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 of-coast investing, and the strategy behind Revolution’s Rise of the Rest Seed Fund and its founder, Steve Case. 

Anna Mason, Partner at Revolution, joins, and Rob talks about how they met, and about doing deals for the past 5 years. Anna shares how she went from Wall Street, with a front-row seat to the housing crisis and the Great Recession. 

She also speaks to the importance of investing in under-capitalized regions, and in being intentional about inclusivity, especially in the wake of COVID where some metrics reveal a backslide in DEI progress.

“We see opportunity first, through the lens of geography. The drive-it-home statistic that we have long focused on is that while the industry has grown as an asset class from $10B up to north of $150B a year, 75% of the capital invested every year still goes to three places: California, New York, and Massachusetts. “

Anna talks about the bus tours with Steve Case, which is an iconic exercise for the fund, and how people react to their arrival. 

Spoiler alert: Steve does not drive the bus. 

Who does Anna Mason see executing? Founder Rathna Sharad and Flavor Cloud, and recycling startup Recyclops.

Full Transcript Below:

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 your host, Joseph Siebert. Joining me today is co host, Rob Weber partner Great North ventures. Our guest is Ana Mason, managing partner at revolutions Rise of the rest Seed Fund, Rise of the rest invest in promising companies at the seed stage. Were outside of Silicon Valley, New York City and Boston.

00:42

On a it’s great to have you on today. The first question I wanted to start with was this Have you briefly described your path into venture capital. And also, if you could go a little bit deeper on your thesis with Rise of the rest? Maybe any more specifics as to the focus of your role within Rise of the rest?

01:01

Sure. Thanks, Rob. It’s it’s great to connect in this more public forum. I know we spend a lot of time chatting with each other about deals and I’m excited, really excited for you guys in launch this podcast. My name is automation. I’m a proud washington dc transplant. I’ve lived in the district for about six years, I like to say I have my two favorite startups are my little girls who are two and a half and five and a half. They’re fifth generation Washingtonians. And the responsible family life choice that led us to raise our kids in DC is very much so the reason why I’m there. But along the way pretty early and I got connected with Steve and revolution team. And it’s been a real privilege and an honor to just work alongside him and my other partner, a managing partner, David hall to really grow rise the rest. It’s my path into venture I think like many is an interesting one. And part of what I love about our industry, but I also think can be a little bit challenging is that there is no one clear check the box path into the industry. So I like to say that I have a bit of an eclectic portfolio of professional experiences that brought me into venture. I grew up professionally on Wall Street, I was a distressed and high yield bond and bank debt trader and also dabbled in a bit of post retired private equity. Over the years. Long story short, I had a very, very front row seat to the financial crisis in the Great Recession. coming right out of school, I landed in a job that I thought was like the greatest thing since sliced bread working at Lehman Brothers on their distress desk, which has a strong reputation. Little did I know that shortly after, you know, a couple years after I joined, I would be trading our own bonds and bank debt on that desk through one of the largest corporate bankruptcies in history. What I would say briefly just about that experience, and how I think it tracks to my path into venture is that I find myself very frequently thinking and somewhat frequently saying that venture is very much so like the other side of the coin, from distressed from the distressed investing world, you’re making big bets that typically have very binary outcomes. But the fundamental difference, and what I really love about our industry, and about our work, it rides the rest specifically is that in venture, you’re really fundamentally betting on the bright side of the coin. And you’re just, you’re working with partnering with funding and backing entrepreneurs who are really functionally optimists, I think reimagining the future, which is a wildly different universe from working in a subset of the financial markets that are focused on trading in the securities of companies who have missed the mark, they’ve missed the innovation or have some measure of corporate malpractice that is that has taken their securities into a more distressed stage. So I learned a tremendous amount in the earliest days of my career, both from the standpoint of the nature of the work we did and I did on the distressed side, but also in having gone through a major corporate bankruptcy upheaval, and merger thereafter. And that merger experience going from Lehman to Barclays taught me a tremendous amount about corporate culture. And it’s a lot of what I try to apply from an investor lens standpoint, into how we think about team construction and team values. Because at the end of the day, whether you’re a seed stage startup with five employees, or you’re a major conglomerate with 25,000, employees or anything in between, at the end of the day, your organization is the sum of its people. And so really kind of having a feel for the good, the bad and the ugly there from some personal experiences early in my career certainly guided that experience. Wall Street was beloved and have to leave it experience. So just kind of fast tracking here a little bit. My Wall Street recovery program took me to Southern California, and I lived In LA and got involved in the awesome guests years ago, still somewhat nascent startup community, they’re co founded health tech startup called burness. We originally started in the boutique fitness booking space. Like so many we pivoted early in the lifecycle of our company, when we realized we productize the wrong value proposition, happy to talk more about that later. And that pivot led us into an opportunity where we really doubled down on community and the social psychology of fitness. And so it’s been fascinating for me to see sort of the emergence and the 2.0 of a lot of social, like vertically focused social, social commerce company is kind of coming up in the market, because we were very much so playing in that space. Back in 2012 2013, my co founder and I both got pregnant. And we were in a great place with our business, traction wise, but hadn’t fully landed on our business model. So we had an awesome opportunity to soft land, our company into a major, major private company in the space called Beachbody, which was a great home for some of our engineers and the technology and the platform itself. And I moved to DC for my responsible family life choice, which takes me close to present day. So I’ve been a revolution for five years. And it’s been a real privilege to work on scaling rise the rest.

