20VC: The Three Fundamental Forces in Society with Ciaran O'Leary, Partner @ BlueYard

Ciaran O'Leary is the General Partner at one of Europe's newest funds, BlueYard. A $120m fund located at the early stage, centring around 3 key areas: The decentralisation of markets, the democratisation of capabilities, and the liberation of data. Prior to BlueYard, Ciaran was a Partner at Earlybird with investments in the likes of Peak Games (emerging markets social gaming), 6Wunderkinder (productivity apps), Moped (private messaging), B2X Care Solutions (outsourcing platform), madvertise (mobile targeting network) and simfy (digital music distribution company). Before Earlybird, Ciarán co-founded a startup and gathered operational experience at others. We would like to say a special thank you to Mattermark for providing all the data used in the show today and you can check out Mattermark Search here! In Today's Episode You Will Learn: 1.) How Ciaran made his way into startups and the investing industry? 2.) What is the thesis with BlueYard? What is the preferred cheque size, sector and geography? 3.) With the mass of VCs emerging, how can startups at the early stage determine whether a VC really is early stage? Are there any defining characteristics? 4.) For startup founders out there who always hear from fellow founders that everything is going gangbusters, how should they react to that? How can you determine whether a startup really is doing well? 5.) Say the startup really is going well and they are looking to scale and hire, we always hear we need a world beating, world class X? How can they communicate that hire better to their current team and their board? What should the CEO or Head of Talent be focusing on when viewing talent? Is there anything they should look out for in particular? 6.) Now when a startup really scales, board meetings become a big part of a CEO’s life. So how can CEO’s turn useless board meetings into very useful value added meetings? How can they optimize that time? What should they look for? What should they ask for? Items Mentioned In Today's Episode: Ciaran's Fave Book: The Road Ciaran's Fave Blog: The Economist Espresso As always you can follow The Twenty Minute VC, Harry and Ciaran on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  This is the 20 Minute VC with your host, Harry Stebbings, and I hope you enjoyed the previous interview with the amazing Matt Mazzio. And for the first time ever, you can listen to behind the scenes footage of my conversation with Matt, basically all the hardcore opinions that were too raw to go into the main edit, to be quite honest. And you can get that simply by signing up to the newsletter on the20minutavec.com. And today, we are back on the other side of the pond to speak to another mover and shaker of the VC industry with Kieran O'Leary, partner at BlueYard, joining me today. Now, BlueYard is one of Europe's newest funds with $120 million under management and an investment thesis that is encapsulated around the decentralisation of markets,

• 0:42Harry Stebbings?

  the democratisation of capabilities, and the liberation of data. However, Kieran will explain this much better and in much more detail in the show, I have no doubt. But prior to BlueYard, Kieran was also a partner at Earlybird with investments in the likes of Peak Games, Wunderlist, who you might remember, we had Chad Fowler, CTO at Wunderlist on the show previously, Moped, and many more incredible companies. Also, if you have not had a chance to check out the official Saster podcast, brought to you by Jason Lemkin and I, then that is a must, and you can find it by searching for Saster on iTunes. And finally, we would like to thank the amazing folks over at Matamark, as always, providing the best data and powering the analysis behind the 20 Minute VC. And

• 1:24Harry Stebbings?

  if you haven't done so already, you've got to sign up for Matamark Daily, the best curation of startup and VC articles and resources. However, it's now time for me to hand over to one of Europe's newest funds. May I present Kieran O'Leary, general partner at BlueYard.

• 1:45Harry Stebbings?

  You have now arrived at your destination. Kieran, welcome to the 20 Minute VC. Thanks so much for joining us today.

• 1:52Speaker 01

  Thank you for having me.

• 1:53Harry Stebbings?

  First, I have to say a huge thank you to Chad Fowler for making the intro and making this interview possible. But now, I'd like to start off by hearing a bit about you, Kieran, and how you made your way into the wonderful world of VC.

