As we discussed in our opening episode of Season 2, raising money for your startup works differently between the coasts than it does in Silicon Valley, New York, or Boston. Non-coastal founders need to build strong relationships and prove their business model if they hope to secure funding, and they also need to understand what makes their particular community tick. Because as it turns out, not all heartland tech ecosystems are created equal.
This is a fact that our two guests for today’s show know all too well. David Hall is a partner at the Rise of the Rest Seed Fund, a role that has taken him around the country to meet some of the most innovative startups in America’s burgeoning tech hubs. And Mike Preuss (who has previously joined us on the podcast) is the founder of stakeholder-reporting software Visible, which helps more than 2,000 companies on six continents track and share key business metrics with investors and other business partners. Together, the two possess an intimate understanding of the ways that unique regional factors influence how entrepreneurs and investors operate.
In this episode, David and Mike help us go beyond one-size-fits-all fundraising advice to explain how the characteristics of your tech community should influence the way you interact with investors and raise capital. They point out some of the most pertinent similarities and differences between regional tech hubs, break down what a healthy founder-investor relationship looks like, and ultimately illustrate how founders can use their community’s unique identity to their advantage when raising money.
In this episode with David Hall and Mike Preuss, you’ll learn:
- Key similarities and differences between non-coastal tech hubs (9:17).
- An experienced investor’s high-level work and life advice for entrepreneurs (15:46).
- The benefits that thorough stakeholder reporting can provide for every startup (22:51).
- How to build a talented team and loyal customer base between the coasts (33:38).
- Proven strategies for nurturing healthy founder-investor relationships(37:33).
- How founders and investors should approach fundraising in non-coastal cities(49:16).
Please enjoy this conversation with David Hall and Mike Preuss!
- Listen to it on iTunes.
- Stream by clicking here.
- Download as an MP3 by right-clicking here and choosing “save as.”
If you like this episode, please subscribe and leave us a review on iTunes. You can also follow us on Soundcloud or Stitcher. We have an incredible lineup of interviews we’ll be releasing every Tuesday here on the Powderkeg Podcast.
David Hall and Mike Preuss quotes from this episode of Powderkeg:
“One of the biggest things that surprised me when I moved out to San Francisco is how willing people are to help, and I’m starting to see that across all these different ecosystems.” — @MikePreuss on @PowderkegHQ
“Non-coastal companies typically grow slower, but into just as ripe types of market opportunities, so I wouldn’t let that dissuade investors from looking at opportunities in rising cities.” — @dhall3 on @PowderkegHQ
“Sharing what’s going wrong is how you can get the most help from your investors, because they’ve seen it before. But it’s also hard for a company, because you’re admitting that something’s not going right, and that’s scary.” — @MikePreuss on @PowderkegHQ
“It’s important for founders to create deep network density as a community, because that helps put more companies on the radar of top-tier investors.” — @dhall3 on @PowderkegHQ
Links and resources mentioned in this episode:
Companies and organizations:
Venture capital firms and seed funds:
Software and apps:
David Hall (@dhall3)
Mike Preuss (@MikePreuss)
Steve Case (@SteveCase)
Jeff Bezos (@JeffBezos)
Howard Schultz (@HowardSchultz)
Naval Ravikant (@naval)
Sheila Johnson (Wikipedia)
Dale Carnegie (Wikipedia)
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Hey, welcome to another episode of powderkeg igniting startups, another live edition. We are on Facebook live right now. So if you’re listening live, please feel free to tune in and drop some questions in the comments. We’ll be sharing that with both of our guests. Today, you’re listening to Episode 57. With two incredible guests on the podcast today, we’ve got David Hall partner at Rise of the rest Seed Fund, all the way from Washington, DC. And then we have Mike preusse, who is the founder of visible based in Chicago, but with teams all over the all over the world, not just the country. He’s got an awesome startup that we’re going to talk about. So here’s how the show is gonna go. The first few minutes, we’re going to talk to David about his journey, I’ve had the pleasure of being on tour with David, at least three or four times, maybe even five times with Rise of the rest, touring around the country talking to entrepreneurs all over the world, learning about them, David, and the rise of the rest Seed Fund, just raised $150 million seed fund with people like just Jeff Bezos and Howard Schultz, investing these entrepreneurs around the country, specifically in areas outside of Silicon Valley. And then we’ll have a chance to hear from Mike preusse, who’s going to tell us a little bit about visible, David and I will have a chance to ask him some questions about what he’s building there at visible. And in the last 10 minutes or so Mike will have a chance to ask questions of David. That’s going to be an action packed show. And we’re going to kick things off with David. First of all, David, thanks for being here. Man. It’s really good to have you.
Matt, it is great to finally make this happen. We’ve been planning this for years. And it’s it’s just it’s an honor to be on with you a and b. It’s great to see I’ve seen what you do on for us and with us on the rise of the rest tours, having been a longtime partner and it’s great to sort of to return the favor in the paddock.
