a Mobile App, Not a Website”.

Portfolio Updates

FactoryFix, a Recruiting Platform for Manufacturers to Hire Workers, Raises $10M Series A

Allergy Amulet Secures NSF Funding for Lactose Detection

NextGem’s waitlist is open for early users. If you’re interested in trading cards or testing the app, check it out.

TeamGenius has released Hockey Labs, a new youth hockey training app. 

131 Open Positions

See all open positions on the Great North Ventures careers page

Dispatch is hiring for 74 positions

Structural is hiring for 3 positions

FactoryFix is hiring for 4 positions

TeamGenius is hiring for 1 position

Pitchly is hiring for 4 positions

PrintWithMe is hiring for 8 positions

Parallax is hiring for 5 positions

Branch is hiring for 17 positions

Inhabitr is hiring for 2 positions

Clinician Nexus is hiring for 1 position

NoiseAware is hiring for 1 position

PartySlate is hiring for 6 positions

Flywheel is hiring for 2 positions

NextGem is hiring for 2 positions

Backhouse Brands is hiring for 1 position

In this episode, Rob and Josef talk about a new book out about network effects, “The Cold Start Problem” by Andrew Chen.

They speak with Una Fox, who works as a Chief Global Data & Analytics Officer. Una was previously a VP at Disney and a Director at Yahoo, and is a truly data-driven leader. Una has known Rob for over a decade, and talks about personal network effects and startup communities, and gives advice to founders for getting value from their organization’s data.

 Who does Una see executing? Tripp.

Transcript:

Josef Siebert 0:09
Welcome to the execution is King podcast where we talk to successful startup founders, investors and ecosystem builders to uncover insights and best practices for the next generation of great global startups. Today, I’m talking to rob Weber, managing partner at Great North ventures. How’re you doing today? Rob?

Rob Weber 0:29
I am doing great. How are you doing? Joseph?

Josef Siebert 0:31
Good, good. I’ve been reading this new book, actually, by Andrew Chen. He runs this program called the reforge program. He’s also a venture capitalist. I applied to that program a couple times already. But I’ve been rejected, because I work for a VC and they strictly accept startups to work on all of these, like network based digital tactics, basically for growth. But it’s really great book. I know you’ve read it as well.

Rob Weber 1:00
Yeah, I think the the cold start problem, you know, I came from the consumer app, kind of social app space. And so I worked, you know, a lot with social apps and marketplaces. And of course, Andrew Chen, who wrote the book was that it’s kind of famously in the growth team at Uber, to their rapid growth, before going over to Andreessen Horowitz. And, you know, for what it did for me was, it’s a, there’s about an eight year period where we were operating these business native acts, which put us kind of in collision with all these leading consumer social apps and marketplaces and games around the world. You know, I found that book to be really clarifying in terms of a lot of the things I remember reading about learning from talking to people at conferences about, you know, how you how you, like, spin up these growth teams, how do you create this kind of growth mindset, there really is sort of a playbook for how you create these sort of multiuser kind of network driven applications. And some of the examples how people fake it are really interesting, like Tinder with college party to college party, just signing up people are, these are like, my favorite stories, because, you know, once they get big, and they scale up, and they they figured a repeatable way to do that. Okay, you know, I think people just sort of think of them for what they become, almost every one of these types of businesses have this sort of, they didn’t start out with a big network effect or a big audience. So how do they break through, you know, and become one of these gigantic successes,

Josef Siebert 2:23
they had to do things that didn’t scale? Right? To get over that the cold start problem?