• 2:05Speaker 01

  I think Fred Dastan of Excel said on your podcast here that he is the worst background possible to be a VC. And I'd like to correct him and say that, no, that's actually me. But over time, I actually learned that there is no good background to be a good VC. And if you look at the, you know, the very best people in our industry, who are a bit more advanced and have really helped sort of entrepreneurs build great companies, you can see that the range is very, very broad. So I think it depends more on your personality and your mental skill set and, and, and also being humble and understanding your role. So having said that, I actually wanted to become an airline pilot. I never thought I'd be doing

• 2:47Speaker 01

  this. I would, I would have considered that as, you know, quite a significant life failure would have told me when I was 18 that I would be VC. But, you know, I didn't get comfortable with, with kind of the lifestyle that, that, that would imply flying for an airline for your life. And so I decided to study business because I didn't know what else I wanted to do, wasn't sure I'd stick with it. I got stuck with it, started in investment banking and mergers and acquisitions, more because it was the fashion back then. I wasn't really passionate about it. So I did that, I think for two years, then I joined the Carlyle Group and did sort of leveraged buyouts. So we did the exact opposite end of venture

• 3:28Speaker 01

  capital and realized though there after a short period that, you know, I was heading into this kind of finance direction and I didn't really like that. And so I left without a plan, started thinking about founding a company, had a couple of projects, was helping some friends who were entrepreneurs, sort of general management and raising some money and, you know, couldn't quite pin something down I wanted to do. And then in that process, I bumped into a firm I was at before called Early Bird and they said, hey, you know, we're, we're looking for some young people to join our team. And if you want to work with entrepreneurs or maybe an entrepreneur yourself, a good way to do that is to, to be at a VC firm and interact with, with lots of entrepreneurs. And I said, that's a horrible idea.

• 4:14Speaker 01

  I thought that A venture capital, I thought, you know, I had a total misconception. I thought it was around, you know, being deeply technical, investing in in patents and that kind of stuff. And then I also was very negative on the European and especially the German VC landscape and also the entrepreneurial landscape. Then, you know, one of the partners there, Rolf Mattis, he kind of convinced me that things were changing and that was going to be a big opportunity. And so I joined them also more out of curiosity, then was there for six years, opened the Berlin office for Early Bird, which was kind of a really defining thing for for me mentally and and how I wanted to to be a VC.

• 4:54Speaker 01

  And then left a couple of months ago, we started Blue Yard, and then here we are.

• 5:00Harry Stebbings?

  And I want to hear about Blue Yard now, so hit me with a bit about the fund, you know, what stage you're into, what preferences you have in terms of sectors, geographies, what's the synopsis on the fund overall, would you say?

• 5:11Speaker 01

  Yeah, so I I I hope we're kind of asking people to keep the congratulations for in a couple of years if we've hopefully managed to help some entrepreneurs, because, you know, I can I can tell you that, you know, it's it's easy to, it's like entrepreneurs, you celebrate raising money, that's great, but after thirty seconds, you're, oh, wow, you know, look at that, huge responsibility on our hands now. Blue Yard, it's a very small firm, it's, you know, Jason, myself, and then we have Chad as a venture partner, who you know is is a much more, A, he's a better saxophone player than we all are, and B, you know, he's a he's a tech leader and and he's a meaningful venture partner.

• 5:53Speaker 01

  And we wanted to create a firm that is very small and where entrepreneurs really only deal with with the partners and where we can be very agile and quick, and also where we can form the entire firm around a thesis. And there's three fundamental forces we think are happening in society and in economies, and we want to help entrepreneurs build companies around them. One of them is the decentralization of markets, so the reduction of the power of gatekeeping.

• 6:24Speaker 01

  Items than allowing more people to transact the markets, allowing individuals to, you know, build up an economy on their own. And we think that that's going to increase and not decrease. The second thing is, you know, we're still at the very beginning of technology giving people superpowers. So democratizing capabilities through through technology, we think is is going to be very powerful. And the last one is companies that help to liberate data. So we all like talking about data and big data, but what does it actually mean to make data useful? You know, it has to be portable, it has to be accessible.

