When tech startups use each other’s products and services, they give each other added opportunities to grow, and the entire startup community gets a lift. There’s good reason, then, for tech communities to support cross-selling between companies at the local, regional, and national level. Furthermore, there’s plenty that entrepreneurs, investors, and talent can do to help support this goal.
Take our first guests on this episode, John Francis and Clay Gordon, the founding partners of Stout Street Capital in Denver. As venture capital fund managers, they’re dedicated to building meaningful cross-selling opportunities among their portfolio companies. Doing so enriches the startup ecosystem in the Rocky Mountain region and beyond. Joining them are founders Kirsten Moorefield, COO of Cincinnati-based Cloverleaf, and Jeb Banner, CEO of the Indianapolis startup Boardable, who have each developed products centered on relationship-building and are active participants in their local tech communities.
Our four guests today take us on a journey into the world of tech community cross-selling, illustrating how everyone involved in the industry can take steps to raise each other up. We discuss cross-selling from the perspective of both entrepreneurs and investors, touch on the role played by relationships and team building, and even get into some practical advice for marketing and business development.
In this episode with John Francis, Clay Gordon, Kirsten Moorefield, and Jeb Banner, you’ll learn:
- Why starting a venture capital firm is a lot like starting a company (5:50).
- How Stout Street Capital is helping to grow cross-selling tech networks across the country (11:50).
- Boardable’s best tips and strategies for marketing through affiliate networks (13:45).
- Why Cloverleaf’s whole business is founded on relationships and team building (24:35),
- Signs that your company has or hasn’t yet reached product-market fit (35:22).
- The best things Denver, Cincinnati, and Indianapolis have to offer for tech startups (42:04).
Please enjoy this conversation with the founders of Stout Street Capital and entrepreneurs Kirsten Moorefield and Jeb Banner!
- 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.
John Francis, Clay Gordon, Kirsten Moorefield, and Jeb Banner quotes from this episode of Powderkeg:
“It’s always better when you invest in ideas which are outside of your circle. It’s easier to invest in strangers than in people you know.” — John Francis on @PowderkegHQ
“Our goal is to allow cross-selling and synergy between our portfolio companies that would be a big value add for not only our companies and investors, but potentially for corporate partners that would see us as a platform to innovate.” — Clay Gordon on @PowderkegHQ
“Helping people understand their own strengths and weaknesses can create a much more enjoyable workspace, lower turnover, higher engagement—all of those things that companies are trying to crack the code on right now.” — @kirstenteresa on @PowderkegHQ
“With nonprofit boards, you have a different set of pain points and problems, and the solutions out there don’t really solve for those problems. We’ve built a lot of the foundational pieces that do solve these board management issues.” — @jebbanner on @PowderkegHQ
Links and resources mentioned in this episode:
Companies and organizations:
- United Way Worldwide
- Habitat for Humanity
- Girl Scouts
- McKinsey & Company
- Procter & Gamble
- ExactTarget (now Salesforce Marketing Cloud)
Venture capital firms:
Software and apps:
- John Francis (Crunchbase)
- Clay Gordon (Crunchbase)
- Kirsten Moorefield (@kirstenteresa)
- Jeb Banner (@jebbanner)
Did you enjoy this conversation? Thank Kirsten & Jeb on Twitter!
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Click here to say hi and thank Kirsten on Twitter!
Click here to say hi and thank Jeb on Twitter!
What stood out most to you about what Kirsten & Jeb shares in this podcast?
For me, it’s the best things Denver, Cincinnati, and Indianapolis have to offer for tech startups.
You? Leave a comment below.
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We a lot of synergy that both of our firms can bring all over the country but definitely in the Rocky Mountain region.
You can take that and actually aggregate it to the team level, you can start to see what really makes a high performing team and a low performing team.
We’re also realizing that this is a bit of a blue ocean land grab really because from our research and understanding 90% plus of the nonprofit’s out there are currently using email to manage the board.