Well, and with that would not be you and me duo. If we didn’t get a selfie, of course, we’re always taking a selfie on the stage. I got your fist bump right here, man, and then also without an introduction. So I don’t always get the chance to do a full introduction with you on stage. But I thought I would take a moment right here to give a little bit of background on you because I think it’ll give some really good context for the discussion. I’ve learned that you are a Baton Rouge, Louisiana native. You got your Bachelor’s in economics at Morehouse College, graduated magna cum laude, and got your MBA in business from Harvard Business School. You’ve worked in business development, financial analysis, and m&a for companies like Akamai The Washington Post and Morgan Stanley, board observer for many companies, including revolution, money, even folio Cooper’s many, many others. You’ve been on the rise of the rest tours, I think you’ve been on the most tours other than Steve Case himself. And I think the only one you missed was due to the birth of your son, which is a totally legit excuse. You started there at revolution in 2006. And that fund of revolution has invested more than a billion dollars in companies based outside of Silicon Valley since 2005. And now, with this new seed fund, at Rise of the rest Seed Fund, you have $150 million at your disposal. Well, ostensibly, some of that’s already deployed, but from entrepreneurs like Jeff Bezos, and Sheila Johnson, Howard Schultz, it’s really, really a pleasure to have you here. Is there any major career highlights that I missed? In that introduction, David,
you hit everything as the only other huge career highlight for me was getting married to an amazing wife, who has been supportive of me flying all around the country and talking to entrepreneurs, but you hit all this all the highlights, awesome job, you’re good
at this. Done it once or twice with you. And it’s been really cool. To get to know you. You know, as I mentioned, over the years here, some of the things I haven’t had a chance to talk to you about is some of your earlier, earlier days, even going back to a teenager, I know you were into a lot of things. You’ve mentioned that you’re involved in student government, you’re involved in plays early on, you also earned the title most likely to succeed when you were in high school, which clearly has panned out for you. What is it that you think gave you that drive? Early on in your in your? I mean, I don’t know if you can call your high school your career, I guess it is your career, your early career? What gave you that drive? Where your student body even said you’re the most likely to succeed?
Yeah, well, first, first want to say that it was an honor being voted that 100 years ago by my peers, but the reality is, like, you know, like a lot of kids, I had great parents. I had, you know, I was really blessed to have an amazing family and amazing support system that kind of enabled me to dream really big and dream, dream to do things that they that my folks, my grandparents that they’ve never had a chance to do and and it is it was a An awesome freedom to be able to dream and be and, and enter into things that were, you know, debate, play, you know, like theater, student government, all these things were so interesting to me and you know, help to feed my, my, like hyper extroverted tendencies. But to me, you know, it was really honorable, it was a big honor for my student body to vote for me as most likely to succeed, they felt that there was something in me that was capable of doing more than then than sort of the average Joe and or Jane. And that, that gave me a lot of, it’s something that’s lingered in the back of my head as you’re making lots of these little minor decisions since high school. But the reality is, it’s, you know, I like doing well, I like working hard, I like seeing the results of hard work sort of materialize into new things, better things into leaving institutions better than than when I started working in them. And it’s just constantly been something I’ve been attracted to.
Well, and I think your Student Government chops that you built up there, clearly, you’ve continued to develop those skills, because one of the things I’ve seen you do, in all these cities, I mean, just on his last tour, in places like Memphis, and in Birmingham, Alabama, engaging with entrepreneurs there to talk to them about how to raise their first round of capital and giving them feedback. Seeing you interact with these founders, one of the things that you seem to have a knack for is relating with people, is that something that you’ve always has always kind of come naturally to, like, say, was in your DNA? Or is that something that you’ve sort of learned to develop over time?
It’s a little bit of both. I mean, like the essence of it, I’d say, I’m pretty fortunate that it comes pretty naturally, I like talking to people. I like hearing their stories, as I’ve gotten older. And as I’ve developed in my career, like the the nature and the understanding, finding common ground for people in conversations, to me is the biggest key to being able to have a level of conversation and a level of relating to them, that makes them comfortable to share. And, you know, from my, from my job today, as an investor, it’s pertinent, it’s critical for me to be able to go in and have an honest dialogue with with an entrepreneur, and be able to figure out both the things that they’re telling me directly the things that their body language is signaling, and be able to have good inference in the things that they’re not telling me. And those were all skills honed, you know, since I was five years old, talking to the grocery store checkout lady and trying to figure out what what you know, how I can understand sort of what’s making her tech. And so yeah, I think it’s been, it’s been a huge success, and something that I’ve learned how to develop and learn to be a little bit more insightful. But But luckily, it’s always comforting pretty easily. For me,
that’s good. One of the things I’ve seen you do is you’re just genuinely interested in people, I think, the more founders and even investors kind of can develop that skill set. I think that’s even like a Dale Carnegie principle, right, like, be genuinely interested in people. That’s one of the things I’ve seen, you just have core to your DNA, always asking people about them, you know, usually takes a while for you to get around to rise, the rest and what you do and how you guys engage, you’re always first thinking about, you know, what, what is it that makes this entrepreneur tick? And then how can you help that person, which I think goes a long way?
Yeah, for sure, everybody has a story. And the more you, everybody has a story, and everybody wants to be heard. And I think that the more that you enable them to tell you their story, they’re unbelievably open, and unbelievably forthcoming with the good, the bad, the ugly, and I think the discretion of being able to pick out what is what is, at least as a relates back to the investor role, what is bad and ugly, and even good, that’s negative from an investment perspective, because it’s all sort of part of their, their collective story and deserves both an audience but also deserves, like an empathetic year.
Absolutely. Well, and you’ve talked to a lot of entrepreneurs, you’ve been on six of the seven tours at Rise of the rest. And you’ve been in communities like New Orleans, like Indianapolis, as I mentioned, you know, Memphis and Birmingham, of course, Nashville. Are there any similarities you see in these tech communities themselves, looking at these sort of second and third tier tech hubs around the country?