• 7:03Speaker 01

  You have to have a meaningful amount of control over it and it has to be available in some kind of application layer or insights layer. And so those are the three things we're after. We're going to keep an open mind. Jason and I were huge astronomy geeks and science fiction geeks. And so we we think we've told a couple of people, we're also going to try and do a couple of science fiction investments.

• 7:28Harry Stebbings?

  And then applying that thesis directly to Europe, are we seeing those three key transformations really occurring in Europe at this moment?

• 7:35Speaker 01

  So I think there's a couple of things going on. If you look at the current wave of big European companies or the wave of the last couple of years, you know, it takes seven to 10 years to build a big company. So these companies were founded, you know, seven to 10 and even more years ago. If you if you look at some of the big names, and those were the days and age of kind of mobile consumer applications and e-commerce and, you know, listings and these kind of things. And so that went really well. But those days are a little bit over. And what's happening is is that all these really great, successful companies have helped create wealth and ecosystem. And more importantly, entrepreneurial role models.

• 8:19Speaker 01

  And they've trained a huge amount of engineering talent base. And so that engineering talent base and product people and design people, they are now leaving these big companies to start their own companies. But they are starting companies that are more engineering driven, more technical, more enterprise, more global versus, you know, regional adaptations. And we're also seeing things like students at technical universities that would, in the past, would have loved to have worked for. BMW are now saying, hey BMW is an embarrassment against Tesla. So before I joined BMW, you know, I have all these entrepreneurial role models. I know there's funding. I'm going to go and have a shot at sort of getting funding for my own technical startup.

• 9:03Speaker 01

  So we think the European ecosystem is going to geek up and it's going to be much more supportive for this wave of entrepreneurs.

• 9:13Harry Stebbings?

  And often funds are labelled with the term early stage. So what do you really interpret as early stage? What does that really mean in today's VC economy?

• 9:22Speaker 01

  Yeah, so it's true. It's a widely abused term, like so many things in our industry. I think for entrepreneurs, what is a good guide is always looking at the fund size. So you can say that you're an early stage firm or you focus on early stage. But if you've got this huge big fund, you know, it will never be, it can never be a core part of your strategy and allocation and resources and these kind of things. So, you know, Blueyard is a $120 million fund and we're focused on seed and A. You know, you write tickets from a couple hundred K up to say five, six million maximum as a first ticket. So that puts us squarely in the early stage bucket. And I think again, for entrepreneurs, the best way to figure out is just to ask VCs,

• 10:07Speaker 01

  well, you know, what percentage allocation of your fund goes to those kind of ticket sizes? And if that's a majority, then they're an early stage firm. And if not, they're not.

• 10:16Harry Stebbings?

  And have you found all VCs to be so willing to convey their fund strategy and their fund allocation to entrepreneurs so willingly?

• 10:23Speaker 01

  I think they should. Having said that, there are some very large funds that are successfully doing early stage and they have a dedicated strategy around it and they're thoughtful about it. And they're aware of what it means for the entrepreneur to have a very large fund in early stages. But that does require thoughtfulness and transparency. And I think the better firms have that. And those that don't, I think the entrepreneurs just have to be very open about, they have to do their own due diligence. I think that's something European entrepreneurs will have to learn a bit more is to do their own due diligence on venture firms.

• 11:01Harry Stebbings?

  And then having started Blueyard, you have the potential to mould this completely yourself. And so what do you think are the requirements to make the best VC fund? And how are you applying them to your workings and adaptations with Blueyard?