Rob Weber 2:28
Yeah. And I think sometimes I really liked in there to sort of kind of reminded me, like, you know, is it just like a big launch? And you get a bunch of publicity? No, no, not really. Usually, that doesn’t work that well, like normally, it’s about this, like atomic unit, how do you create value within maybe even just two people to start with the examples of big successes generally, that’s kind of how they start. But this talks a lot about like, you know, kind of the startup world, you know, and the network kind of driven business models. But I think, in this episode, una Fox, you know, we’re going to talk a lot about kind of the network effects of just working with people and community, and how your own career can kind of take advantage of network effects. And it’s kind of a full circle moment. For me, I think I met Oona 15 years ago or so? Well, she was an executive at Yahoo, which was our largest customer at the time at my prior startup. And we did you know, millions and millions of dollars of business with the Windows team over maybe a span of, I don’t know, as five years, maybe 10 years in there. And I that put me in really close contact with Oona her leadership style and the team. And so I kind of lost touch with her. I know, she eventually left Yahoo. And Yahoo was a lot different company, you know, 15 years ago than it is today. Or certainly 25 years ago, like in the 90s, like Yahoo, people, you know, the Gen Z years probably don’t recall, like, don’t remember, they would have been around. Yahoo was like a Juggernaut and the internet in the 90s and early 2000s, you know, people before Google even came onto the scene, right? Like in the 90s. So you think about like, I kind of lost touch with Luna, she went on to Disney, where she worked on, I think, initially, she was on the E commerce team that launched marketplaces for the Disney Stores. And then I think she also worked on the Disney plus launch, which was obviously one of the most successful consumer subscription business launches of all time. And so I remember reaching out to her just to check in like six months ago, and we just started to hit it off. And I think is the trust we had built over the years. You know, while working together at Yahoo. You know, it was it was almost like not missing a beat. And I found that, you know, throughout your career, whether it’s who you partner with, with your business, who you choose to work with, and recruit to your company, like I think, I think that’s one of the opportune one of the opportunities I love about no working in businesses, you kind of get to pick and choose who you work with. And once you’ve built up that trust in, you can kind of it can be repeated in how you build teams, how you lead teams, who you work with? So there’s a lot of there’s a lot of this sort of network effects in business beyond just, you know, scaling social apps.

Josef Siebert 5:08
When a fox is the chief global data and analytics officer at Aristocrat, welcome to the podcast Duna.

Una Fox 5:15
Hey, Joseph, it’s great to be here. Thanks for having me.

Rob Weber 5:19
So soon, I know you’ve been a part of launching some really impressive digital businesses, and initiatives at some larger companies like Yahoo, and Disney, can you kind of walk us through some of the leadership lessons that you’ve learned throughout your time kind of scaling these kinds of digital businesses,

Una Fox 5:35
I’ve been doing this now for over for almost 20 years. So there’s lots of different use cases and different experiences that I’ve been through. So when I was at Yahoo, it was really all about the Ad Tech experience and building out new digital products. And I was having a conversation with somebody and at a Silicon Valley conference a few years ago, and talking about ideas. And really, what I have seen over the course of 15 to 20 years working with different companies is that sometimes there is a product that you’re working on, that you have aspirations for that product, but maybe the timings just not right. You know, either it’s a b2b product or a b2c product. But even though you’re making progress on building that product, the timing might not be right for the market. And then at some point, years later, you see that product evolve, or it appears and the timing is right, and you think, Oh, my goodness, this is this is what we were waiting for. So when I was working at Yahoo, back in Oh, six, and oh seven, we started to build out a display network like we had for search. And at the time, we were trying to cobble together all of the systems that would allow us to do that, right. So basically, what we were doing was building partnerships with publishers to extend inventory, add inventory, and impression inventory, for Yahoo, and also for those publishers, so that we could reach consumers, either if they were on Yahoo, or at the publisher site, or somewhere else, I think it was a great idea was a great concept. And we were working really hard to make it happen. And then I think a lot of those people, technology people left and they ended up starting the DMP framework in products less than 10 years later. And then they showed up as DMPS. And when I was a Disney, I ended up being a client and onboarding Blu Kai, which is one of the biggest DMPS that was out there at the time. And I really understood the technology very quickly, because I had worked as an executive in the team at Yahoo. So I don’t know if that’s something that resonates with you.

Rob Weber 7:51
I mean, I think about timing, and you have these examples of like, you know, in the late 90s, as a teenager watching things like web van explode in the.com box, and then many years later, you know, seeing what happens when you have a mobile device with a capacity of an iPhone web ban wasn’t a bad idea. You know, maybe the timing was bad. To your point. I think we talked about this in the prior episode, Joe Stryver, a friend of ours, who’s the first UX hire at Google. And he talked about going through these compute paradigm shifts from like, the web to mobile. And now we’re headed everyone’s buzzing about Metaverse, and AR VR for all wearing 3d glasses in two or three years. How might that change some of the ideas from 10 or 20 years ago? Because there’s probably going to be some new things that maybe the the timing wasn’t right before. But with some new compute paradigm, maybe the timing will be better,

