00:00:01 [Music] moving the needle on founder failure one conversation at a time i'm your host lucas poles and welcome to startup 2.0 by spark xyz join us each week as we give you access to some of the top investors and entrepreneurs around the country to help you think through and overcome some of the top challenges that start-ups i think there's no better place in the country to be investing than los angeles what is the problem that you're solving and for who like what is that specific pain point sometimes when a company is not

00:00:31 listening to its customers and just thinks it knows better than it customers has a really really hard time finding product market fit i want to see somebody that that isn't gonna stop you know this person you just feel like they're gonna they're gonna they're gonna make it work [Music] a big heartfelt thank you to brex who without their support this show would not be possible we've seen firsthand the difficulties accessing basic corporate credit without providing a security deposit or personal guarantee early on

00:01:05 as companies grow managing expenses has become more difficult and time consuming which is why we've partnered with brex to offer a corporate credit card that is not personally guaranteed offers higher credit limits provides auto reconciliation and integrates with erps using receipt capture brex is the credit card of the start ecosystem and we highly encourage you to check welcome to the show thank you lucas good appreciate it i appreciate you coming on a little covid 19 special edition uh zoom uh so definitely appreciate you taking

00:01:41 the time um i know that you're busy with uh classes ending and the next week at sc uh the alma mater and uh yeah so definitely appreciate it yeah so we'll uh we'll dive right in so first where we really like to start is i'd like to find out more about just kind of your background i know you have a very fascinating one myself haven't been in the usa incubator so want to dive into that a little bit and then we'll run into some of the covid stuff because i know that's top of mind for everyone and then we'll talk about more vc stuff

00:02:12 cool that's good awesome good so a little about me um i'll just uh kind of give like a high level chronological breakthrough things that i've done sure first part of my career was kind of corporate always worked in tech in one way or the other um in business development product development but um worked in uh telecom you know for a while when it was going from um the old legacy systems to voice over ip so i did a lot of work in that era like a little before skype was around uh internationally and yeah went

00:02:55 back to school so did an mba and then worked in uh management consulting like a tech strategy for about five years and at that point started a startup uh in new york which i ran for a couple of years and it was really in that process of like figuring things out or not figuring things out and seeing a lot of other friends kind of you know maneuver um got interested in how founders just go through that process of you know what should i be building like who's the customer that you know that type of

00:03:28 thing um started running a roundtable series in new york around 2011 2012 and discovered i really liked working with founders so i did this a number of times and i was looking for a way to make it into something bigger and so i had the idea that i would want to like join a startup accelerator like join the team of an existing one um or even start a new one and um new york in 2011 2012 you know new york already had about 10 accelerator programs and i didn't think it made sense to try to start the 11th

00:04:04 one so i was actually looking for a new market to go to and earlier in my career i had worked in hong kong for a while and so i actually thought back to exploring hong kong as the location so took a scouting trip you know connected with as many people as i could over a couple weeks kept the discussions going when i went back to new york and out of that process which was probably about six months um i kind of gradually stepped into what was first like a startup bootcamp program and then what became a funded

00:04:41 startup accelerator so ended up um starting the first funded accelerator in hong kong you know i ran that for a year before moving to la for family reasons um after i got here i ended up at usc so that's where that's where we met you know so i teach in the entrepreneurship center um you know i run the incubator program on campus i do a couple other things um and then yeah along the way i've you know gotten involved in other accelerator programs and just ended up meeting a lot of people and working with a lot of startups

00:05:14 no super fascinating background so definitely want to before we get into everything i was kind of want to dive into a little bit of the differences between the hong kong and the us market like we're startups because i know that there are definitely a lot of international startups that end up uh watching startup 2.0 and so i want to kind of just dive in in that like what was your advice different for the hong kong startups yeah they have to take different avenues than the us one did uh yeah we start diving into it

00:05:46 so that is a question that um i don't know i feel like i've been thinking about and talking to you know people about for a while so my i guess my background was not really one of working in major tech hubs so even when i was in new york it was you know 10 years ago right you know eight years ago it was not you know the new york of startups you know of today yeah um much smaller market um and then i had a lot of experience you know in hong kong i ran a program in rome also and i just ended up getting to know