All right, hello, and welcome to episode 58 of powderkeg igniting startups podcast. I’m your host, Matt Hunckler. And today, we are talking with four amazing guests. From all over the country. Our first guests are from Denver, Colorado and the entire front range area, although there are investors who invest in everywhere in the middle of the country, and then I have two founder guests. First founder is Kyrsten Morefield, the co founder of cloverleaf an awesome Cincinnati based startup that is growing like crazy. And then finally, founder out of Indianapolis, Indiana, Jeb banner, the founder and CEO of portable, I’m really excited to have everyone here on the show today. And as usual, we’ll start a conversation with our first guests and talk a little bit about their story of how they got to where they are, and a little bit of what their investment thesis is. Those guests are John Francis founding partner and clay Gordon Managing Partner of stout street capital. And the thing I like about stout Street, other than the fact that they’re an investor in Powder Keg is that they’re really passionate about helping founders. And they’re driven by this sort of extensive data analysis, market analysis and due diligence, like any good VC. But they’re really focused on these early stage tech companies in the middle of the country, especially sort of that Rocky Mountain region. They’ve got a portfolio focus on software and fintech and advanced materials, but they’ve got investments in robotics and artificial intelligence, and they like to chi kind of play this semi active role in their portfolio companies, which has been a huge benefit to us at powderkeg. But today, I’m really excited to have them dialing in from Denver, Colorado, John and clay, thank you so much for being here.
Hey, Matt, thanks so much for the warm introduction.
Absolutely. It’s really good to have you guys on the show. And I’m gonna get to ask some questions. I’ve been wondering for a while now, even even beyond some of the questions I peppered you with when we first met. So let’s just dive right in. So I’m good. Yeah. Before we dive into stout Street, in particular, maybe, could you each give us a little bit of your own personal background? Clay? How did you get into venture capital?
Yeah, sure. I. So I went to school here and at University of Colorado, and then was kind of looking to kind of expand my reach. And I really wanted to move just to kind of get more exposed to the entire US. And so I moved to Washington, DC, where I worked at a nonprofit primarily focused around education of policy. And I stayed with that organization for about three years. And my primary role was as a fundraiser. And building skills around fundraising is kind of where I saw my value add moving forward, cool. Three years spent in DC, and in North Carolina, which was one of my territories, I knew that I wanted to move back to Colorado, with, you know, the wonderful economy that it had. And it just kind of made sense with family here, and job opportunities. And then I moved back and started working at a, I guess, a larger portfolio company based here in Colorado, which John was working for. And I will stop there and kind of let John give his background.
Yeah, John, how did you? How did you and can you give us a little context of like what you were doing when you first met clay?
So yeah, I just moved to Denver when I met clay and before that I was working at a boutique shop, which did algorithmic trading for oil and gas. So it is a very completely different background. But what kind of drew me to it, then where was the opportunities, especially in their early stage? And also the startup scene here, right? So arrows growing and it’s in the middle of the country, it’s act, it’s accessible to every single part. I mean, it’s right in the middle and you could literally go anyplace with a two hour flight, right. So it’s right in the middle, and that kind of help. Help me kind of make that move. I justify that moved to Denver. And once I was here, the whole community was so open in terms of welcoming us being being the new guys in the scene. We just started two years ago, where we essentially server and scratch we bought the first and have any background in, we see in mastering. So I have a little bit of background in finance. The community here was so open the people were open to educators also connect us with other VCs and also other VCs all around the country.
That’s really cool. So the fact that you guys ended up at the same companies, sort of seems like it was fate for the two of you to meet, how did you first start these conversations around, maybe starting this VC fund.
So I moved here partly to manage an existing portfolio of early stage investments through one of the parent companies. And the common thread here was Clay’s father who manage all these investments. And he wanted me to come and look at it and see how we can really grow that portfolio. And through doing that, and Clay was also part of that. And what we realized was this was a great opportunity and, and where we are kind of positions ourselves to really make a qualitative and quantitative change in the ecosystem and be be the be the guys who who can actually change how investments are done in early stage venture.
In terms of the the sort of those early conversations, how do you decide sort of like what amount you wanted to raise with your fund, and how you wanted to deploy that capital.