Una Fox 8:41
even 10 years ago, right? So 10 years ago, it was all about QR codes. So everyone was talking about QR codes needed to have a QR code. And then it got to a point where when you see it has a business that had a QR code, you’re like, what is the point of the QR code? Well, COVID COVID, changed all of that, right? The use of the QR code and the digital device, and how ubiquitous that has come and the restaurant and bar industry or any other services that are using QR codes, they become essential. It’s just what is old is new always. And I think you’re right about the glasses, actually. And I think that we’re going to see an explosion now and in the use of headsets, but it may not be in the way that we think it is it’s going to evolve VR is going to really evolve very quickly. Now there’s, I have a very good friend too. She’s done serial startups in the gaming space. And she has a company called trip, which the product is really using VR experiences for depression for mental health. And it’s been extremely successful. They’ve been working on this for a few years, but they’ve now really, you know, hit their stride. Yeah, that’s another example. Right? It’s just going to evolve very quickly. And look what happened with streaming and due to COVID as well, right? Everybody’s at home, no one could go to the movie theater. And so then suddenly it accelerated movies being released straight to streaming.

Josef Siebert 10:08
Yeah, it was interesting, not just how the technologies come back around, you know, as the circumstances change, but also how the people in the companies like, like these new initiatives that came on to what you were working on how that circled back when you move to Disney, and then suddenly you’re a client of, of these people you’ve been working with before?

Una Fox 10:26
Yeah, it’s another aspect of the network effect, right? You need a network effect around a product to make it successful. But then you also need a network effect and in your community to build relationships to business, hire talent, right?

Josef Siebert 10:41
Yeah, you need a network effect around your product and your business and your and yourself. Yeah, absolutely.

Rob Weber 10:47
That really resonates with me, I come to really appreciate being able to work with people that I built a trusting relationship with. Also just seeing people who can execute when you work in like in the world, there’s a lot of people who make promises and under deliver, and they don’t really hold up to their commitments. And so I think reputation really is earned. And I think that’s why I think the network effects of kind of building a career around relationships, at least certainly resonates a lot with me.

Una Fox 11:15
Everybody enjoys working on a mission together and getting things done. And I think if you are able to work in a team, you’ve got a harmonious bond together, you’re getting products out the door, you’re getting things done, you have a mutual feeling of success together, then when you when you leave that experience, you go work in other places, my experience is that I have maintained those bonds and those relationships with people through the course of my career. And they still call me we call each other, we refer each other, we advise each other. I don’t know how I could exist in my career without that, right. I mean, the fact that you and I and Ryan work together, you know, over 15 years ago now, and we’re still connected and can call each other and, you know, I think it’s a pretty good easy conversation, right? We have, we have a trusted relationship. So it’s absolutely critical. It’s all about having good positive relationships with people.

Rob Weber 12:14
I think we talked about that. I can’t remember which episode but someone was talking about, like recruiting maybe that was also the Joe Stryver episode, who was at Google and how one of the things he observed in the Bay Area was how you had these like clusters of people in like product and engineering teams, kind of going from company to company, but together, because, you know, the company was kind of less important to them than just the who they worked with. And I think that was kind of an interesting thing, when you’re if you’re scaling a business really fast, you know, if you get a certain group of people, they’ll probably helped bring other talented people.

Una Fox 12:45
Absolutely. Yeah, for sure. Are you both familiar with the Maya Angelou quote, which is, maybe nobody will remember exactly what you say, but they will remember how you made them feel? You know, there’s such a huge conversation now. Everybody took time and took stock of their lives during the pandemic and during COVID to evaluate what they want to do. And people absolutely do not want to be working in toxic work environments, right? So it is it’s very important to have, first of all, for yourself a good understanding of what you want, as an employee, and what kind of relationships you want to have with people around you. And then as a manager and a leader, you really have to have an empathetic perspective, when it comes to working with people understanding every individual situation, people are not going to want to work in toxic workplaces. So I just think it’s really important for managers to think about how they make people feel, right? They’re working together on a day to day basis. It’s just critical.

Josef Siebert 13:50
As a leader at a big company or at a startup, do you have any input for people who might be leaders, when it comes to setting a great company culture?