00:06:21 people in like smaller tech locations so um yeah to your question like my my recommendations are very different for founders in those locations so like high level what i found when i was in hong kong for example and even when i talked to people in other locations is what i found is um a lot of the i think just like uh underlying bias is thinking of building a company as though you were in a major tech hub you know in in the valley or something silicon valley um when some of the advice that would work in a location

00:07:02 like that really does not work if you're in a smaller location where you know there's no investment community or a very small one and they are like really risk-averse for example um talent is very different locally uh the like the platforms that you use might be totally different as well the you know the problems that are local or regional might be really different so i ended up recommending that people first start to build for their local realities local regional realities um [Music] rather than thinking okay i should just

00:07:42 copy whatever the like the tech kind of media you know like headlines seem to recommend you know me doing for you know building my startup um so in the situation when i was working in hong kong now things have changed you know a bit but when i was there um you know hong kong's a big city it's a wealthy city very small investment community like i knew every single you know uh investor you know in hong kong and it was a very small group to be honest like the the people who in los angeles or in the bay area or new york boston

00:08:23 like the the people or the profile of somebody who would be like an angel investor you know in those locations yeah in hong kong you are you know buying real estate you know you're investing in uh just you know the financial markets you're investing in uh you know manufacturing you know facilities in china um it's a very different type of uh background and um you know more risk-averse in fact if anything you know it was explained to me by one of the investors uh there who said you know like a lot of

00:08:55 my friends say i'm crazy for investing in these companies because you know i could just buy you know a building yeah and it's like it's like a guarantee money coming back in and instead you know i i'm gonna have you know ten of these investments and you know nine of them or maybe all ten will not pan out and it looks a little like i'm a little like silly so i i i get it um and that was kind of like you know the cycle that impacts how many people go into trying to build their own thing or the types of things

00:09:26 they build and the um like the two stories that i had from like the early days when i was in hong kong one was i had a team of two computer science masters grads they had just graduated and they were going to join this boot camp that i was running for the first time before i did the accelerator last minute they back out and the reason is their parents made them get real jobs made them get like you know a corporate job um and if you're living at home there's a lot of people within hong kong your parents have a lot of influence on

00:10:02 what you do with your time so they said no you're not you're not working on this little hobby you know you're actually going to get a real job and i want to i want a logo that i recognize on the business card that kind of thing um and then the other funny thing that was explained to me by another person who was actually in the first boot camp that i ran in hong kong so this is 2012. um so he said to me um you know if we were out you know meeting uh you know a romantic interest you know you know if you're out like you know

00:10:35 at a bar or a club um and somebody asks you like oh so what do you do and if you respond and say like oh i'm working on a startup what is heard is uh okay so this person has no prospects he couldn't find a real job he probably has no money not so great whereas here in la it's oh exciting oh oh me too i'm also working at something or like oh i'm planning to do this so it's a very different kind of like social pressure it makes sense why there's a much smaller you know tech community in you know hong kong's a big city so um

00:11:20 yeah when i ended up talking to people in different parts of the world and even much smaller tech locations than hong kong back then um i would see that kind of mix like everyone would or a lot of people would still look towards the typical advice that might work in a big tech hub in the us it doesn't really fit with your loca you know your local you know set of problems customers talent pool investor community so as a result my my go-to response was more about understanding how you could actually build something that is

00:11:57 sustainable locally how you could think first about bootstrapping because the probability that you're going to raise money is probably even lower than it is in the us i mean it's low in the us much lower in these other locations so instead how could you just maximize the opportunity you know the chance that you have of success don't think that it's just magically going to work out as you know a uh like quintessential you know cover of a you know tech publication in the u.s explains cool no that's awesome so um great

00:12:37 super interesting understanding of the kind of differences um did you ever focus on so we talked to so you talked a lot about bootstrapping there did you ever focus on trying to have them transfer to the us market or into a different country to either get new customers or new uh new sources of funding wasn't a focus of mine but that certainly was a path that some people took um you know like a a couple of the like the larger companies you know even back at that time the the pathway was basically build a