The most common similarity I see in a lot of these cities is this desire for community necessarily above, above individual success. This this really deep notion that says, you know, a rising tide will lift all companies and I think that, you know, a couple of successes like shift and Birmingham or like exact Target and Indianapolis, really put those cities on the map and give every other entrepreneurial opportunity or our founder in those cities a little bit more lift and make it that much easier for them to do well. And it’s really important for, for founders to, to network and create this deep network density as a community, because that only helps make it more efficient for venture capitalists flying in from San Francisco to spend, you know, a day in Birmingham when there’s five companies to meet, if they’re coming to meet shift the for shift in the folks that chip to say, hey, there’s two other companies that you guys should absolutely meet might not necessarily result in investment, but definitely results in putting putting more companies on the radar of top tier investors.
Yeah, absolutely. I I’ve definitely experienced that myself some of those similarities. I’m curious, though, as you talk to these companies, have you seen any major differences between these communities as you’ve gone from city to city?
You know, it’s funny. So every city has their own uniqueness. And instead of leveraging the differences, and instead of being sort of apologetic for their city, seeing them sort of claim, whatever either the benefits or the challenges that they’ve uniquely had to face, and sort of execute on those, it’s really interesting. For example, in New Orleans, you know, Hurricane Katrina created one of the most unbelievable urban blight in the United States of history. And as a result, New Orleans had to rebuild its entire education system. So what ended up happening is lots of Teach for America, alums moved and sort of set up shop in New Orleans, and really created this new ed tech hub, because they would teach to Teach for America, they would leave, they’d found these companies that were dealing with everything from instructional design to sort of intervention for behavior challenges, and they really created a little mini edtech culture in New Orleans, all based on the ramifications of the horrible catastrophic event, but now have yielded some really interesting new companies. You look at that list was looking at one of our investments in a company called Siva technologies. He was based in Detroit, and the founder of Siva, one of the founders was a former Chrysler mechanic who had been tackling really tough problems for Chrysler. For years, he retired and then came up with this way of helping autonomous vehicles clean their sensors, because mud and dirt and snow, really screw up an autonomous vehicle. If they can’t, their sensors can’t can’t properly see, he then partnered with his daughter, who was a technology executive at Microsoft, and started a new company manufacturing these new sensor cleaning mechanisms for cars and other autonomous vehicles out of Detroit, so it totally makes sense for a auto, you know, an automotive industry veteran to restart his his the second phase or the third phase, really of his career out of Detroit. So it’s really interesting to see how there’s some that totally makes sense Detroit. Automotive makes sense. But But But the really interesting thing is seeing how new things pop up in, in places like Ed Tech in New Orleans, it’s fascinating to see. Yeah, that’s
really cool. Are you generally kind of looking for a specific trend when you go into a city? Like when you come to Indianapolis? Are you like, Oh, we’re very interested in marketing technology? Or is it more of a hey, we know, there’s cool stuff happening in Indianapolis? Let’s go and just find the best companies there?
Well, it’s kind of three things right thing, number one, if there are some natural company in our city or regional industries, that makes sense to be launched from that city. So kind of ag tech in places like the Moines kind of makes sense, right? Happy to really exploit that and understand that. But then, but then there are two other things, right. And a lot of these cities, they’re really good public and private research universities, that may or may not be sort of exactly in the city, but sort of proximal or regionally, regionally accessible to the city. Seeing what comes out of those, those universities based on, you know, like the the language application Duolingo came out of Carnegie Mellon, because that’s where like the professor was. And so seeing how those types of many sort of cottage industries are created from IP that comes out of out of universities is really, really something that we’ve taken note of a couple of times. And then the third fact that I think is more more recent phenomenon is you’re seeing travel spouses, you know, husband or wife has the move for work, and they’re going from, you know, Google’s headquarters in San Francisco to some, you know, one of their other outposts. And the spouse who traveled, who may be a technologist themselves is like, I find myself in St. Louis, and I don’t have, you know, my community and so they start to build it and we’ve invested in a school comes to ecommerce platform, actually based in St. Louis, that was a result of a travel spouse leaving New York City and partnering with it with another local founder and creating this amazing women’s swimsuit company. So you see lots of ways for these communities to happen both sort of organically because of the industries that have been in the region for a while, but also, transplants come and bring their, their, their, their thinking with them. And you always see new technology sprang out of, you know, the next generation of entrepreneurs that are graduating from university. Those are
some cool examples. And definitely, you see a lot of that grit and hustle in the founders, just like you’d find in the valley, or New York, sometimes even with a little bit more grit and hustle a little bit more of a chip on their shoulder. You know, I’ve heard you say one of the things that you would have told your 15 year old self was to maybe have a little bit more fun, and maybe enjoy some more balance in the journey. Do you think that that advice applies to founders who are in the trenches of a startup?
Yeah, I mean, so maybe not necessarily guys under have more fun, but definitely seek more balance, right, figure out the ways to, to re energize the parts of the journey, because being an entrepreneur, I always tip my hat to entrepreneurs, because that is a seven days by 24 hours type of job. And you’re always on and figuring out ways to get that recharge in a meaningful, manageable, positive way, is really important. And so I think that the you know, the very simple way of saying Have more fun actually does translate. But if, if it’s unplugged for a couple of hours and take a hike or do a run or play with your kids, you’ve got to create that distance, because otherwise, the burnout factor is so much higher. When there’s no there’s no counterbalance, it’s not going to be you know, day for day or hour for hour. But if for 20 minutes, you’ve unplugged, you’ve turned off your phone and you’re focused on reading a book to your child, that interaction should give you a little bit of charge to load back up and do another couple hours of work. At the end of the day. I think it’s imperative for entrepreneurs, for any type of professional to be able to strive and find that balance. It’s good for mental health, it’s different physical health is good for emotional health. It’s good for maintaining relationships. And when all of those other things start to go go negatively. The performance of the company, the performance of the executive tends to fall pretty precipitously. Yeah,
absolutely. And there’s always benefits to that as well. For example, I know you’ve become an expert at sharks as your son has become more more of an expert at sharks himself. As you were kind of retail oh my gosh,
my kids know every fact there is to know about shark. So I am I become a little expert on all their hundreds of teeth that regrow every six weeks or whatever the number is.