So initially, we thought of starting with a with a small fund with a $10 million commitment, essentially, with half of it being saved for follow on investments. And we wanted to quickly do 30 to 40 companies. And being with a finance background, I realized that for us to actually get a qualitative and quantitative return. For the for the companies that we’re investing in, we need to have a sizable amount of companies in our portfolio for us to drive those returns. So for us, it was a quick learning curve, right? So the first six months, we probably mess it in three, but the last 12 months, we invested in 30 companies. So it’s a it was a rapid learning. And also, to some extent, from where we started to where we are right now, it’s been wildly different, right? You start with a thesis and you kind of learn, just like any startup, you pivot so many times, right, you pivot and kind of find what you were doing was not right. And it’s it’s similar for VCs as well. I mean, it’s very similar to a new startup, in terms of learning and also finding what mistakes you made and how do you correct them?
What were some of the mistakes that you feel like you made early on and were able to correct and learn from?
So as it this is very similar what VCs think is like, not every business is venture bankable. Right? So that was one of the few mistakes of the early mistakes that we made was essentially investing in people that we know. And that’s not always a smart idea. I feel like investing in people. Yes, it makes a lot of sense. And so there’s a bias when when you know them, right? But it’s always better when you invest in invest in ideas which are outside of your circle, and invest. And I would say it’s easier to invest in strangers than investing in people, you know.
Yeah, you kind of take out the emotional element to some degree, you filter out maybe the ranges of emotion that might cause you to make a bad financial decision, while maybe still believing in some of that, that emotional radar so you can feel and understand what makes this founder tick. Is that kind of what I’m hearing
Yes, absolutely. And yeah, that’s probably one of one of the mistakes that we did the other ones, probably, like the diligence we did. So for the stage of investments that we make. What we realized was the diligence period required for companies in this stage should be relatively short. So when we started off, he probably had diligence companies or intelligence for like two to three months. And that’s not realistic, right. And in a lot of weeks, he’s still stuck in that mold. And we wanted to go in and kind of change that, and have a decision and like one to two weeks. And we kind of pushed ourselves to do that. And that’s, that’s kind of resulted in this speed of investment that helped us achieve this 30 companies in 12 months, which, which is kind of unprecedented in terms of speed, and also coverage in this area, at least. So in many ways. We’re setting a new standard and also like, creating a new paradigm. Right. So for investing in early stage companies.
I love it. And I think getting more capital out there gives you more chances, obviously, for that homerun success, that portfolio diversification. And you know, I mentioned a little bit of a thesis there, but you’re in a lot of different things, from robotics, to AI to a lot of different things like platforms and marketplaces like powder keg.
Hey, Matt, we just wanted to touch base to see if you got that last answer. Yes.
Yes, we did. Sure. All right. So John, and clay, in terms of where you are right now, you’ve got 30 investments that you’ve made in the last 12 months, what is next for stout Street.
We are just kicking off fundraising for our second fund, we would like to raise $20 million to dive deeper into the ecosystem. Our goal over the next three years is to be into 100 portfolio companies to give us a critical mass that would allow for this cross selling and synergy between our portfolio companies that I feel like would be a really big value add for not only our portfolio companies, our investors, but potentially corporate partners, that would see us as a platform to innovate for their larger companies. And so we really want to be strategic as we invest not only in the Rocky Mountain region all over the country, but really build the right partnerships to drive that. And I feel like Powder Keg is definitely the best example. I mean, you guys definitely specialize in community, not only with investors, startups, corporate partners, but also mentors, which is, you know, a viable part of the ecosystem. And so, you know, we’re extremely excited about the partnership with Powder Keg is that’s really your specialty. And I really feel like there’s going to be a lot of synergy that both of our firms can bring all over the country, but definitely in the Rocky Mountain region. And we are hoping, again, long term strategy to be this fast paced driver for Denver or the Rocky Mountain region.
We’re really excited about it too, and feel really lucky to have investors that care about, obviously, first and foremost returns for their LPs, but a close second, you know, the founder health, their portfolio, making sure that the that they’re finding and doing the diligence to find the best companies, regardless of where they’re located. So if you’re open to it, I would love to dive into a little bit of the founder segment given opportunity for you to hear from jabot portable and hear from Kiersten at Clover Leaf. Let’s start with Jed banner based in Indianapolis, Indiana, and his company bought double jeopardy with us. Yep, sure him. Awesome, man. Can you tell us a little bit about what bartable is doing right now?