00:13:18 little something that's working locally and it seems to also have some international application so if you if if you are in a small tech hub you're probably starting to think internationally relatively soon because your local market eventually becomes too small it's not like you know you could build just for the u.s market or just for the china market and that's like big enough right but not the case in a lot of the smaller locations so some of those founders would it get to some point then they'd take a trip over to

00:13:51 often you know the bay area yeah time there and you know raise and like maybe even relocate at least part of the team so yeah i i knew a number of people who took that type of a path okay interesting cool um so let's switch gears a little bit um so you run the usa incubator now i want to dive a little bit more into it i want to find out kind of like why a unit uh like how a university incubator might differ from one within the actual startup ecosystem um are there differences are there not uh yeah how's it run generally just kind of

00:14:29 the kind of a whole tree sure so um yeah i didn't come from working in a university environment before i started working in a university environment so this was new to me as well but um i would describe the differences uh between a university program and a say a privately run program as so a couple of things the um the program is there really is a benefit to students alumni faculty and staff so as a result that means a couple of things are a little different um the first thing is the only restriction i have on the potential

00:15:10 applicants i look at into the program is at least one founder must have some tie back to the university student faculty staff alumni um in our case it is a little more than half alumni you know founders you know maybe about you know 40 plus percent or students and then another you know small percentage that are faculty and staff um that's you know uh if you are in a big university you do have a big pool of students and alumni of course but it's certainly restricted it's not like the world like i used to look at

00:15:49 applicants from like anywhere you know in you know when i was doing the program in hong kong or you know the program um in a university program you know most of the time you know you need some affiliation with the university the other difference which is um in in the case of you know the program i run and in i'd say most university programs you know we're not writing you a check you know in day one you know here it is and you know we're also for that matter we're not taking like equity stakes in these

00:16:21 companies so as a result um you know we're really looking for the same kind of good things to happen but i'm a little um i'm not as narrowly focused on startup set have a path towards being like massive you know right so i will also look at companies that they might never be applicable to a vc or to a funded accelerator program because you know the uh the interpretation of the potential market size is too small uh where it's not a vc backable company but it still might be a solid business it still might be a business that

00:17:02 supports a team of people a company that you know can support itself even just through revenue um so it's a little more of a broad mix of companies because we have everything from the vc backable highly scalable startup to you know um low-tech consumer products that are more linear in how they grow um and then the other difference i'd say and this is where um some university programs have you know more focus ours is again pretty broad in this sense there's no one focus on industry you know we've had everything from you

00:17:42 know machine learning sas robotics uh to food and beverage products you know low tech consumer products apparel even so it's a very broad range which can be a challenge yeah but it's also fun just to see okay what are the things that are you know that people are working on you know that are out there um and it um it kind of keeps a very dynamic you know uh mix of founder types business types nah super interesting yeah cool awesome um so a topic that i'm sure that a lot of the offenders in the internet

00:18:20 are asking you right now is uh current situation why we are on zoom and not hanging out in person um so wanted to find out like how how do you how is covet 19 affecting the portfolio companies in the incubator so um it's actually been a real mix i can't say it's all in one direction or another because some are benefiting some are not um and it's not you know necessarily industry specific because um you know if you look even within say like the restaurant or food industries like you know some some parts of those industries are

00:19:01 actually benefiting like if you're on the delivery side some are really hurting if you are a like a traditional kind of sit-down restaurant so the same type of thing that we've seen um what i would say generally is the um so the mix of companies that we have in the incubator in general they're pretty early stage you know um it's not uncommon for them to have raised like a little bit of say like a little bit of you know pre-seed you know kind of funding um but they're early enough that it wasn't like

00:19:39 they were dependent upon being able to raise money very soon yeah for the most part so given that you know in general you know generally speaking like the burn rate is really low they're able to sustain themselves they're maybe seeking ways to sus you know just to bootstrap themselves and in a number of cases i've actually seen or you don't have you know on the other hand you don't have like a an investor who is like saying like you know i i i need you to meet like you know this you know this next target