Una Fox 14:00
I actually think that there’s a lot that big corporate cultures have learned from startups. You know, there’s many different examples, but one of the things where it has impacted us in a very positive weight is the importance of offering people flexibility, it seems to have been easier to create more flexible working environments for people in startups. But it has allowed bigger employers to offer the same flexibility to their employees as well. In fact, I would say it’s it’s really influenced a lot of the ways big corporates work now. And big corporates want to offer these different types of tools because they’re competing for talent in the same marketplace. The one thing that I would say though, that’s maybe easier for a larger company with more funding or more infrastructure is to be able to provide all the functions like training and people and culture programs. So managers are taught how to lead and manage people, what’s acceptable to do what not to do. I didn’t know that there isn’t that type of infrastructure, typically in a startup right away. So if it’s all down to one leader, and they’re not really thinking through how people are feeling burned out or ignored or not valued morale, I know component pretty quickly, we could think about that is just what’s been happening during COVID. Write with everyone working at home, we had to think about how we reinvented meetings, make them shorter, so that people weren’t getting completely burned out. So we went back into exploring what we’ve learned over the years in tech development, which is doing stand ups. So instead of having a one hour meeting, in person meeting, normally in the office, you do a 15 minute stand up, instead of sticking these one hour meetings on the calendar, giving people short breaks between meetings, so that they’re not getting that Zoom burnout. So that’s one example of leadership. But the other thing I will say is that there’s been research and not just the Zoom burnout, but it’s being on camera versus being on audio, and particularly for women. There is some research that was showing that not everyone wants to be on camera all the time, I think women do feel a pressure in particular to look good. And I do think as a leader, it’s important to show the way and say, if you don’t want to be on camera, you don’t have to be on camera, you can have your camera switched off. And once you’re participating in the call, and you’re actively engaging, that’s fine. I think that’s the type of leadership we need to show up with today. I know Rob, what about you? What’s going on in the startup world?

Rob Weber 16:35
Well, I have to say, you know, for us, when we have a portfolio of something like 30 companies, I think, you know, early on, I’ve always been fairly flexible in my approach. So I would let the founders kind of guide how they wanted communication to flow a little bit. But then over time, I start to feel, you know, where was communication, you know, being managed most effectively. And what I found, I use board meetings as an example, the best boards that I’m on for startups have like a one hour monthly call. There’s not a lot of heavy handed governance, when you’re in a startup, usually, you’re being agile, you’re responding to customer feedback, you’re constantly thinking about prioritization with limited resources, I found like the best run boards for startups are usually kind of that kind of monthly cadence where it’s one hour, check in, talk about where you know, where you been, where you’re going, versus like, maybe the more typical, like mid market board meeting is like three hours once a quarter, four hours, maybe all day, it’s just not effective in especially, I mean, this is, I think, also part of being just remote. I think it’s much better to have more frequent, shorter check ins, at least as an investor, what do you start? You lose people’s

Una Fox 17:48
attention? Right? I mean, you lose people’s attention, especially if I mean, I have been on all day, like you, I have been on all day QBRs. Those are tough. Those are tough days, right? Yeah. And I assume that I as I am not the only person that finds that to be a tough day, I just don’t know how on Zoom, everybody can be focused for a full day. That’s, that’s a tough one.

Rob Weber 18:19
Kind of going in a different direction. I know, your current role, you’re kind of leading analytics. I know, when we worked together while you were at Yahoo, in digital advertising, analytics are so much in performance are so tied together that it’s hard to find a digital media or digital advertising kind of business or product that is that isn’t really analytics, or strong from an analytic standpoint, or probably wouldn’t be a very good digital media technology or product. Right. But when you think about, you know, you know, I guess I’m not as familiar with your work while you’re at Disney or not, in your current role, you know, how does analytics kind of play a role when you’re thinking about scaling digital businesses?

Una Fox 18:57
First of all, if you take businesses like and particularly for, for founders that are in the digital space, if you if you’re looking for direction, the companies like Uber, Meza Netflix, Amazon, Airbnb, their entire business process is mostly is digitized. And so therefore, it’s mostly trackable, and scaling using analytics. And companies like that is a lot easier than doing it in a more traditional business that doesn’t have the whole process, digitize maybe like manufacturing, or traditional retail, or automotive, aerospace, etc. And the reason is that there are still certain elements in those business processes that aren’t completely digitized. They have elements that rely on a lot of manual data input. And so in those organizations, there’s a huge amount of effort that has to go into harmonizing all of the data, streamlining processes to go with that And even then, you know, uh, now this is this is all rapidly changing as we’re having this conversation because companies such as Amazon, they’re reliant on AI processes to provide services. And the traditional world is transitioning to that, too.

Josef Siebert 20:17
So what kind of practical advice do you have for founders who really want to be data driven? And like build that into their startup?