06:24

So can you tell us a little bit about the thesis behind Rise of the rest?

06:28

Yeah, at its core, I would sum up the thesis of rise the rest by saying we see opportunity, first through the lens of geography. What that means in practice, is that the guiding light and the sort of drive at home statistic that we have long focused on is that while the venture industry as a whole has grown tremendously as an asset class, from, you know, $10 billion invested a year up to now, I think north of $150 billion a year 75% of the capital invested every year still goes to three places, California, New York and Massachusetts. And so we believe very deeply and are delighted to put our money where our mouth is that brilliant entrepreneurs can have and continue to build transformative companies anywhere in the country. But the tip of the spear in activating those opportunities is early stage seed capital. And so our model is what we call a catalytic co investment model where we are high volume early stage investors. And while we do invest across industry, over the years, we’ve sharpened our pencils to increasingly focus on opportunities that sit at the intersection of, of a handful of themes and those four themes for us, our infrastructure, resilience, digital transformation, and sustainability. And so that can take us into FinTech it can take us into healthcare, may can take us into hard infrastructure. I’m pretty sure I have a small child, my little startup who somehow broke the lock and snuck in here. But that’s the thesis for rise the rest in a nutshell.

08:14

So I’m a big fan of Rise of the rest. And I know one of the things that it’s known for our it’s bus tours all around America. I know that’s been challenging to pull off during COVID. But I wonder if you could share with us a story or two, in terms of the most unique or interesting startup ecosystems you’ve come across in your travels with Rise of the rest.

08:38

Your thanks, Rob, I’m excited to get you back out on the bus with us again, whenever it is safe for us all to convene in that way again. So I’ve actually personally been to 47 cities and counting in the five years since I’ve been at rise the rest. And so these are always the hardest questions, because picking just one or even two is tough. I thought I chat briefly about to startup communities that might surprise people, even as I’m so heartened and pleased to see how much momentum the broader thesis and interest level investing outside the coasts, has become over the last couple of years. And so one, one community that I’m wildly bullish on is Tampa, the Tampa Bay Community in Florida. I think it’s most interesting to me, and I think is worth noting, because Miami, you know, sort of just across the state has been getting so much fanfare and attention and opportunity. And frankly, I think rightfully so I’m long Miami in so far as that debate rages. But I think Tampa long before COVID and in particular through COVID has had the opportunity to really kind of double down on the ecosystem that’s developing there. So some fun facts about the Tampa Bay region, average age. I don’t know if you want to wager a guess, Rob average age in Tampa Bay? What do you think?

10:09

I would I would think it’s all I think of Florida as being retirement oriented. So I’m gonna say like you say, 42.