Well now when a deal comes in that’s related to sharks, you’re going to be the the partner that rides the REST calls on for this shark tech startup.
I’m the Megalodon expert here.
I love it. Well, what are some of the other advice that you give to founders? Besides just kind of keeping some balance? What’s some of your most frequently given advice to portfolio company founders?
Yeah, so I think, particularly for our founders, which find themselves outside of New York, Boston, San Francisco, generally, the first biggest piece of advice I give them is don’t apologize from being where you’re from. I mean, you, you see that, that you see the unapologetic stance when they’re pitching their company. And a lot of that manifests itself and having these these strange comparisons were, you know, their number one valley based competitor just raised a $50 million round from you know, top tier brand name firms and, and they want to go out and do an Ico because they’ve got to be competitive, and they need to raise $50 million themselves. And that’s, that’s just not the truth. I mean, like you in generally, it’s about building the best company and if you can build the best company, in a place like Nashville in a place like Miami in a place like Raleigh, Durham, you should you should double down there and your your cost advantage is going to be greater, and your ability to really stay focused on the mission as opposed to having to always worry and look over your shoulder about the opportunity cost of what you’re not doing. Is is is not so much not so so top of mind of a challenge. I think the other piece that I always tell them is hire smarter than they are. I mean always, always look for people that are going to challenge them. No one is going to question their ability to run the company or be the founder or chief executive of a company. But if you under high prior and
David, I think we may have lost your audio there. I’m not sure we caught the last half of your answer. I’m not sure if maybe it’s the headset or or if we’re connected. But I think this might be a good transition to bring Mike on. Well, we figured out what might be going on with the microphone. Mike preusse. Can you hear me?
I can hear you loud and clear. Can you hear me?
Yeah, I can hear you. Absolutely. Maybe David just had some connection issues. Well, with that, let’s bring on our next guest. And hopefully we can get David back on here. Well, while he we figured out some technical difficulties there. Our next guest I’m super excited to have on we actually had him on the show two episodes ago, but I thought this was such a relevant episode to bring him back for him, because he’s got a very interesting story actually, first met our next guest. When he was still a senior in college down at Indiana University in Bloomington. I had the pleasure of helping recruit him into a program called the or fellowship program, which was an entrepreneurial fellowship program based here in Indiana, meant to help keep talent in the state of Indiana. He of course, joined a team, a high growth tech team. He’s very qualified to be in the or fellowship very qualified to be an entrepreneur. He joined a team that kind of outgrew the ecosystem here in Indiana at the time, there was not enough conductivity to capital, there’s not enough scale in terms of cloud and hosting power, because it was at the time the fastest growing company in the history of the internet and that company, Formspring, moved out to San Francisco. So I was recruiting Mike to try to stay here in Indiana ended up recruiting him to go out to the valley he ultimately went out to the Valley had an awesome experience out there. Crazy rocketship, right at Formspring and would love to get some of his perspective on that. But then came back to the Midwest to start a company called visible. And if you tuned in to Episode 55, you’ve heard a little bit about visible. But if you didn’t have a chance to tune into that visible is a stakeholder reporting platform. It’s used over 2000 used by over 2000 businesses. And it’s used to kind of help keep all your team members, investors and stakeholders engaged through some beautiful reports. But I don’t want to give too much about the platform away cuz I want to give Mike a chance to kind of pitch what visible is doing today and sort of a little bit of background on that company. So first and foremost, Mike, welcome back to the show. Thanks for being here, man.
Matt, thank you for having me. I would love to say first time caller longtime listener but that is no longer true. So excited to be back on and jammin with you guys today.
Absolutely, man. Good to be here. Yeah. Can you tell me a little bit about about visible?
Yeah, visible is a is web application that is helping empower entrepreneurs and founders and other high growth companies report data and updates, successes and challenges to their most important stakeholders. So that stakeholder could be your wife or husband that could be angel investor or venture fund. Really anyone that’s taken a chance on you and been part of that journey, we help companies share that data directly back to the people that matter most in their company.
I love it, man. And you said, I saw that you serve over 2000 companies right now, where it’s kind of the sweet spot for you guys, what stage company and and what’s sort of the pain point that you’re helping solve the main pain points?