Una Fox 20:26
Good question. I think, first of all, the term data driven from the outset, or creating a data driven culture, really what that means is, are you using the right information to make the best decision possible? You know, startup founder might be thinking, Well, there’s only two of us here. What does that mean? It means that you have to bring the data to any discussion and a stand up any meeting when you’re getting together. If you’re having stand ups, talking about how many customers you’ve signed up, or something that’s going on with your software development lifecycle, or anything, any kind of tracking, if you’re not taking that tracking data to a stand up, and you’re not using reporting or data points, when you’re having a discussion, that’s an issue. And I’ve been in organizations where everyone’s talking about how we become data driven as a culture. And yet no one is bringing a report into a meeting, you know, and looking at the end of the data. So it turns into a conversation more about gut feelings and you know, things like that, when you or your team are encountering a problem, do you look at the numbers to find solutions and validate assumptions? And if not, you need to be embedding that into the heart of your culture. That’s number one. Number two, using data to drive decision making. So when you use analytics to understand exactly how your customers interact with your product, and you’re able to see clearly, where are they finding value? And where is their friction? Where are you getting a lot of maybe emails or customer service issues with products, the right data will allow you and your team to always focus on the most important problems and opportunities, and whether you’re measuring the right things. So for example, if you’ve built a streaming product, and you are not able to have that delivered into an environment on a real time basis, so you can’t really troubleshoot a problem, because that’s something that’s happening in real time. That’s a big gap, right? Using self service analytics to make data accessible. So your problems are going to get solved faster when the information is flowing really freely. And if you don’t have the skill set, to build that for yourself, for example, your mobile app data, maybe you’ve got push notifications, maybe you’ve got a bunch of different processes that are tracking data around your mobile app experience. And they’re in different places, or maybe they’re with third party tools. And you’re struggling to bring that together and look at that maybe you’re going into different tools to look at different things, you know, the freelance economy, you should be able to get a sequel analysts to pull that together and pull some backbone reporting. So it’s easy to develop, and you can get the information when you need, it’s not holding you back, you’re spending hours manually pulling reporting together. That’s just something that you could easily outsource. And you shouldn’t be doing that yourself. So you’ve got data, then you’ve got reporting and analytics I took typically reporting and analytics, I can join together. But then you know, you need to, then there’s the sowhat moment. So with the right tools, you can look through your customer data and other information to look, find correlations that can be used to find maybe some pockets of growth or areas you’re overlooking. That’s what I would call insights. Right? So for example, do you feel you understand who your ideal customers are? Do you have the data to support that? And if the answer is no, the process of backing up some assumptions with data could be really eye opening. It could be something as simple as you’re going to launch a survey, ask a variety of questions, put that data together, and then compare that with what you’re actually seeing with customer buying patterns, put it together. And then now you’ve got some insights that allow you to validate how the your customers are interacting with your product. And maybe that’s going to open the door to opportunities that you weren’t aware of. So creating that data driven decision making culture is not a one step move. It’s have multiple steps along the way. And it really is a mindset. So it’s just, you know, always thinking about the data points, how it’s informing you moving forward, that you were able to get it quickly that you’re able to parse it out quickly. Now, those are the types of things that that you want, really.

Rob Weber 24:59
What do you think about You don’t what does it take to build a strong startup community or because you’ve been a part of some really strong startup communities?

Una Fox 25:06
Well, I guess I have been, even though I have a really strong corporate experience. I was exposed to the startup community in Ireland, probably more than 10 years ago, when I founded a coding Academy solution for kids here in Los Angeles. And we were connected to it was a grassroots organization that came out of Southern Ireland, and called Coder Dojo. And so another friend of mine and I, we set that up here in in Los Angeles, and we just started to get really connected with the tech community in Ireland because of that, the startup tech community. And we’re for over five miles apart between the west coast and an Ireland, but we had Twitter’s, so we just started to get to know all these different people on Twitter. And that’s how I discovered that Arland it’s a small and very tight community. So the tech community is extremely strong, and very tight. And then there are people there who’ve been worked as engineers, either in startups or maybe in larger corporates, and then they left and they went in, they did a startup. And once you have that community of people who are encouraging people supporting each other, then there are also several people who have been very successful. And so as they came out of there, similar to what you’re doing, you know, they set up VC, you know, and venture groups and supported and mentored other startup leaders. So Arland has this very, very, very strong networked people. I mean, Irish are great networkers anywhere. I mean, pretty much live all over the world, and we stay connected. And then it’s irresistible. When you meet another Irish person, you say, Okay, do you know, Rob, and what time does he come from? And oh, and I know the person’s mother and the father, I went to college with this first. So we’re just like, always, you know, constantly networking. But I think the the other thing that put Ireland on the map was, you know, the creation of Web Summit came out of Dublin with the work that Patty Cosgrave did. And now it’s obviously moved to Lisbon. But Web Summit has such an incredible reach across the world. I mean, it brings startups from all over the world. And it has really created a hub of huge global scale, right. So where Arland was sort of at the epicenter of that, that’s, to me a success story of what can happen in a network, obviously, I’m also part of the digital media network, and part of an entertainment and media network. And then when I had a great opportunity to go back and work in London a few years ago, I was there for three years with Disney met a whole new group in the media space there in London. And now there’s, I feel that connection, much stronger connection between London and LA. So it’s just amazing. To be able to get the opportunity to continue building those communities, right, throughout your career.