10:16

Yeah, it’s like 34. It’s crazy. It’s 34. We learned that when we went there a couple years ago, you actually came in lower that I that I might have thought otherwise. But there’s, you know, when we visited there a couple years ago, pre COVID. We got to see firsthand what Jeff fenech and Lakshmi Shenoy and the team at embark collective or building in the Tampa community. And what’s super interesting about this, I think of it as what what we call the work live play model in our 2019 rise, the rest ecosystem playbook. There’s a major real estate development underway there, called the Water Street project, the Tampa Bay Water Street projects, it’s like multi billion dollar, really like city renovation, if you think about it. And what I love so much about what was developed there with so much thought and intentionality is that as you redevelop different areas of a city, you have to have entrepreneurship, top of mine in front and center. And that’s where you had this really this like gem in this toolbox of embark collective, which was not only startup hub and community space, but it was really a collective to bring together leaders, mentors, investors to support this emerging generation of startups in the Tampa Bay Community. And through that, they really become this like magnet or beacon. That gives people a landing place, not only for startups who are maybe relocating, or maybe are homegrown in the region, but also for so much of the talent that’s moving to Tampa, from the Bay Area and otherwise, and either wants to pay it forward, wants to find that next opportunity wants to mentor wants to invest wants to join a startup. And now there’s a space for it. And I think creating that type of network density and concentration with intention can make all the difference in a startup community. So that’s incredibly exciting to see. And I will also say, I don’t think they’ve all been announced yet. But we have four investments in Tampa, up from zero, like two years ago. So it’s really cool to see what’s happening in that market.

12:24

That’s really interesting to hear. I’ve actually been thinking about buying a place in Florida as I as I get older, the Minnesota winters are starting to, you know, catch up to me, but I was thinking more of more like southern Florida, not necessarily Tampa. So before I buy a place in the next couple of years, I will have to spend time in Tampa and see what it’s all about. Yeah, you gotta check it out. As a entrepreneur and investor, you know, so much of success, you see really comes from having a strong team and developing a team and talent. And I know with the rise of the rest, you recently completed a nationwide career fair on clubhouse, targeting all kinds of different local talent markets, such as the Twin Cities which I participated in and others, I saw you this quote that you tweeted from Brian chesky, the Airbnb co founder, who also participated, he said, You’ll never be in one place quite like you used to be, the place to be will be the internet. So see a lot more small and medium cities rising up. I could really relate to that being I’m kind of I’m not super nomadic, but I, you know, I spent a lot of time in the Twin Cities or rural like Lake town in Minnesota, and then also Chicago, you know, but I, I don’t like to be bogged down or tied down. And I think that really resonated with me Brian’s quote, but when you think about advice, you know, as you’re counseling founders through investments that the rise of the west or otherwise, what advice would you give to founders with respect to recruiting top talent? And, you know, what do you think is working best right now? And I guess, what do you think is not working?

14:02

So I love this question about place, obviously, in a, you know, in our intro discussion, I highlighted that place really sits at the foundation of our investment thesis or programmatic work, just everything we do, centers around this idea and this philosophy, its mantra, really the only place matters. And so as we moved into this space, where the realities of COVID created, I think, what some people call zoom land, like, you know, you’re sort of in nowhere USA everywhere USA. The question about, like, What does place mean, almost, at the risk of sounding hyperbolic, you know, sort of felt like it was taking on his like existential thread, about how we should all be thinking about place and one of the conclusions I’ve personally reached, in part informed by this intentional work we did through our tech talent Tour, which as you noted, Brian chesky and co headline but it was really intended to be a virtual Career Fair that could bring together active job seekers from all across the country with these startups who are in our portfolio, we had actually over 1000 open jobs across the entire portfolio. So I think a couple things on on this front. One is that I’ve, I’ve personally come to the conclusion that we’re in this moment that I’m calling like, the great unbundling of place, where when you think about it, even from a venture investor standpoint, we’re constantly chomping at the bit and looking for opportunities, like, Oh, is this industry being unbundled? And what does that mean for opportunity? And where does value get unlocked and who can really, you know, go after and chase this opportunity? I think we’re seeing the same thing happened with place where fundamentally the value proposition of place, right, which is usually where you work, and where you live, are inextricably linked, is now unlocking and unbundling. And so just like when we think about industries that are being unbundled and value creation is happening for startups, who are sort of jumping into that moment, with a very specific product offering that really just focuses on sort of like one element of the previous bundle, I think you’re kind of seeing the same thing happen, where cities can really focus on the value prop of why you should live there. And companies can really focus on the value prop of like, why you should work for us. For this to fully work, I think for cities, and for companies, and startups headquartered in Rise of the rest cities, they’re probably actually needs to be some sort of partnership that happens between the city or the economic development authorities, or the Chamber of Commerce, and startups, who often don’t get as much attention as some of the later stage companies. So that’s something I’m actually personally spending a bunch of time thinking about what could come next there that helps not only companies in our portfolios, but helps any startup in any emerging city across the country. And so all that’s to say, while there’s tremendous opportunity, because you’re seeing so many people move for individual startups, and I know all of our companies are feeling this on the front line. It’s actually also challenging, because now you’re not just competing for talent in your own backyard. We heard this from one of our startups headquartered in Nebraska, where he’s like, I used to be the best game in town, for everyone, for all these engineers, but now suddenly, they have remote opportunities in other places, too. And so I think, for companies to really put their best foot forward as they’re trying to attract top talent, and what is becoming very quickly, like an increasingly competitive market. Is that you, I think, you really have to kind of let your personality shine. I think we’re, we’ve certainly entered this age from a consumer standpoint, and I think we’re seeing this from an employee standpoint, to where values really matter a lot. And frankly, I think that culture and values people operations is something that early stage startups may didn’t always have the luxury of thinking about. But I’ve noticed, at least across our portfolio and a new companies we talked to, it’s becoming increasingly important and prominent. So two last quick things that that I think came out of actually this talent toward the first is