Yeah, I would say, you know, most of our customers are maybe two people just getting started in the garage all the way up to you know, two 300 person companies. So in terms of like a true sweet spot, you know, I think it’s anyone from 10 to 100 employees. But the one interesting thing about visible is that it’s not just a problem in the valley or or San Francisco, it’s a global problem. We are designers here on this awesome graphic together a location where all of our customers are. And we have customers in every continent except Antarctica. So we’re probably doing some prospecting there soon, just to say we have all seven. But yeah, and the problem really is is pretty simple, right? I have all these different disparate data sets, you know, apps that I’m using to run my business things like QuickBooks, or Xero, Salesforce stripe, and I want to be able to tell the story of that data and report it back to my investors. The one thing you know, when we started visible is, how can I effectively communicate with my investors and leverage them for their expert expertise? And we just found that email was inefficient or it’s happening across email and spreadsheets and text messages and one off meetings. How do we give a really professional and beautiful looking report that’s super simple to put together? So that was the impetus for doing it. But yeah, to kind of give you a long winded answer, you know, and 100 person companies, but really all across the world,
nice man. Oh, I didn’t know that we’re a user, I would not say we’re a power user yet. But I think we will be soon we’ve, we’ve been kind of updating a lot of our other systems that would feed into visible to make sure that all that data is clean. Because I know it’s one of those things where it’s like, garbage in, garbage out. If you don’t have clean data going into the system, you’re not going to have clean data coming out. But it’s been a really cool thing. And I’ve heard, I’ve heard from a lot of investors that get reports from visible, that it’s a, it’s nice, you know, it’s it, you can kind of fully customize the report. It’s not just like a standard update, which is really nice. And makes it easy to kind of go through that entire investor update process. And as someone who’s transitioning over from creating a new email from scratch every time, I’m very much looking forward to the software fully automating that process. Yeah. Awesome. Good to hear. Yeah, man. Well, I was wondering if you could give me a little bit of background. You know, we were talking with David a little bit about his background coming from Louisiana, obviously, going on to the DC area. And now traveling all over the country seeing these different tech communities. You’ve spent some time in the valley, but also in Indianapolis, Chicago as well now with visible, what are some of the similarities that you’ve seen across these ecosystems? And then what are some of the differences?
Yeah, that’s a good question. Yeah, so yeah, I went to I grew up in the Midwest in the Chicago suburbs and went to Indiana. And then from there, my company Formspring actually ended up moving, like you said, from Indianapolis to San Francisco. And I think one of the biggest things that you read about all the time, but it really surprised me when I first moved out to San Francisco is how willing people are to help and meet up with you. And that’s just like, something that still just kind of shocks me to this day is it really does have that pay toward mentality, and you can surround yourself with just incredible people that you would think would never give you the time of day. And, and I’m starting to see that across all these different ecosystems as well. And I’m sure David can attest to this. But you know, each metropolitan area, or city or location kind of has its own culture and vibe. So it’s kind of hard to compare and contrast, you know, apples to oranges. But that was kind of the biggest thing. But you know, even just being plugged into the Indianapolis community, and all the work you’ve done with with powderkeg. And some of the other people there, you know, has that same mentality where there’s one kind of cohesive culture, you can kind of wrap your arms around. And same with Chicago, you know, Chicago 1871 was kind of the the jumping off point for Chicago in terms of a really big epicenter of where people meet up and do events and meet each other at work. Get advice. So each city is different. But all in all, I think, you know, they’re all around kind of that community building aspect.
Well, I wanted to wait for David to hop back on to ask some more questions about visible and I think we have David back on now. David, are you with us?
I am with you. Can you hear me?
Yeah. Right on, man. Cool. Good to have you back. Sorry about that. Glad we could rock rock and roll with the punches. Perfect. Thanks. You have any questions for Mike on visible and what he’s doing there?
Yeah, well, yeah. So first, your your your medium page is amazing. And I spent a few minutes going through some of your medium posts. And I think that that that’s that’s one of the more interesting ways of sort of putting your company on the map. How do you find getting the story about about the company and sort of telling the visible story in a way that resonates to sort of people who don’t know you and people that your marketing folks aren’t targeting? How do you how do you articulate that in a way that that’s a discoverable and be sort of meaningful?
That’s a great question. I really wish I could take credit for the medium page too. But it’s not me at all. So that is, probably Matt and Andrew on our team who have done an incredible job with, with our marketing, you know, one of the things that I we build on the company is just like, how do what do we enjoy engaging with and reading and how do we like to be, you know, marketed to ourselves, as you know, buyers of different products. And we have this idea of like a really an authentic voice. And I think that’s one of the big things that we’ve tried to incorporate into. Everything that we do is having this level of authenticity and just kind of being real, but not being like, but also kind of toeing the line of trying to be professional as well, because there’s, I think, a fine line of like authenticity and professionalism. But we always try to have a super authentic voice and at the end of the day, we’re never trying to peddle or push visible on someone. We’re just trying to educate and get some insight and just create value for founders, we’re doing a relaunch of our email newsletter that we’ve been religiously sending out every week. And we’re calling it the founders forward. Probably next week going forward. And it really it just kind of taking a page out of that matter book matter Mark book, almost where it just kind of curating and giving you the most relevant information about building your business, whether that’s raising money, hiring people attacking some sort of problem you might be encountering. So in terms of reaching people, we try to do really creative things that maybe are, are a little different. We’ve done a lot of word of mouth, as well. So one of the big ways we get a lot of our customers is really word of mouth, either through founders, referring other founders, or ambassadors telling founders about visible so you try to give a creative spin something a little bit more unique and keep that authentic voice.
Yeah, I mean, it’s a heck of a problem that you’re tackling. And I like, like fostering seamless, and, and really high impact communication, you know, from from sort of one to many, where the constituencies are all a little bit different. And everybody’s looking for a slightly different chart or graph or data point, it’s really not a simple task to solve. So so being able to, I think, I think for, which leads me to the next question about the depth of integration, that you guys have to look into to let you know, cross system to sort of start automating a lot of this reporting functionality. How do you think about that from a tech perspective? And you know, every day there’s a new, you know, finance application, or a new CRM coming live? How do you prioritize what’s going to come next under the platform?