Yeah, so portable is board management software primarily for nonprofits. Three of the four founders have been founders of nonprofits as well. So It centralizes all of the activity of a board into one cloud based platform. So it’s meeting scheduling, document sharing, tracking, RSVPs, attendance, discussions, digital voting. And it’s really tailored to integrate as much as possible with existing platforms that the users and the organizations are using. So you integrate with Google Drive, Dropbox, OneDrive, email, calendar integrations, as well, to automate as much as we can. Those routine tasks of the board that take up a lot of time but don’t bring a lot of value. And then we’re looking to take it further towards engagement as we go. And so we’re building an engagement tools How to pull the board members more into the organization to help them be better advocates to increase their attendance, to have them show up and volunteer as well as, of course, be active donors. So that’s where the product is going. And we’re about a year and a half into it. We started last February. We’re growing quickly. And we’re all over all over the world. At this point, we’re in 12 countries and, and excited to see just how far we can go. There’s 10 million nonprofits out there, and we’d like to serve as many of them as we can.
Well, it’s been really awesome to follow the journey of portable and just the rocketship growth you guys have experienced over the last year. So Clay, I know you have, as you shared here on the podcast, have had some experience with fundraising for nonprofits. And I’m sure involved with the board there. You have any questions for Jeb and what he’s building at portable?
Yes. John, do you wanna take first question, are you? Yeah, so you see a lot of these board management software’s like, how are you guys differentiating I saw a one of the things you said was engagement? I mean, how do you compete with all the big guys like Capterra, and guys like that, who are doing something similar.
In the space, there’s a lot of competition on the enterprise level in terms of corporate board management solutions, most of those solutions out there, like diligent and board effect are built with the intent of serving the, you know, the inc 5000, if you will. And the problem set for a corporate board is very different than for nonprofit board. Engagements really not as much of a problem. There’s monetary reasons for these board members to show up to pay attention to the board books that gets sent out to be engaged. But with nonprofit boards, you have a different set of pain points and problems. And the solutions out there don’t really solve for those problems. So what we’ve done so far is to build a lot of the foundational pieces that do solve the board management issues that yes, both corporate and nonprofit boards experience, we’ve done it more than I towards nonprofits. Like we’ve built an Agenda Builder with templates that really accelerates the the building of agendas, you have annotation functionality for people to take private notes. And those can be used by either sector. But where we’re going is to build into the tool, the functionality around those four things that I mentioned earlier. Incentivizing attendance, encouraging volunteering. So that’s sort of the muscle side of being on a board, advocating, so sharing content, and then also pulling out your wallet and donating. These are four problems, the three of them, at least, are very distinct to nonprofits. So as we go down this path, we’re going to differentiate with that, then the third phase of the product vision is talent. A big problem for a lot of nonprofits is finding the right talent, both on a skills level, but also in terms of diversity and gender. And so we’re looking to build functionality into board a bowl, to allow boards to bring in talent that’s interested in serving on the board and build a talent marketplace on a regional basis initially, as we rolled it out.
Okay, so in terms of the market, you’re really going after just a nonprofits. Is there, like a typical nonprofit that fits your profile? And how do you do the outreach, essentially, to your potential customers?
Yeah, absolutely. So for instance, United Way’s are very typical client for us. And we have a partnership with United Way Worldwide now as a preferred vendor, so we can mark it to their 1800 United Way affiliates around the world. There’s 50 plus here, just in Indiana, for instance. And then you think about all those other nonprofits of a similar size, the YMCA is Habitat for Humanity’s the Girl Scouts. These are, these are everywhere, and they’re all affiliated. And one of our approaches here we have four legs to our go to market strategy, digital marketing, which is really the main engine and you mentioned Capterra, which is a great directory and listing for board management solutions. And this This is where we get a lot of our leads. We also do a lot of content marketing, and other paid social channels. We have partnership networks like the United Way one, then we have referral revival piece, because all these boards are interconnected and so board level travels with board members. As they go to different boards they say Why aren’t we using portable and that’s where the 30 day free trial and comes in, you know helps them You know, say, hey, let’s just try it out. And then the fourth is we do some direct email outreach via partner to targeted prospects, we reach out to about 1000 unique prospects a month through this partner, and through a drip campaign, and then they engage we engage with a demo or trial as we move them through the sales process.