18:15

we discovered, and it was an exciting discovery, that so many of our portfolio companies, even early stage ones, have heads of people, Chief people, officers, VP of talent, like not just an HR person, but someone who is looking at the whole picture of what’s our culture, what’s our recruiting process, what’s our training methodology? How do we really bring people into the fold. And I love the fact that that is front and center. And so I think that I’m thinking about how you build that function. And frankly, how that becomes not just the CEOs issue to think about, is an incredibly important tactical steps that startups can take at this early stage. And the second is, frankly, just to really transparently reassess your policies for your team. We surveyed our portfolio as part of this talent or effort. And we found that while fewer than 30% of our companies had remote work policies before COVID, more than 75% plan to have a policy, either already do now or plan to just have one for the foreseeable future. And on the flip side of the nearly 2000 active job seekers who RSVP to join us during this virtual career fair 99% of them were interested in or open to remote work. There was like one person that wasn’t interested, and 67% were interested in or open to relocation. And so I just think like flexibility is the name of the game these days. And it’s a tricky terrain, I think, for startups to navigate, because it can be distracting from a focus standpoint. So again, empowering someone on your team early Who’s sort of thinking about the people function most fully, I think is really beneficial.

20:05

So along with this unbundling of work from from place, you know, as kind of education from place as well. When you think of the uvp of these different cities, a lot of it has to do at least nowadays, you know, with with education that you can attain there. But you’ve been traveling around to these cities, you’ve been investing in these early stage startups. And obviously, there is this unbundling of education happening. Right now, I don’t know how, how progressed, it’s been put, there’s all these things, I mean, Udemy, Coursera, the ones that immediately popped to mind, but then there’s things like lambda school as well, and all kinds of other opportunities to get the education you need to work specifically in, in like startup type careers that are really proliferating. But as far as like traction, that you’ve seen, you know, like at companies, have you seen people in leadership positions? Are these founders coming out of those kind of educational backgrounds? Have you seen any traction to that unbundling of place and education,

21:13

we’ve made some investments in that space in a couple different different directions and are excited to track the progress of those companies. I can’t think of specific examples of founders in our portfolio who have been graduates of those programs. But I know that there’s active hiring that happens out of those programs. And I can say, you know, I think one example of a company in that space is to you, it’s actually DC based, you know, in our backyard in DC, they’re a publicly traded company, which I think in and of itself speaks volumes to the potential of the industry and the potential for success and real traction and efficacy of that business model. Um, but we actually partnered with them as one of our core talent partners on this recent talent tour that we did. And they brought a tremendous number of candidates through the platform. And I think what’s interesting, and what you see in some of the nuances of these models, is you have many people who are actually also leaving their current career, like they’re leaving their jobs, sort of mid cycle, mid career professionals, I guess they there’s the terminology. And they’re inspired to be a part of positive change, which I think is fundamentally what our industry is all about. And while I don’t have the specific stats for you on founders, you know, something that a colleague of mine said a while back, that’s always stuck with me, is that you don’t need to be a founder to be an entrepreneur. And I think this, having this spirit of innovation and opportunity and possibility is something that bleeds through startup cultures, whether you’re the founder, your employee, number five, or number 50. And I think you see a lot of those folks coming out of these programs into job opportunities in the startup space.