Yeah, that’s a really good question. And one that kind of wraps my brain every day and the TAs are well aware, it’s, once you have integrations, this is kind of the beauty of them, right? Like, they’re great, people love them, you can create a really great experience pretty quickly. But they also expect every integration in the world. So you get a customer that’s like, Hey, you work with 90% of the tools I need. What about the other 10%? And, you know, we prioritize integrations just kind of based on, you know, what does that ecosystem look like for that particular company. So, you know, Stripe and QuickBooks are almost the de facto tools for finance and accounting for most companies until, you know, 10, even $20 million in revenue. Now, obviously, Salesforce and HubSpot have a lot of market share when it comes to your CRM and how you’re running your sales and marketing operations. And then, you know, we really kind of pushed Google Sheets is one of our big integrations, because what we’ve just seen in general, in from Matt’s point earlier, a lot of the data systems and data that you have set up as a company is kind of dirty. And so even just doing a drug integration, you’re probably gonna get bad data out. So most people are massaging or manipulating data in a Google sheet before they’re even reporting on it. So we really kind of strive to say, like, Hey, did integrations are great, because they’re gonna help, you know, alleviates some of that pain. And we do want to get you to a point where it’s seamless. But really, the most important part is actually kind of the qualitative context and just sending that update out, right? It’s like, Why did something happen? What can we, you know, what, why are things going really well, or really bad, and supplementing that with data versus focusing on on charts and data integrations? Because, you know, a lot of times, those are going to change in six months anyways, depending on you know, where you are in your life cycle as a company.
Yeah, very cool. Man, I don’t want to keep Yeah, I know how to do this pretty well.
So I’ll keep going. Questions, keep rolling, keep rolling. Now.
How was how was recruiting for you in Chicago? How are you finding the team that you need? And where? Where are there gaps that you got to look outside of Chicago to help Phil?
Yeah, so we have this kind of interesting aspect of visible and the the very short, abridged version is one of our core investors, real ventures in Montreal, actually was building this application internally just for themselves. And we ended up bringing on our CTO, corral there. And he was really in love with this idea of, and I it’s been awesome of hiring talent anywhere. It exists. So we’ve taken this approach, we want to hire the best and brightest. And location shouldn’t be a part of that equation. And so we actually have team members all over Europe. We have team members in Chicago. And yeah, so to answer your question, Chicago, you know, there’s an amazing ecosystem here. There’s a ton of big companies that you can recruit from now. And, but we have you know, we just brought on another team member in Indianapolis. So we actually have a distributed team as part of our core value of of what we want to build that visible.
David, is that something that you’ve seen at some of the companies that you’ve talked to just traveling around the country that there’s there’s more distributed workforces than then you might find in A bay area in New York City?
Well, I think it’s just a phenomenon of work in general. I mean, I think that you, you’re seeing more people. I mean, our partnership is distributed, we’ve got partners in Minneapolis, we got most of the most of us are here. But I think you’re you’re seeing people have to work and have to have work accommodate to, to where you can find the talent where the talent lives where the talent chooses to live. And I think, you know, one of the one of the things we’re seeing a lot, frankly, is that people are getting priced out of New York City in the Bay Area and choose to, you know, want to live in places like Chicago and Minneapolis and Madison, because because there’s such a, it’s such a huge cost advantage. I think the big the biggest challenge we see to that, frankly, is C suite reporting or recruiting, you know, like, it’s like the junior staff and then sort of the the mid level staff, I think having them be distributed is easier than maybe having sort of the senior team also be distributed, I think sometimes you need to have a little bit of a HQ concentration. And I think for that, it’s actually hard to have a CMO that commutes from New York to Indianapolis. And sometimes it’s even hard to sort of extract them from New York to be in an Indianapolis or somewhere in the Midwest, but but we’re seeing more of that because a lot of those folks that are CMOS went to places like IU and are like, wow, it’d be really cool to be able to go home and get on an instance stop getting on planes and Thanksgiving and Christmas, but actually be able to live in my hometown or near my hometown near my folks in my family. My support networks.
Yeah, we call those boomerangs.
Good terms of our
great and somehow gotten Mike to come back to the Midwest, although I think I think there was a magnet there for him as well to come back to the Midwest. Yeah, my wife.
That’s boomerang ever. Yeah. That works. You see that happen? A lot?
That is very true. Well, I wanted to kind of get a little dialogue going between both of you want from the founder side? And, Mike, I know you have extensive knowledge of the of the investor side of this equation, too, because that’s what your product does. But what are some of those things? Just from an investor entrepreneur relationship? And it doesn’t necessarily have to be, we don’t have to necessarily have this conversation be around the investor update emails, because I know there’s more than just update emails that foster a relationship. But what are some of those things? And David, maybe you could kick us off? What are some of those qualities or even habits that you’ve seen founders have, that has have really helped develop into strong relationships with you as an investor?