00:20:13 and you know now you're in trouble yeah so um so there's been there's been um some that are doing well someone that are doing poorly even i'll even say because kind of in this time thinking of some of the more basic or traditional businesses is sometimes what i don't know i go to or people go to first so back to the discussion of food you know we've had a number of food and beverage companies in the in the incubator they sell in whole foods they you know some have like real retail um maybe something like eight or ten

00:20:44 percent of the companies kind of fit that and um the funny thing has been or the interesting thing has been you know i had one who i caught up with last week who told me sales are going up everyone's cooking at home and so they're buying our things and they're just like you're getting it delivered and you know our sales are increasing i also had another one that had the opposite you know had much more of a they sell to corporates like you know primarily for events it's like a specialty kind of dessert

00:21:14 and that's been really hard hit and so they've had to re like reconfigure how they are reaching customers go direct to customer for the first time you know they haven't been doing that before um so i i take it as um you know it's a little individual um statement like i have one machine learning company that um for the most part sells to e-commerce platforms and it helps them identify and categorize all the different products like the thousands of products you know that are in their catalog um so there again if you have

00:21:52 additional e-commerce spending you know that could be a benefit yeah and all of a sudden now like oh i i can get like a better sell-through if i'm using your tech to categorize and present the best you know um you know products to you know to my customers so it's it's a little bit of a mix i'd say um in the companies that we have in the program so well let's dive a little bit into that then so maybe for some of the companies that are uh are they're negatively affected by it like what what advice are you giving

00:22:29 them are are you uh are they looking at a possible pivot are they looking at just different sales channels like which direction are they kind of going right now um out of the examples that you've seen so far really depends so i'll get a couple of examples so one um it's just a different you're gonna pimp it on the customer yeah so if you were selling to a say a corporate buyer you know thinking that you know this is a service that is you know it's not really one that's transferable to people working at home

00:23:04 um you know do you just stand still or do you start trying to approach you know more of a direct consumer model something like that um on the extreme i have had one company that has basically said this is not gonna work out anymore we're gonna do something else and i actually i caught up with him yesterday um the pivot is completely different it's not even a pivot it's just a new business this is a totally new thing which it's totally fine um the team is sticking together in other words but the product is

00:23:41 completely different um and i think i actually might like their chances with this new one more than i did with the previous one so sometimes that that happens i i've actually i've actually seen i've seen that happen maybe four or five times over the last few years in the incubator where a team applies with something it goes so-so eventually doesn't work out they shut it down but the same group largely starts working on something else and it's that next thing that works a little better um so in some cases i think you know

00:24:22 when you're talking about impact of kova 19 in some cases this can like force the decision sooner than you know than it would have happened otherwise i could imagine this company i'm thinking about you know kind of you know shuffling along for another year and it's an okay business it's not great and then eventually saying not for us but when you have like a very sudden impact something like over 19 it forces those decisions a little earlier on it you you either force the decision of okay we can adjust and actually maybe things

00:24:58 are going to work a little better yeah we can adjust and we can keep things kind of going or you know we should just stop now yeah let's do something else it's not gonna i mean it's not worth our time to try to continue to pursue this original concept so um so to some degree mostly talking about early stage businesses here yeah to some degree because you know if you have that flexibility if you're not under a lot of pressure from you know um like your financial pressure pressure from you know like a investor you might

00:25:35 actually have a little more flexibility to just go in a different direction and i try to just keep a positive outlook for these businesses so i mean it's not it's not necessarily a bad thing though with them like i don't know from my perspective i felt like there were a lot of zombie startups kind of in the ecosystem that and not just startups i mean we can look at the corporate landscape as well as someone like sears or uh any of the other large corporates that are kind of just like trudging along that

00:26:07 keep getting cheap debt that are just kind of hanging out there but haven't been forced to make that kind of tough decision but i think in the long run and it'll end up helping out the ecosystem because all the zombie companies were holding great talent that couldn't be repositioned into ideas that would end up working and so it might be short-term loss i mean absolutely well and it's tough for me i think the unemployment rate today is like 25 million or something already which is just nuts but uh long term it