23:03

Yeah, I think that’s right on, I think one of the values that I always tried to push really hard when I as an entrepreneur was just shared around accountability. And I think that’s one of the real benefits. So you know, most startups provide employee stock appreciation plans or stock options. And I think that really kind of aligns it, you really want your team to act as if they’re owners and to take accountability when you’re building a startup. And I think that really can support that kind of a culture where every, every employee is a founder, and I think it’s really important. I was gonna maybe to change gears a little bit I wanted to ask, so your partner is Steve Kay’s. He’s one of the true pioneers of the internet. I know when I was starting out in the late 90s, as a teenager hacking away at my first websites and ecommerce projects, AOL was just a force of really kind of bringing the internet to the masses across the country. What is it been like working with someone like Steve that, you know, is really one of the true pioneers of the internet? Really? How does that impact your day to day,

24:10

it’s incredibly inspiring to work with Steve and it always has been from from day one, you know, it’s, it’s funny part of my role over the years it rise, the rest and in addition to the, you know, investment per view, and has been overseeing sort of strategy and execution, for our Rise of the rest, road trips, these bus tours that we do and that I think we’ve become pretty well known for. And it’s funny, I usually get three questions, and they’ve sort of followed me and us all through the years and through all the tours coming up on our ninth one. And, you know, the first two questions are is Steve really on the bus? And the second question is, like, is Steve running for president? You know, sort of learned, you know, my quick one two punch is like Steve is really on the bus. And and he’s no, he’s to the best of my knowledge. He’s not running for president. But I think there’s, you know, that first point It’s really like literal, like when I say like Steve’s on the bus and sort of both literal and figurative. He is, you know, front and center and present in all the work that we do. And I think his dedication has been a constant source of inspiration to our partnership to our team, to the cities that we visit, it’s always been fun in a delight to see the way that people react to and interact with him and to have the opportunity and the privilege to sort of be on the inside track of that has always been a lot of fun. And there’s also a tremendous amount of learning. You know, I think most people are not strangers to sort of the brilliant marketing behind the rise of AOL. And, you know, the CDs, everyone always talks about, but I think I’ve seen and I’ve learned a lot of that kind of shine through in the way that he’s, you know, conceived of and, and, you know, we’ve expanded Rise of the rest over the years, there’s a very specific, very deliberate, high level message that I’ve always found so impressive and inspiring in terms of how Steve always delivers it. Most people who know of our work in the space know that 75% of venture capital goes to three places. And all of the work that we do all of the investment, all the partnership, all of the focus on economic development, is inspired by that one single fact. And it’s been just tremendous learning, I think around that. The final quick thing I’ll say is, the Steve is also a great storyteller. And I think one of the first times I heard him, you know, when we were out on the road on a tour, tell the story about you know, one person, you know, when he started AOL in the early days, I don’t know if I’ll get this exactly right. But I think the story goes, like only 1% of the US was online, and it was only for like three hours a day or a week I forget exactly what that last part is. But I remember the first time I heard him talk about that, and link in his mind, the connection between sort of leaning into and creating the future with AOL, and, and drawing parallels for himself and the work that he and we are trying to do with rise. The rest was just, you know, kind of one of those that gave me chills moments, and it continues to be a source of inspiration, I think, in all the work that we do.

27:13

Here’s what I want to know, though, does Steve ever drive the bus? Like maybe it goes and sits up there he hangs a couple AOL CDs from the rearview mirror. So they’re spinning,

27:23

we do have a professional bus drivers. It’s a pretty big tour bus. We’re, he is on it. I have never seen him actually drive.

27:35

So I was gonna skip to my last question. I think the tech industry at large, but especially the venture capital market, has really struggled with diversity, equity and inclusion over the years, and I no Rise Of The rest is really at the forefront of kind of embracing diversity, equity and inclusion, from a VC point of view. So I just wanted to ask, how is the progress been? The last? I guess you’ve been with revolution for five years? How do you think the VC industry is doing in terms of embracing? You know, Dei,