Rob Weber 28:08
Yeah, it kind of I don’t know, it reminds me of this book, I read by Brad Feld over at Foundry Group called startup communities. And he kind of went to talk about the different stakeholders and communities as you know, sometimes universities, service providers, so think college, warriors, whatever. But sort of Brad says very clearly in the book, he thinks that startup communities are best led by entrepreneurs. And I really, I kind of read that I got no, I’ve never heard anyone say that. But I think that’s right on thinking of like, here in Minnesota, a group of friends started a group called mini Starr. And one of the first things they did was launch kind of an unconference called a bar cam called mini bar, mini bars. This bar camp, I think, in the US, as far as we know, you know, eastspring, a few 1000, people will get together. And we’ll have 10 Different people speaking on different technical and entrepreneurial kind of related topics concurrently, everyone can register to speak, you’re awarded the room size based on how many people pre registered to join your talk. But it’s like the most inspiring day I can stay current with from real practitioners on topics related to design, to you know, data science, entrepreneurship, raising money, I mean, almost any topic that was started just grassroots by a couple of entrepreneurs who just said, they also started doing like a demo event where we would just start showing like a demo of what we were working on no PowerPoints is show off your software to start at around like a table. And now the thing is so big this mini star, there’s like 30,000, plus tech enthusiasts, it’s almost like grown to big words. It’s not like intimate like it was.

Una Fox 29:45
I think that’s right. I think once once these things get really big, it is hard to maintain that energy. But I do think when you’re getting people together, it’s great to have a lot of diverse topics that you can focus on. There’s one particular company that I worked at, who also will remain nameless, but they would organize a day, once every year for all of the engineering creative people meet a lot of people in the company. And the range of topics that was covered on this one day was just so fascinating. And there was no PowerPoint used, it was just all panel conversations or talking presentations. But it was across culture, from you know, music, to film, to technology to politics, science. I mean, it was just unbelievable. I remember one day going to one of these events, and I just, I just My head was exploding from absorbing all of these different experiences. It was just, it was mind boggling how you could get all that culture in one day. Yeah, it

Rob Weber 30:58
kind of gets you out of your comfort zone, when you you had the chance to kind of dive into all these areas that you weren’t even aware of, or you know that or it’s, it can be really inspiring, I think,

josef siebert 31:07
you know, when it comes to community building, that point about it having to be led by entrepreneurs. That’s really interesting, because there’s a lot of like government a lot of nonprofit involvement, because they want to see that economic value creation. They want to see that money coming in. They want to see that that value creation, the job creation, that comes with startups with new small businesses, especially technology led ones that could be around that could be creating the next big industry for a location.

Una Fox 31:37
I do think that there’s some well intended efforts that start in certain cities, because they’re trying to create business to try to create, you know, new economies for their community, which, which I’m actually in favor of, right. I mean, if there are special tax credits or tax incentives, or what have you that only government officials can create in or, you know, city officials can create in a particular city in order to, you know, create a start of economy. I think that’s always a good thing. You know, particularly when we see what happened in 2021. Obviously, the big cities like in the United States, New York and Silicon Valley, in particular, has always been the startup hub right where the majority of venture backed companies begin. And same in New York. But last year, I think it was one of the first year in several years that out of all of the venture money in the US, there’s been a slight decline in Silicon Valley, and it’s going to other cities. So now you see Miami popping up Los Angeles popping up. And I do think that there are some cities that have had venture money due to mayors or city officials, basically saying we’re going to make this a priority. So once they’re creating the environment for people to get the support that they need to create a startup, but yes, you need the entrepreneurs, you can’t do without them. Right.

josef siebert 33:04
Yeah, absolutely. It’s, there’s, there’s a balance, and I don’t know if anybody’s perfectly figured it out. And of course, the gold’s changing every time right, as technology develops, just like QR codes came around, you know? And who would have thought 10 years ago, we’d be doing this right now via zoom.