Yeah, I mean, I think for me, it’s kind of honest, early, often, right? Like if you if you if you’re able to hit those three standards of communication honest, like, tell me that the whole story, the whole truth, what’s actually happening? You know, what’s, honestly characterize the conversations that you’ve had you’re having with either prospective investors or prospective customers? That goes a long way, because it helps understand helps helps me understand, is it a failure of the story or the narrative? Is it a failure of the meet? Or is it a failure of the execution, all of which we can manage, but we, if can’t have honest conversation about it, we can’t can’t affect that part, too, is on sort of early, right. Like, it doesn’t help me to tell me sort of Midway that the house burned down, like, like telling me that the house is on fire. And we can do something about sort of solving and saving the things that are the most valuable. And then the last piece of this is frequency like, like it. Again, quarterly updates are nice and are maybe required in our legal docs. But there’s a lot that happens over the course of a quarter, particularly for an early stage startup. And so being able to have that that frequency, and that habitual set of conversations, either every two weeks, once a month, is just really important, just so that the investor can have, you know, keep really good tabs on the company. If you’re still if you haven’t met the company yet. And it’s sort of a prospective meeting. You know, I It’s, I always advise startups to start those conversations as early as possible, tease the ideas, see what the, you know, see what the how that idea resonates with that investor, because, like early nose for for companies raising money are sometimes as valuable and helping to limit the range of people that you get to have conversations with just as much as sometimes getting a yes. The one caveat to that, though, is that we track, you know, endlessly so you tell me, you know, a year ago that sales in 2018, by the end of the year are going to be $5 million. When we meet in q4 of 2018. I’m going to pull up the old debt I can say, Hey, you said that sales are going to be $5 million. Why are sales 2.2 million? What happens? So there is a slight risk to that. But it’s better to have because now you’ve got a conversation, I was interested enough to take the first meeting, I’m interested enough to take the second meeting and interested enough to go back and compare the notes. So I’m obviously interested. So the ability for you to go back and say, Oh, well, you know, sales were off for X y&z reasons, is easily explainable, but you’re gonna have to explain
what are some of the things Mike, that founders are looking for from investors, you know, when a founder sends out an update email, you’ve got on one side of the spectrum, the investor that never hits reply never really gets involved in the business at all. And it’s just sort of there on the cap table. And then on the other end of the spectrum, you’ve got the investor that can be all up in your business every day blowing up your cell phone texting you what’s kind of that sweet spot, at least from your perspective, as a founder, but then also working with 2000? Plus other founders, as customers?
Man, I wouldn’t want either of those people.
It’s why I said those are the two ends of the spectrum.
Yeah. You know, I think really, what founders wanted to add a day is reassurance and, and help, right? If you think about a startup, or a business, like visible or powderkeg, there’s probably a million things going right. And there’s probably a million things going wrong. And the one big thing we try to educate our customers on and just the market in general, is that sharing what’s going wrong, or challenging is, is how you can get the most leverage and help from your investors, because they’ve seen this movie before. Right? It’s, but it’s also the hardest for a company, right? Because you’re admitting not failure, but that something’s not going right. And that’s scary to kind of open that up, because your view of the world is just your one company versus investor, right, like Rise of the rest, where they have seen this hundreds, if not 1000s of times. And you know, they can jump in super early and help whether that’s an issue with customer churn or an employee issue where, you know, you’re thinking about trying to get someone out of the business or hiring, right. So there’s this idea of leverage and engagement, and having your investors say, like, hey, everything’s gonna be okay. Right, this has happened before, you’re definitely not alone. But to get to that point, you know, you have to communicate with them. And to David’s point, I guess, on you know, kind of frequency and, and just overall level of cadence, that I think that’s important as well, the shorter, the better. And probably the more frequent, the better. You know, I’m not saying every single day, but if you know, one or two times a month, and a condensed update, investors are not going to read a long winded, 10 page narrative of what’s going on, they want something kind of spoon fed directly into their email inbox, and being able to engage with it there. So, you know, we always try to say shorter, the better, more frequent, the better, it’s just gonna be easier for you to put it together in all honesty, too. And then some narrative and novel of what’s happened over the last quarter. Because usually, when that happens, that means like, something is going bad or trying to cover up something in the middle, and then it just, it’s not good for anyway.
David, how do you like to engage in investor update emails? Or do you like to engage in investor update emails?
Yeah, I’m the guy who’s all up in your business, I want to I think I love the email. I think the emails, we’ve actually established a little technology here that will ingest them for us automatically. And so we’re really trying to use technology to keep tabs on sort of things that are going well, things aren’t going well. And I think that I think my kids on a really important point, like the lowlights for me the highlights but the things that are going well the things that are going up into the right are always really interesting to hear. It’s less the headline and more the reasoning for those things. But for the lowlights, the things that aren’t going well, understanding those and getting involved in those early are really important for me and so so the frequency of that I mean monthly is the right about the right cadence to have some kind of update sort of yellow green red light update. And I really with the exception of like, you know, extreme things on the positive or negative side that need to be dealt with immediately. Obviously those those take precedents but on a normal course, like a monthly email highlighting or really calling out highlights and lowlights are really important. I think the other thing that a lot of founders, particularly early founders new founders struggle with, and I think they’d all be better served to start thinking about this is tasking your both your board members and your investors particularly with certain tasks that fit within sort of their their their, their know how their wheelhouse And I think it’s, you know, so for example, you don’t ask the, the, the junior partner or junior analyst observer on your board to, you know, for sea level introductions, but like, hey, I need some help with like some reporting techniques, can you send me four or five examples of really good board reports that I can start to use and as I engage the board here, that’s a great way to task a specific person with a specific duty. And they can, they can fulfill that easily for for sort of C suite, C suite introductions for customers, going directly to some of your more senior board members, or some of the bigwigs on your cap table, really easy ask and like I really like would want to persuade strongly the entrepreneurs to task people have specific duties so that you’re able to maximize, and they don’t feel like they’re spending all of their time working with one particular company.
Is that something that you’d expect to see come through in an investor update email? Or is that something you’d you’d expect to see kind of come in and more of a personalized from the founder type of ask
a little bit of both, they’re always going to be general asks, right? We’re looking for, you know, a couple of things, you know, 123, we’re looking for an introduction to XYZ company, if anybody has it, that’d be great. We’re looking, we’re interviewing auditors, anybody have any good experience with auditors? Like those are good. But I think that a lot of those should be followed up with specific emails to particularly those who’ve already leaned in and said, Look, let me let me know how I can help let me know how I can be most impactful to the company. And if they’ve asked, like, take them, take them up on their offer, by all means.