00:26:39 could turn out for a positive uh going forward right so what's uh i guess another interesting question then so uh as we kind of look forward towards the future a post post-apocalypse how do you see and this is totally kind of a left-field question like what are your thoughts on how maybe consumer behavior changes or uh how the world might look slightly differently uh going forward give you an example like an equinox member for seven years going to the gym can't go to the gym now i'm literally having i literally

00:27:26 found a manufacturer in china and i'm literally having uh gym equipment uh bought there uh imported to here i won't be a gym member anymore but like what how what what other examples might you see on on shifting this behavior is it a move from like how we work in that like oh working remotely isn't awful uh we can actually still get stuff done and save people a lot of time and uh energy um what are what are your thoughts around it yeah um high level yeah super high level yeah at least think there's opportunities in

00:28:06 say speaking domestic u.s in um you know return of growth in manufacturing or at least a very you know hard consideration of places that should be uh growing like like sectors you know that that should return for you know like domestic production yeah um you know whether you categorize the areas by like their healthcare-related equipment you know like the issues with like mask production or other ppe um or pharma you know production so i think there's going to be a hard look at that maybe even to the point where

00:28:50 i get why over the decades you know for cost reasons or just for like overall manufacturing ecosystem reasons a lot of production moved out of the us but um but then you know a sudden pandemic which is not the kind of thing that only happens once in the history of the world it's something that happens you know again and again um i i think it's it's um it's forced the issue now and maybe we'll see a way of you know encouraging some of that production to come back um you know and beyond you know like like just this one saying

00:29:29 you know year of the uh kovid you know pandemic um that might be one thing um another is you know a lot of people are discovering it's you know it's okay working from home okay obviously depends on how big your house is or your apartment obviously depends on how many people are in there and their ages uh it certainly depends on like the weather that you have in the location but whereas you know um something i would like to see anyway is that these smaller locations around the country around the world that

00:30:12 formerly were you know left behind as people started going more towards the cities and let the talent started you know centering around you know the big urban areas um i would like to see some smaller locations which are great places to live or if you have kids you have great places for them to grow up yeah you know um have it be possible for you to work from home yeah and maybe you can you know you spend whatever some number of weeks per year in an office environment and you travel for that and

00:30:43 the rest of the time you can um you know the the tech is there to enable it it's really the you know like the social behavioral or just cultural side that was not there um i'm interested to see the long term just health practices behavioral types of things and how long they stay so if you look back you know 100 years ago 1918 flew um you know people were wearing masks back at the time and then they stopped pretty soon after you know they went right back towards you know big you know uh gatherings and you know

00:31:25 handshakes and hugs and kisses like it didn't go away i'm always a little skeptical that um a pandemic can completely remove that physical contact that humans have been doing for a long time it might make you a little more careful or it might make you just more sensitive to when someone sneezes and i i mean i already was doing that like in january it's like uh i'm just bumping elbows you know i'm not gonna shake your hand um or in general i would be sensitive to that because i have a lot of students and i would i mean

00:32:04 like people would come into my office like a year ago and you know sneezing i'd be like okay i'm like you guys after yeah try to protect my health too a bit um you know 50 people every day it's uh the viral load builds up um but um yeah i mean i i would love to see you know that ability to keep working from home for more people and allow people to pursue living in a different location and you know thoughts around manufacturing or you know or even just thoughts around how you might monitor something you know like the next time

00:32:51 that something like this is is gonna pop up um nobody nobody's really handled this very well you know uh around the world it's not like today like there's like one place one person who had it all figured out and like everybody else you know messed up it's really yeah combination of bad systems or or systems that worked really well for the previous environment now breaking down yeah um but uh yeah i certainly um uh would like to and if i can you know be involved or through the incubator or through like just you know other people

00:33:33 who i talk to um have some involvement with lessening the blow for people who have lost their jobs or who are like needing to think about the next thing because they know it's maybe a matter of time before their company has to do a round of layoffs yeah like um know finding the next range of positions or careers or types of work um for people affected you know um if i can be of help you know there even if it's just like connecting people um i'd like to help that's awesome yeah and you know we always always appreciate stuff like that