28:10

my sense, in my experience, is that we’re making progress. I see it in the now much more regular announcements of you know, many of our colleagues who are women or, you know, GPS of color, or launching funds for the first time raising second or third funds with, you know, much larger numbers and a un behind them. It looks like we’re as an industry starting to do a better job. I think you see some of that too. On the, you know, the funder side in terms of what the composition of founders who are getting funded. But those anecdotes like those anecdotal insights aside, I think when we still see the headline data come through year after year, the numbers are just still so incredibly sobering. You know, from a female founder standpoint, we went backwards during COVID pretty dramatically. And the numbers were not all that impressive to begin with. And so I think we are living in an age more broadly, of increased intentionality and focus, frankly, because we all sort of live and operate in the public eye in some capacity. And I think there’s a more there’s the potential for a more virtuous circle between what your customers and what your investors and what your team sort of demands that can hopefully create more momentum and more positive change on this front. You know, one of the things I’ve been reflecting on, both with respect to geography and with an end diversity more broadly, is that I think we’re in maybe in a moment where it’s helpful to dig deeper Behind the headline numbers, because we do also have a tremendous amount of momentum in the asset class. And there are, you know, an increasing number of later stage funds. And I say this with all the warmth in my heart who are like weaponizing capital, and, you know, doing these very quick, later stage rounds that sort of inflates the overall numbers, I think of invested capital in the space, both in the fund world and in the startup world. So, you know, coming back to geography just for a minute, as we close, the headline numbers haven’t changed from the standpoint of 75% of venture capital still go into three places, but svv put out a report a couple weeks ago, where there were some really exciting data, I think, from our standpoint, it rise the rest, which is that the percentage of early stage funding, early stage specifically funding going to Bay Area startups, has actually declined 15% in the last 10 years. And what’s even more interesting to me, and I think to us, is that half of that decline has come in the last 15 months. So when you think about everything that COVID is accelerating, I think in certain ways, I think some of these shifts, you’re starting to see more acceleration and more momentum. And so that even that, just that one fact, that made me really want to double click on that, and understand, like, Where is that capital going? And what does that look like? And so there’s a lot more work to do. That’s like really the short answer behind my longer winded answer. But I’m encouraged to see more people around the table. And I’m also encouraged by the seriousness and the size of check increasingly being committed in the public forum by institutional LPs, and by the corporate community. I think, in particular, like the corporate LP community can start to make a pretty big difference when it comes to funding both startups and fund managers from a founder of color or female founder perspective.

31:56

So one last question, before you go on, we try to ask this of all our guests, sticking with the theme of the podcast, nice book into it, who is someone, or maybe it’s a team or a startup that is really executing. Or maybe it’s flying under the radar that nobody hasn’t heard of, that we should be paying attention to.

32:18

I have two companies in our portfolio. just picking up on that last thread one is led by an extraordinary female founder, the company is based in Seattle. It’s called flavor cloud. And the business is a cross border. Ecommerce enablement tool that really helps to empower every retailer to go global rathna recently closed a $6 million dollar series a round, and she’s just flying. And she’s one of the most capital efficient, sort of nose to the grindstone execution oriented founders I’ve ever met in our portfolio, and the numbers don’t lie. And so she’s already I think, come close to doubling monthly revenue, since she closed that a. So I’m really excited for the prospects of that business and think she’s writing a real wave of momentum in the e commerce enablement, and sort of supply chain resilience sectors. And the second is a newer company in our portfolio out of Salt Lake City, it’s called recite clops. And the company started as a consumer oriented like recycling as a service business that focused on rural and smaller MSA communities that didn’t have recycling services provided by their municipalities, in large part due to some changes from the International sort of regulatory landscape. And what I what I love so much about what’s happened. And they’re also just heads down executing so so efficiently is that their business has, I think, very quickly evolved not only into that consumer facing recycling as a service play, but actually now they’re sort of leaning into this reverse logistics company that singularly focuses on sustainability and the opportunities that come from that. And that’s created some really explosive b2b opportunities for them that I think are already and will continue to prove to be a short cut from a market based expansion standpoint, that helped to take them from a regional to a national player pretty quickly. So super excited about them. And they also the founder, there’s actually the younger brother of another founder in our portfolio who’s who was one of our first investments back when we launched rise the rest a couple years ago. So I love love seeing that connection come through for so many reasons.

34:37

Second generation of investees That’s great. Yeah, so listeners check out flavor cloud and recite clops. And if you google recyclates, and see a picture of Dwight schrute in a samurai outfit, that is the wrong recite claps.

34:53

It is not thank you guys so much for having me on congrats on the new podcast and I can’t wait to see Tune in to all your future episodes. Thanks, Ana.

35:02

Thanks so much on it’s been great to have you on today and looking forward to keeping the conversations going in the years to come. We’re really proud of all the good work. You’re doing it rise of the rest. Thanks, Rob.

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