Absolutely. Well, I I can see we’re almost at time here. Before we break. I was hoping that maybe Mike, you could close with some advice. And then David, I wanted, I wanted to ask you for some advice as well. Mike, my my question from you is I read recently, and I think this was on the visible medium blog, which is, it’s never been easier to start a company. But it’s also never been harder to build one. I think that was from navall Raava Khan from AngelList. And, you know, the competition for Capital and Talent is greater than ever. Obviously, your product helps with that. But if you were to kind of give one piece of parting advice on how to compete for that capital, what would that one piece of advice be?
Yeah, I think my biggest piece of advice is, especially if you’re if you’re purely thinking about raising capital, it’s probably the question I guess, is fundraising really is kind of a 24/7 365 thing, right? It’s fundraising. It’s like, well, those things you’re always raising, and you’re actually never raising, right? Because if you’re telling investor you’re raising, that’s like, kind of weird, but so it’s like you’re always raising it never raising. And, you know, another thing that’s super common that we loved, reiterate right, is people love to invest in mines and not dots, so invest in relationships early. Even if it’s maybe someone that’s outside of the funding zone for your company. Now, that’s person certainly will be in 12, or 18, or 24 months, and having a warm relationship and just kind of dripping them. Like you would, in nurturing a lead in your sales funnel. Same thing with investors, right? I’m not saying give them and open them up everything in terms of, hey, here’s what exactly what we’re doing and, and what’s going right and wrong. But kind of give them that high level sizzle and keep them engaged so that when you are fundraising for the next round, you have super warm people that that know your trajectory, and you’re not starting from scratch, because then what’s going to happen is you’re gonna start from scratch. And then you have meeting one meeting two, meeting three meeting for visiting to try to connect those dots. Whereas if you already have you know, auditable kind of log of what your business has done, you’re ready to go from, you know, hit the ground running, create a lot of momentum and create a really good process for yourself.
That’s great advice, particularly important for founders that aren’t in Silicon Valley, or in New York, where maybe you’d be bumping into investors, kind of on a regular basis in meetings and giving kind of the ad hoc updates. Using a digital tool like email can definitely help a ton. I appreciate that advice. And David, I was gonna ask you for some advice for investors. Why should investors be paying attention to this middle of the country reason or the, you know, quote, unquote, the rest of the country outside of Silicon Valley in New York and beyond the why, like, how should these investors be looking to invest in these in these high value companies?
Yeah, I mean, look, I think that the, you know, we’ve talked about this a bunch today. You know, you’re seeing so many trends from the boomeranging of talent out of out of the coastal epicenters back into hometowns, and sort of other big cities like Chicago, and you’re seeing that trend happen and accelerate your seeing you guys We read the press just as much as I do about sort of the costs of operating a business in some of these big, big coastal cities. And you’re seeing opportunity in it like we’ve never seen before in sort of the heartland, and the ability to have and harness that into startups is huge. It’s huge for, for college graduates, it’s huge for communities that are dying and need some of this new talent, need some of this resurgence to come and start a company because when you start a company, it’s not just the 20 people that you hire, it’s sort of the coffee shop, that you guys go to the bars that you go to the lunch places that you go to, like, it really starts to lift the community. And if you want to be an economic development, like participant, like working for a startup is a huge way to do it. The how on that is always going to be a little bit more challenging, because it’s, it’s, there’s such a relativistic perspective about about sort of, always wanting to fit the Silicon Valley growth model, which frankly, a lot of startups outside of those those those coastal hubs aren’t able to meet. And so you see, frequently, for example, you’ll see a series a valley company, that would be a series a or a seed company, ending up being a series a company outside of the coasts, because it’s just taken a little bit longer. The flip side of that is often those companies are either further along because they they’ve had to be or have generated revenue, and have sort of proven out a bit of a business model because they’ve had to. And so you’re seeing a slightly different set of metrics for investing. The other big thing is, is sort of the difference between the types of investors and what what, what, what determines the great proof point, right? Like it, because of the weight of a lot of these companies outside of the coasts have had to be funded, you’re gonna see more revenue traction, but sometimes that’s at the expense of faster growth that comes with bigger, you know, bigger fundraising, and so you’re gonna have to merit sort of growth versus revenue, traction is that constant push or pull, that often investors that come from outside of these regions that come into them, are having that having to be disabused of as they come into the, into the regions to try to invest like these companies want to grow typically slower, but into just as ripe types of market opportunity. So I wouldn’t let that dissuade investors from looking at investments in rising opportunity, rising cities.
That’s a really helpful perspective. And I’m sure we could have two more hours of conversation just on that topic. But that is it for today’s show. I do you want to thank you again, David, and Mike for being on today’s show. I want to encourage all of the listeners or viewers, if you’re watching on Facebook Live, make sure to give them a follow up both of them a follow on Twitter, I think David is at D Hall three on Twitter. And Mike is just at Mike preusse. On Twitter, we’ll make sure we link that up here on Facebook Live, which again is at facebook.com/powderkeg. And even if you’re watching the replay of this, make sure you drop any questions or comments you’ve got there below. Because I’ll be sending this link out to both David and Mike here after the weekend. And if they feel so inclined, they may jump in and answer some of your questions to for more resources and the show notes on today’s episode, some of the people some of the resources mentioned, we’ll make sure we link all of that up in the show email@example.com. Make sure you tune in next week because we’ll have another episode with another great guest from outside of the valley, as well as a couple more entrepreneurs who are building great companies from areas all around the world. Thank you again so much. And thank you guys for being a part of today’s show.
Thanks a lot, Matt. It’s a pleasure. Yeah,
thank you. Thanks, man. Thanks. See you guys. Thanks, Michael.