00:34:12 um i definitely agree with you about the uh the supply chain piece um i feel like it really really broke uh finely tuned like uh uh stretched i guess to the max supply chains um it took them down hard like really quickly too like it didn't take a lot to totally sink uh the entire supply chain so i i do see 100 agree with you i see a lot of it coming back even if it is a little bit more expensive it's like okay well if the next time that this happens like i mean it could have taken down some companies

00:34:50 on this one oh so i'll i'll throw in my also my kind of like a tangential connection for this discussion it's not specifically related to health yeah or 1819 um i won't be surprised if you know the way that people look at risk will change so like one of the things i'm actually bearish about for the last couple of years i've written about um is um avs autonomous vehicles yeah and i'm actually wondering that this big impact from kova 19 and like the systemic risk that it exposed in something like supply chains etc um

00:35:34 you know you optimize the supply chain for that perfection of like there's no delay in delivering you know each of the components and the assembly takes place and you ship it on to you know the customer um and you have a disruption and then there's a big impact so i'm wondering if people are going to then reevaluate the um that cost benefit assessment of autonomous vehicles in other words the benefit of autonomous vehicles is you know you can put more cars on the road you know closer together so

00:36:06 you eliminate traffic jams or you know you don't rely on drivers not being available in the middle of the night or you can have you know like all these different scenarios that take place you can gather data but you also have a system that is really reliant on you know not being hacked not being aimed in some other way and if you can impact it you can impact an entire fleet or an entire city entire nation so i wonder if people are going to take a closer look to these potential deployments and say

00:36:40 okay there's actually a risk here of a big breakage yeah and those little benefits of optimization are going to be wiped out in a day if it does break down so that's my kind of tangential you know left field example that you know what might happen later on that is interesting uh it is going to shape the way that we think honestly i'm super interested to watch how it kind of plays out and goes going forward um let's switch gears a little bit let's go back to uh maybe a little bit more focused on

00:37:16 entrepreneurship rather than just the current crisis um let's talk about some of the problems that founders face so uh there are a lot of them traditionally but what are some of the biggest mistakes that you see founders make early on off the top of my head i mean there's a lot right staying really wedded to the first idea not being able to change even when you're collecting a lot of data that says you're on the wrong track not taking care of um the team dynamics or or even just the what i'll call like um you know just the

00:38:00 uh the regular like legal paperwork of uh making sure that the team is um you know uh what one of the things i ended up um after starting the program in um at usc one of the things i ended up requiring that new founders who i work with you know do or new teams that i work with you is that they have a founder agreement in place so you know in other words what's involved in your founder agreement no i i don't write it for them um you just need to have one you know i'm not like legally reviewing this

00:38:39 you need to have this discussion in other words there's a lot of kind of templates that you can modify or you could have if you want you can have a lawyer do this for you but there's a lot of like boilerplate that you can use as a starting point the important thing is you've had this discussion on the team who is doing what if there's an equity split how is that happening what is vesting what happens if someone needs to quit for some reason or is pushed out for some reason or is fired because of cause

00:39:08 or other reasons um rather than have nothing and then it's total chaos if the team falls apart which is a common thing falling apart or somebody having a problem it's about a third of um you know early stage teams uh statistically so if you can take one of these big problems off the table you've just increased your success rate yeah you know you either like identify early on oh wow like i thought i had 90 and you had 10 and you thought you had 90 percent attempt like at least have this discussion so you don't have and that

00:39:48 happens right you know so you don't have you know a year later you know something like that oh god which happened um or you don't have a rogue founder who like someone quits and then it's uncertain like do they actually own anything here i'm not sure so um that i mean that's a pretty common mistake that hey we're all best friends you know it's a handshake don't worry about it we'll we'll deal with that later on um early stage teams fall apart at a pretty high rate so just try to take that risk off the table

00:40:24 um but that involved the first idea um dude diving back into that do you do you force them to start looking at uh because you start dealing with a lot of teams you start you force them to start looking at more of a hierarchy look within the actual organization or is it still kind of uh flat like uh are do you end up walking them through or do they even see like hey uh okay is the ceo uh does he have the ability like who has the ability to fire whoever like do do they start setting those principles then