So currently, what are you guys doing in revenue? And how many? How many nonprofits have signed up for this?
Totally optional. If you if you want to pass on some of those questions, consider and we’ll be publishing this publicly.
Yeah, I would be happy to have a conversation off the record on our numbers out, I’ll share because I need to keep some of that off the off the public record right now. But I’m happy to go into more detail. But we’re around 200 customers. Got it.
Great questions from John and Clay. And I’m sure we can talk
a little bit about the capital days. And what do you guys think? And why would you need one of the use of funds?
Sure. So we finished the seed round earlier this year. And so we’re in between races right now. Right now, we are doing a lot of the visioning for what the next raise will look like in terms of its size, whether we potentially do a bridge, you know, sort of a follow on seed, or whether we go to an A series. So I’m working with our board right now, along with some other people that, you know, more experienced in that zone. So we’re looking at something late this year, beginning of next year beginning to do a raise. But we did a over a million dollar seed round earlier this year. And so we’ve got some capital now to run with and that we’ve just been deploying it.
Sounds good. So is there any metrics yet? You’re looking to hit for doing one of those scenarios like the press or Series A? or any other insight on or?
Yes, I think that Matt needs to, he’s trying to jump in. I’m not sure if you heard him there. But just real quick, we’re looking at getting to a million ARR as fast as we can. We’re also looking to get to cashflow breakeven or at least get inside of it, which we think we can do here in the next six to nine months. Because of the structure of the business. The annual prepaid accounts, give us a nice cash flow advantage, since that’s about 70% of our sales are annual prepaid. So every month we see increases over in terms of quarter over quarter there so we have some internal goals that we’re looking at. But we’re also realizing that this is a bit of a blue ocean land grab really because from our research and understanding 90% plus of the nonprofits out there are currently using email to manage the board.
I love what you’re doing Jeb and I’m not sure if maybe John and clay are unable to to hear me there. But John and now Kiersten Can you hear me? Me too. Me too. Hopefully he’ll he’ll come back on. I’m think we’re figuring out this might not be our long term podcasting solution. It came so highly recommended. Jeb was actually the one that was on a couple podcasts with this recording software and was like, it’s awesome. It’s going to be perfect. And it’s it’s been a little bumpy so far. Yeah, that might that might be trying to get, you know, four different cities on one. One call. Hurray. All right. So end segment with Jeb. And let’s, let’s shift gears and we’ll I’ll introduce Kirsten here and we’ll we’ll just dive into q&a with Kristin sound good. Great. Awesome to hear what Jeb is building with portable and I’m sure he’ll have some questions for John and clay here in just a second. But first, I would love to hear from KEARSON Morefield, co founder of cloverleaf based in Cincinnati KEARSON. Can you give us the quick flyover of what you’re doing with cloverleaf?
Yeah, absolutely. So we are a team building software and we deploy psychology data to help the team members better understand not only themselves but the people on their team so that they can have better working relationships and ultimately for the company. What that means is a better bottom line and higher product ability
in terms of your sort of unique approach and how you got to this market opportunity, can you give us a little bit of background of how you got there?
Yes, absolutely. So my background is really in working with project teams. And Matt, I know you are highly entertained by the fact that my first job out of college was marketing for a dogsledding company. But that was a long time ago. It’s a fun fact. And then I moved on, I stayed in the marketing world. And I actually went more into the business and operations side of marketing, managing project teams that were doing pretty large projects for Intel, and Cisco, and IBM. And really, it was there that I kind of saw what makes a really high performing team, some really low performing teams, and really just a lot of projects going over timeline and over budget. And the company that I worked in, had a really awesome company culture. And everybody loves coming to work, even though work was often really hard. And just through conversations with a couple of co workers that I had there, it’s kind of a long story, but ventually, we just kind of realized, you know, if you use some of this psychology data that a lot of companies have invested in, but don’t know how to use, like, say, a personality profile or Strengths Assessment. If you if you can take that and actually aggregate it to the team level, you can start to see what really makes a high performing team and a low performing team. And it’s not necessarily that there’s a perfect team profile, it’s more just being able to help people understand their own strengths and weaknesses. And the same thing about their co workers can turn conflict into productivity. And, and not only that, it just creates a much more enjoyable workspace, lower turnover, higher engagement, you know, all of those things that a lot of companies are trying to crack the code on right now.