Rob Weber 33:23
Yeah, it’s funny. You mentioned that una cuz I remember exactly feeling the way you did about QR codes 10 years ago, and now it’s so ubiquitous, it’s like, oh, QR code. This is gonna save me a lot of time. Like I don’t used to be like a complete negative. And now it’s actually like I just a part of life.

josef siebert 33:39
So I’d like to ask every single guest that we have on the podcast, Oona, what’s a company or a person? You know, maybe it’s someone who’s been operating under the radar? Or maybe it’s somebody that everybody knows, like, in your case, Disney? What is somebody or a company that you really see executing right now?

Una Fox 33:55
Oh, yes. Actually, I mentioned her earlier. person who’s in my network, the founder and CEO. Her name is Mina Reeves. And she started a startup, which is essentially it’s a it’s a wellness platform. And it’s, it’s all about delivering wellness solutions into either companies, hospitals, clinics, and you know, the individual consumer. And what you’re doing is you’re using an interactive VR headset, with experiences developed specifically for wellness and mental health. And then he comes from the gaming she worked at EA, she was at EA for several years, she was a she sold a successfully sold a startup to Sony. She’s had a lot of different leadership experiences, either in corporate or in the startup world. She’s been very successful in the startup world, I known and a really well, because female technology leaders, we all try to support each other and prop each other up. And actually, when I was when I was running, the coding startup, was also really a great mentor during that time and helped us providing space for us to educate kids and her workspace and so on. So she’s always been super supportive. As we were talking about earlier, this could be used as a wellness, you know, device and solution. And they’ve been really successful. They’re getting a lot attraction. They have you know, partnerships, I think with all the VR companies and she’s someone to look out for and so, check it out. It’s called trip T AR IPP.

josef siebert 35:37
That sounds great. I’ll be sure to link trip in the article about this podcast episode so people can follow through and check it out. Thank you so much for coming on the podcast, Una

Una Fox 35:48
Oh, it was a pleasure. I really enjoyed coming thanks for inviting me and can’t wait to hear with it said.

Rob Weber 35:57
Thanks a lot, Una, appreciate it.

Welcome to the Great North Ventures newsletter! We have exit news! And for founders, we have a former Googler talking about the importance of being data-driven, and sharing other advice. 

2ndKitchen has been acquired by SoftBank-backed REEF Technologies. REEF is the largest operator of delivery kitchens, logistics, and proximity hubs in North America. The existing businesses will combine under the REEF brand.

2ndKitchen’s team will remain fully intact, including CEO Nick Anastasiades, CTO Arik Gaisler, and CFO Jon Elron, and will be operating under REEF’s Hospitality division.

In the latest episode of “Execution is King” we feature Joe Sriver, CEO of 4giving and the first UX/UI hire at Google.

Joe talks about being a designer in Silicon Valley, what he took away from the experience at Google as one of the first 200 employees, and how important being data-driven is to good product design.

Joe offers great perspective as a Midwest “boomerang” who returned from Silicon Valley to found his own successful companies, and gives advice to startup founders. 

ICYMI, Glowe’s social wearable is available. The Glowe device is a great gift for any teens who you missed on your holiday shopping list. 

Portfolio Updates

2ndKitchen acquired by ghost kitchen giant

3 Minnesota Companies Make the Deloitte 2021 Technology Fast 500 List [Branch]

From printing to coffee, this startup brings office amenities to the remote worker [PrintWithMe]

139 Open Positions

See all open positions on the Great North Ventures careers page

Dispatch is hiring for 80 positions

FactoryFixis hiring for 5 positions

Pitchlyis hiring for 4 positions

PrintWithMeis hiring for 12 positions

Parallaxis hiring for 5 positions

Branch is hiring for 16 positions

Inhabitr is hiring for 2 positions

Clinician Nexusis hiring for 1 position

NoiseAwareis hiring for 2 positions

PartySlateis hiring for 7 positions

Flywheelis hiring for 2 positions

NextGemis hiring for 2 positions

Backhouse Brandsis hiring for 1 position

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Grant Gibson Apr 30, 2024

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2ndKitchen Acquired by REEF

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Best Advice from the Great North Annual Event: Episode 7, Execution is King