00:41:02 or is it more kind of as they walk through or it's maybe not a tough conversation that they want to have yet no one likes having the conversation because it's very uncomfortable i i don't really walk them through at any great detail because in general the teams that i see at least when they apply it's two people three people four people and there's probably not much of hierarchy later on like you know we've had a number of companies that you know now they have 10 20 you know people on the team as they

00:41:38 grow um a little different story but in general um i'll put it to you this way if i had a lot of resources and i had a staff and you know like who could like somebody just do this one thing uh i'd probably go into more detail right now i i'm battling against okay the default is you you are going to do nothing just need you to do a little something and that that reduces the failure rate significantly um i've actually had this discussion with um friends of mine who are lawyers and very smart and they are correct you know yeah you

00:42:19 should do a much more thorough you know you know back and forth here but i'm battling against like nothing happens i'm not gonna be able to assign a lawyer to do nothing but you know you of contracts for the 30 companies a year that we bring in so it's uh yeah it's a little bit of you know trying to address what i can with the resources that we have um otherwise to your question um the things i like to focus on also are just like shortening cycle times for companies so that might mean shortening the

00:43:04 like the discovery cycle time in other words like you came in you applied with this you know this really early stage business with a handful of beta customers and you still really need to understand who your target customers are let's help you that's that's like guidance training um introductions to help you know shorten that cycle time um same on like other operational issues so a lot of the other resources that we bring in and the incubator you know uh we bring a number of you know mentors or advisors in

00:43:38 you know throughout the throughout the year throughout the semester so it's everything from like legal office hours accounting office hours you know marketing branding uh pricing you know specific yo experts um people who do nothing but run paid ad campaigns or who do nothing but you know um like a b test your um you know your mailing list or uh different versions of your uh you know your website so um look at one of the things i like to look at is like um how do we augment the small teams that you have give you

00:44:17 access to these other resources it doesn't really make sense for you to hire a person who does nothing but marketing at this early stage yeah or somebody who or you're not going to hire like you know an in-house you know uh lawyer right yeah um but no you need help you know a certain number of hours a month and we can get you at least part of the way there at some point you might need to engage someone or at some point you might need to say okay we need to learn more about this one topic at least we've identified the big risk

00:44:48 areas through these discussions and we can decide what are we gonna start with first um and then uh you know and then otherwise you know this program as it has emerged over the years it's a little different because every program is a little different but a combination of being you know half alumni and a really broad range of founder backgrounds you know how many years of work experience you know people have as a result it's really a founder driven program so five years ago when the program was brand new

00:45:27 and everyone was a current student it was almost like it was a class you know week one is you know module one and we all kind of stepped through and this week two is module two and we all kind of are stepping through together yeah that didn't really make sense after the first year when it became a much broader you know mix of you know backgrounds experience levels types of companies so it's largely a founder driven program by which i mean there's a number of things that are a fit for everyone and we'll do some things in a group and

00:45:59 now we're doing that virtually of course but there's also a number of things that you know if it's some specific mentors who i bring in they might only make it might only make sense to have them meet one or two of the companies because that's where the need is or that's like the industry you know intersect um same on the investor side you know um most of the companies that i have coming in they're not thinking about raising money like right now they might be in a few months they might be like bootstrapping their way for a

00:46:34 while and then later on they consider you know raising money um so i don't really um make everyone kind of go through you know the same process of pitching to an investor if you're not going to do that just yet maybe your time is better spent on something else try to make some of the connections because you know just getting to know more people is beneficial but but i'm you know i used to in my other uh programs where you know they were funded programs and we ended with demo days um that was more of a common theme

00:47:06 everyone is gonna practice their pitch every week and we're getting ready you know for the demo day that's less of a focus now or i only use that where the companies are actually pursuing you know uh fundraising so um yeah so uh [Music] those are some of the you know those are some of the differences yeah what about uh so then coming back in to uh talking a little bit more about bc then so what when the entrepreneurs are ready to start looking at raising capital like how are you advising them on that