I love it. Questions from John and clay, they’re in Denver.
So this sounds like a very, very academic, it turns out a lot of people, how do you how do you communicate this? I mean, even looking at MBTI tests like them, and that kind of give them like psychological profiles of people. That’s been around for a while. And how do you do that in real time? And how do you sell that?
Alright, I’m back. Can you guys hear me? Yes. I can just hop right back into that. Yeah. Okay. Yeah, John, that’s a really good question. So actually 80% of Fortune five hundreds have invested into some sort of personality and or Strengths Assessment across their organization, and less than 20% of them are actually storing it or using it. So it’s actually been a really easy sell from that standpoint, because we’re helping them increase the ROI that on something that they’ve already spent 1000s, if not hundreds of 1000s of dollars on. And you are right, though it is highly academic. So we are really passionate about the fact that there’s incredible research and data already out there. And we don’t need to reinvent any wheel, we just need to actually apply technology to it so that it can really make a difference for the people who are inside the organization and for the organization itself.
Okay, so, I mean, how does this warrant like a SaaS model? Like for ongoing? Use a, it looks like, okay, it’s like a one time profiling thing. And it kind of stays in, I understand, in cases where you have a high attrition rate. So like, so you’re talking about a few people adding on? So that justify having a SaaS platform just for those new people?
I love that question. It tears me up perfectly for really where we’re seeing a ton of traction and value and what we’re doing. So currently, the model with, with a lot of the data that we use is a one time engagement, just like you said, it’s maybe it’s a off site retreat, maybe it’s a, you bring in a coach or consultant, or maybe it’s just you have your people take this assessment, so you can, they can be more self aware. And what happens is people get these really good, you know, 10 to 40 page reports. They’re really insightful, but it’s a lot to take in. They read it maybe once and they don’t know what about their team members, and they put it away in a drawer and it’s done. That’s the end of it. Six months later, they don’t remember any of it. So there have been a lot of studies on this classroom learning after two days 95% of the content is forgotten. It McKinsey found that it takes 40 interactions with a point of information to actually start to change behavior. And that’s really why companies invest in this type of information is because they want to change the behavior of their people so that their teams become high performing teams. So what we do is we take all of this highly academic information, and we break it down into really understandable and digestible one to two sentence insights and tips. And we put that in front of people where they’re working on a daily basis. So we integrate with email, we integrate with calendar with Slack, we’re building out text, we are really passionate about the fact that our end users and we have we have more enterprise suite for the higher level, but our end users are really not going to come to our platform, and we don’t want them to we want to come to them where they are, so that we can really make a difference to their work experience.
Can you just tell us your traction so far? I’m curious about just the interactions that you’ve had with the companies thus far?
Yeah, that’s a great question. So we have we started about a year and a half ago. And we now have 40 enterprise clients. And in terms of our traction within them, we have less than 1% unsubscribe rate from our push notifications, we have an over 80% open rate. So that’s really exciting. And I have also mentioned that the focus so far, really on our end users, but we also have really awesome capabilities for managers and for enterprise users. So we work really closely with managers who are just trying to solve some sort of an issue on their team, whether it’s interpersonal conflict between two team members, or whether this is a highly skilled team. Oh, did you lose me?
We can hear her. We did and I think she fell off. Kirsten, I don’t know if you’re still we got all that.
Okay, good. I don’t remember where I left. So we also have a lot of capability for managers and yeah. Okay, so we focus a lot on the end user, but we also have a
question. I think we may have lost you a back Kiersten? Oh, you can hear okay. Last Last I heard was focused on the end user, which is a good note to end on. Well, let’s let’s save a little bit of time. If we if we want to dive back into the product as KEARSON refreshes. Maybe we could start with some question and q&a for John and clay. Jeb, do you have any questions as as you’re listening to kind of John clays background? Any questions for them and what they’re doing there at at stout Street in Denver?