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Jonathan Treble, PrintWithMe: Episode 6, Execution is King

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“Execution is King” – the Great North Ventures Podcast

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Unlocking the Potential of Anonymized Commercial Real Estate (CRE) Data

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Founders or Investors: These are the top 5 signs a startup will succeed

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Mike Schulte Promoted to Venture Partner

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New Name + New Venture Studio

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Great North Launches Startup Studio

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June: Great North Labs’s first fund raised!

Great North Ventures Jun 25, 2019

Great North Labs Raises $23.7M to Invest in Early-Stage Tech Startups in the Upper Midwest

Great North Ventures May 31, 2019

May: Innovation Ecosystems, SingularityU Kickoff, and PrintWithMe

Great North Ventures May 07, 2019

April: Minnebar Recap, ZenLord Pro, and Supporting Entrepreneurs

Great North Ventures Apr 29, 2019

MinneBar 14 Recap

Great North Ventures Apr 10, 2019

Dispatch and 2ndKitchen claim Tech Madness titles

Great North Ventures Apr 04, 2019

Minnesota Innovation Collaborative

Great North Ventures Apr 03, 2019

March: Minnebar, Hockey + Hustlers, and Innovation Workshops

Great North Ventures Feb 21, 2019

February: Improving the Culture for Entrepreneurship, 2ndKitchen, and the Prairie Capital Summit

Great North Ventures Jan 09, 2019

Great North Labs at CES

Great North Ventures Jan 08, 2019

Dec.-Jan.: Top Posts from 2018, pepr, Glowe, and Misty Robotics

Great North Ventures Jan 07, 2019

Carried Interest: Top Posts from 2018

Rob Weber Nov 30, 2018

On Sheryl Sandberg and the Importance of Integrators

Great North Ventures Nov 10, 2018

Oct.-Nov.: Singularity University, Exponential Tech, and the State of Innovation

Great North Ventures Nov 05, 2018

Announcement: SingularityU Minneapolis-St. Paul Chapter and Great North Labs present Intro to Exponential Technology & Leadership in Fargo

Great North Ventures Oct 02, 2018

September: Great North Labs Startup Ecosystem Kickoff Recap, Twin Cities Startup Week

Great North Ventures Sep 26, 2018

August: Great North Labs Startup Ecosystem Kickoff, ZAPinfo, and the necessity of advice and capital availability

Great North Ventures Aug 14, 2018

July: Pitchly, ForwardFest, and Where to Invest in the Midwest

Pradip Madan Jul 27, 2018

Where to Invest in the Midwest: Venture Across Asset Classes

Great North Ventures Jul 10, 2018

Digital Transformation Summit, July 25th in Minneapolis

Great North Ventures Jun 29, 2018

June: Silicon Lakes, FactoryFix, and the Digital Transformation Summit

Great North Ventures Jun 15, 2018

Putting the “Silicon” in Silicon Lakes

Pradip Madan Jun 04, 2018

Digital Manufacturing and Logistics

Pradip Madan May 22, 2018

Mid-Market Grocer Growth: Organic, Seeded or Grafted?

Great North Ventures May 16, 2018

May: Team Genius, IoT, and the Future of Everything

Pradip Madan May 15, 2018

IoT 3.0

Great North Ventures Apr 30, 2018

Healthcare Innovation

Great North Ventures Apr 04, 2018

March: Exponential Tech, the “Goldilocks Zone”, and Minnebar 13

Great North Ventures Feb 28, 2018

February: Team Expansion, Dispatch, and Startup School Events

Great North Ventures Dec 13, 2017

Great North Labs Newsletter – December 2017

Rob Weber Dec 13, 2017

A Letter To My Younger Self

Great North Ventures Oct 06, 2017

Great North Labs Newsletter

Rob Weber Sep 28, 2017

The Secret to Fostering a Strong Startup Community Inside Your University

Ryan Weber May 22, 2017

Great North Labs Featured on Tech.mn

Great North Ventures May 22, 2017

Great North Labs Featured in St Cloud Times

Great North Ventures May 22, 2017

Great North Labs – Featured on BizJournals.com

Ryan Weber May 22, 2017

Great North Labs, Introduction – Ryan Weber