00:47:40 process are they looking uh like what type of vc should they be looking for what should they look for in fec i mean everyone's a little different because the companies are all different but some of the generalities are i mean they're probably like the normal things that anybody would say which is you know you're building a relationship with someone this is not a one-off transaction so you probably want to get to know someone over time and that's both so like you can discover if this is an investor who you want to

00:48:13 work with long term um do they identify with the vision that you have are they excited about the problem that you're solving and you know they they are giving good guidance maybe they have portfolio investments who um who kind of demonstrate the ways that they think about you know um working with you know early stage companies maybe they demonstrate just some of their own knowledge or network that is beneficial to you you know specifically so um you know uh i think that's probably like you know

00:48:50 uh a general mix of ways that you might think through it it's uh we were i think we were you and i were talking about this like a little while ago when you were visiting classes where it's not really the situation of you know only the investor asks the questions and the startup founders you know just answer and it's like you you pass a test and then you check enough boxes and then okay here is the money you know you you you won the competition this a person or a firm who you you value the guidance that they're

00:49:35 gonna give you value the you know the way that they uh seem to work with their other portfolio investments so i actually i typically will recommend that the founders just get to know some of the other portfolio companies in any um you know firm that they might you know be pitching or want to pitch understand a little bit about what is it actually like working with you know this vc um you know what types of guidance what type of um you know help in like your network and you know opening doors to customers to follow on

00:50:07 rounds to uh you know to hiring talent yeah they you know benefit from rise to the top so great too that i saw going back to one of your first questions about like the smaller tech locations um i would actually see in the small locations that it was possible for investors who were not really great you know but they would still like they could survive they had like they had deal flow they were able to be like the place that you would go because there weren't many options now what we saw over the last few years

00:50:45 is like there were more options places to go to raise capital so another interesting you know twist to introspect it back with coronavirus is you know as people maybe become a little more careful on how they invest does that start to change again do you know do some startups become a little um a little needier you know if they were burning too much cash you know if they were expecting that the world is not going to change or that or that next round is like is easy to raise in the near term that's

00:51:21 like kind of changed um you know are some startups going to be forced into you know bad relationships with investors which i you know i hope doesn't happen yeah all right it's uh it's definitely a possibility uh 100 i mean it's it's your just for calls does your time is called for just for measures and so uh there will absolutely be more predatory uh investors that are out there uh just kind of a way that cycles end up working because they know the startup's a little more desperate and it's like okay

00:51:58 you take capital for me or your business fails and so you're gonna agree to my terms because you don't have a choice anymore um which is tough definitely um but the founders don't uh they don't forget uh a lot of times the ecosystem doesn't either so all these founder-friendly firms i mean you'll you'll see how it plays out um if they're gonna pull the term sheets or uh what actually is gonna end up happening so i mean it'll be a long term uh long-term problem for them if that ends up um so final kind of

00:52:33 question um because i'm assuming you have some great great ones um what are some of the best resources for entrepreneurs oh the best resources there's a lot x y z actually no you you've written a lot of good i recommend them to people it's true i'm not saying it because you're interviewing me [Laughter] [Music] there's a lot of content out there but like you've written great stuff like y combinator has a lot of great stuff you know or even just looking at like their their list of documents like you like examples of term sheets

00:53:26 you know et cetera um [Music] i i guess i would also say because each startup is a little different you probably want to find just some of the experienced you know leaders in your industry your sector whether they are other founders whether they're investors and just kind of dive into some of you know um you know um but otherwise like newsletters like strategy you know the information um you know those are solid and enough coverage of you know different companies you know pretty broadly that you might be able to

00:54:08 like you know just do some company or industry research that's helpful otherwise my go-to is don't spend like don't make your default reading or content consumption be like general tech news yes focus more on whoever your customer is like you know what are they reading right like how do i understand them more deeply so um and those are all the publications that like you know we're probably not talking about you know because a little different for everyone yeah um that's probably my go to like yeah

00:54:48 you get enough from just being on twitter you know probably headlines what's going on i need a couple of good newsletters like yours yeah of course um but otherwise start digging into your own customers publications or like industry publications because that's where the knowledge gets a little deeper yeah no definitely great advice well paul appreciate you coming on the show thank you again and i look forward to catching up soon thanks lucas [Music]