So I’m back, but I’ve lost
I think I think I’ve lost yet to this is
I can I can just finish my answer. And then we can go into q&a. Yep. Okay, so we we do focus a lot on the end user. And that’s what I’ve been talking about so far. But we have a suite of capabilities for managers who are really looking at their existing team, how do I improve this team? How do I solve this interpersonal conflict between these two team members, or our team is great, but we have a really big challenge coming up? How can we most effectively rally together around it? And then we also have Enterprise users who they’re looking at, hey, we’re doing m&a. How do we merge these two companies? what teams do we form? Why is my department in Maine performing better than my department in Tennessee? What what’s causing turnover inside my organization? So this data can be applied to really big problems that a lot of companies are trying to solve every single day?
A lot of Kiersten, what are you most excited about right now clover leaf.
I am really excited about our team actually. And that’s not a canned response. It’s really true. We have just hired out a really phenomenal team. So we closed our seed round in February and we’ve just now finalized really are hiring for 2018. And we’ve found a lot of success in hiring people who don’t necessarily have the experience, but they have such a high drive and ambition and they really fit the culture that we have created for our organization. And a true testament to that is the fact that we actually were behind schedule on hiring but we never lost time in terms of productivity for our company. So every person that we’ve hired on has actually exceeded our expectations and productivity, because we’ve hired the right culture fits.
Yeah. So now, now’s a section of my favorite section of the show where the founders get to ask our main guests a few questions about some of the things that they’ve learned or maybe even some feedback on their product and what they’re building. Jeb any, any questions or feedback you want to get from our friends at stout Street?
I, my question was more around their involvement post investment, what that looks like, what what what kind of role they take, what kind of value they bring? They started, I think, address a little bit of that, but like them to go a little deeper if they could?
Yeah, so the thing is, one of the main things that we want to want to build is kind of cross selling opportunities between our own companies and also have a large enough portfolio for that to be meaningful. And I mean, that that seems a pay maybe answer but and that is very, very real in large portfolios, that, that companies themselves can be pretty, the access that they get to some of the other portfolio companies is pretty meaningful. And having said that, we also do what other VCs do in terms of networking are like connecting our portfolio companies with other VCs and essentially helping them close their rounds, or helping them embrace their second round or third round. And we also do our pro rata for each and every one follow on runs. So we want to do, we don’t take any active roles in terms of both seats. Basically, because we don’t invest enough in any of those companies that we merit taking a board seat, it becomes more on the passive side. But we do kind of actively engage with companies and founders to help them achieve their goals also, like make introductions, and also make sure that they’re funded well enough. And they don’t hit any of those roadblocks, that early stage, companies do hit and they want that kind of nurturing earlier on. And we also want to build that community. But right now, we still consider ourselves pretty small. Even with, like, 33 companies in our portfolio, I believe by the end of like, 2019, we want to be at least 100 companies, right? So if you have 100 companies, and you have meaningful cross selling opportunities to have meaningful dialogues between CEOs, and you have a community that can help.
Other questions. I think I started I started fresh Kiersten, do you mind asking the the summarized version of your question? Yep.
So John and clay, you guys have invested in a wide array of companies, you’ll see a lot of different versions and stages of lifecycle. How do you see your company’s defining product market fit?
Yeah, so one of the things that we do is, yeah, look at revenues and look at customers, right. So that’s one of the key indicators of traction, and also product market fit. And most of the companies that we invest in are post product post revenue companies. So though, though, we stick around at the seed and early stage rain range, we tend to avoid companies that that are still pretty concept for like pre product or even pre owned. So that’s one of the things that we do to kind of establish product market fit. And you still have companies that that kind of pivot you and after having around three main people can have changed their target markets and everything. And that happens in every single, every single startup, right and true product market fit is probably at around maybe when you have 10 or 15 million in ARR. Right? And we can’t really wait till that long, but we No, it’s kind of a kind of a cheat formula. But that’s something that we look at, it’s very hard for us to analyze how good the product market fit is, but we try our best in terms of like talking to customers and also like Kenya, how sustainable that market is in terms of revenue and also recurring was if if the customers are ready to pay and see the value in those companies.
You really look how much a customer is willing to buy are you looking for, you know, like specific profiles of customers or numbers of customers or is it defined by the problem there? solvent, you know, like, how do you really define it.
So in any established market, so most of the companies have been mastered in your kid into an established market. Or there are a few exceptions, maybe like less than 20%, of what companies are like in extremely new markets. But most of the companies do fit that mold where they are actually serving an established market, one of the things that we look at is, if an established player like a fortune 500 company, or one of the one of the really big companies, yeah, takes that on, and they’re willing to run that as a pilot and see, I am willing to take that risk in terms of implementing that software or that system are, what what are they selling, right? Who bring it into their fold and kind of nurture them, and they are willing to do that, that kind of signifies for us as something that there’s value in what they’re doing. If we don’t see that, we kind of doubt it. And if if people and founders are essentially blind with a thesis that, oh, this is something that can have value, be usually the scan that you want to see that coming from the industry folks who they’re actually serving.
Got it. So it’s really about customers willingness to buy and to take the risk.
Absolutely, absolutely. And it ultimately has to sell whatever, whatever you build, it has to sell. I mean, that’s where the value is. And that’s what we want to just want to be on and make sure that some of our companies can do and will do in the future and can do it successfully and scale it up.
I’ve really enjoyed these these questions and the answers and just the conversation that we have going. And I know we’ve had a few technical difficulties. So what I want to do is maybe close with a little bit of info from each of you. And what I’d love for you to share is maybe what you like about your local community, your local tech community, and that startup environment where you are because we have four great guests from three different locations. And I was wondering if KEARSON, maybe you could kick us off by telling us a little bit about what you love about Cincinnati, and that environment for starting up.
Of course, I am very passionate about Cincinnati, it’s my hometown, I went away looking for a better place and I couldn’t find one. So after six years of that I came back home. And really why I came back home is because of the community in Cincinnati. It just runs deep, and everybody jokes about how it’s just a really big small town. And I found that to be really true in the startup world as well. So I there there are people here who are willing to give a lot of time and advice and just tell their stories and be really honest and vulnerable about the hard lessons learned which helps all of us go leaps and bounds farther that we don’t have to make the same mistakes, we can just learn a lot from each other. So that’s really what I love about Cincinnati is how much the community is really involved and dedicated to helping each other.
That’s awesome. And I love the vibe in Cincinnati right now. There are so many great accelerator programs, obviously centrifuge is a huge piece of that ecosystem there. And then you have a lot of really great big companies like Kroger and p&g, or Procter and Gamble that are doing their own innovative things at a corporate level. So appreciate your sharing. Jeb, I’m gonna kick it over to you. What do you like about the startup and tech environment here in Indianapolis,
I think that it’s a really good blend of, of helpful community, people are not looking to cut each other down and looking to help each other up. A pretty good amount of capital, especially for on the startup side, I think we’re missing some of that middle capital for scale up, but still really good startup capital available. And a really nice talent pool with the acquisition of exact target with the university systems, we’ve got a really good pool of talent here. So hiring good people is possible here without paying West Coast or East Coast salaries.
I love it and John and clay, what? What do you like most about Denver in the Front Range?
I would say the collaboration being in such an underserved market, everyone really needs to be collaborative if they want the ecosystem to succeed. And I feel like the give first attitude is definitely here as well. And, you know, just say the overall collaboration as everyone kind of wants the ecosystems to succeed. And so that means you’re kind of cheering on your fellow man and fellow women to succeed and it’s just, it’s a very easy and fun ecosystem to be a part of.
Well, I hope that KEARSON Jeb and I can come down and visit you in Denver soon. I hope you’ll get up here to the Midwest again, soon. Thank you, all of you all four of you for sharing your knowledge on this episode of powderkeg igniting startups really eager to follow your continued success, both with the fund and with your respective startups. Please make sure you friendly powderkeg listeners to check out each of these organizations, stout street capital.com portable.com and cloverleaf.me. That’s cloverleaf, all one word. These are amazing founders. We’re going to link up their social profiles on the show notes on powderkeg.com. Please make sure you subscribe if you haven’t yet, so you can join us on the next episode of powderkeg igniting startups