• 11:14Speaker 01

  Yeah, so of course, we live in the day and age where information is much more available and cheaper and also information on how you can build a good venture firm. What I would say is that good venture firms come in all kinds of sizes and shapes, so we just pick one model. And that doesn't mean we don't think that other models can't be successful. So I think the first thing that goes without saying, like entrepreneurs building a company, the best entrepreneurs are really, really missionary. And they're passionate around building something that they feel has to exist. And it isn't this thing where they have a whiteboard session and say, oh, look here in the top right, there's an economic opportunity to maybe build something here and we can

• 11:59Speaker 01

  earn some money with this. But it's typical, yeah. So I think the best VCs I've come into, they are also just as missionary around creating not just this one fund and investing in startup, but creating a venture firm that stands for something, that means something, means something to them, means something for the entrepreneurs. So that kind of made the second choice easy, that we wanted it to be a thesis-driven firm. We wanted to kind of help entrepreneurs build on these fundamental forces we're seeing. And so it was clear that it was going to be thesis-driven. And then lastly, we had learned that keeping things simple and small and focused and free of politics is beneficial to how we can do our job and spend time with entrepreneurs.

• 12:42Speaker 01

  And so that made it very easy to say, BlueYard is always going to be a small firm, everybody's always going to be equal, we're only ever going to have one strategy and one fund, and we're only ever going to have one office, and we're always going to focus on early stage, we're never going to raise a growth fund, we're never going to go into different regions, and we're prepared to shut BlueYard down. So that was liberating. And now, having said that, we're obviously going to have to see how we do our jobs and if we do well, and in a couple of years, look back, if we made the correct choices. But we did model ourselves, say, our firms like, you know, the Foundry Group or USV

• 13:23Speaker 01

  or Benchmark, which is, you know, kind of a small group of people that are equal and are missionary around doing something.

• 13:31Harry Stebbings?

  But you're not ruling out the potential of raising a further fund in the future, are you?

• 13:36Speaker 01

  Oh, no, absolutely not. We wanna earn the right to do that and not make assumptions. Um, but what we don't wanna do is, is build, you know, already from the first day, assume that with Blue Yard, we have to um leave some kind of lasting legacy and brand. Um, cause that's where a majority of VC firms fail. So we're happy to, and I forget what US fund did this, it may have been the Foundry Group, where they said, hey, you know, we're gonna probably raise three or four fund generations, maybe one or two more or less or whatever, and then we're gonna shut it down because, you know, we, we think succession is really hard, we're probably gonna suck at it, and it's not gonna be the Foundry Group, and so, you know, let, let's just assume that that's gonna happen, and if it doesn't happen, great. And so, we're taking similar approach with Blue Yard, where we're saying,

• 14:22Speaker 01

  let's just be mentally prepared and open to have this be a firm that just exists for a certain period of time, and as soon as we're not good at it anymore, or we, or we realize we're not being very good at transition, no problem, we'll shut it down, no hard feelings, and, and somebody better will take our place.

• 14:43Harry Stebbings?

  And you spoke about funds not working out there, but you've also seen a lot of startup journeys and trajectories. So in your experience, what are the main reasons you've seen startups fail in the very early days of, of, of being in existence?

• 14:55Speaker 01

  Yeah, you know, it's, it, it's so hard. There's obviously lots of obvious things, you know, where you just built the wrong product, or product quality, or the team fell out, or these kind of things, you know, where it gets a little bit more granular is the thing of, I think, teams being brutally, brutally honest and brutally, brutally fast in figuring out how much customers and users really like their product. And being very, very honest and tough with saying, no, this doesn't work, next, next, next. So, uh, you know, I, I have done a fair amount of seed investments, and I would say that looking at seed and going to A, the more fluid and brutally honest teams are with themselves,

• 15:40Speaker 01

  and how good their product is, and the willingness to make e- e- e- extreme iterations, even though it means canning literally every line of code, that I've found to be a recipe for success in your DNA. But then unfortunately, there's also things, I think there was a lot of public studies on this. Often, it's also just bad timing. And it's funny, I was, I, I had dinner with an entrepreneur, Skylar Dearman. Uh, he, he was actually first entrepreneur I backed as a venture partner. And he built a company called moped.com. And this is going to sound familiar. It was a kind of think about like a private Twitter like thing, cross-platform. It had the Twitter syntax, you could have channels, they even had bots. Uh, yeah, if you're thinking of Slack, then you're, you're, you're correct now.

• 16:26Speaker 01

  Frankly, the product, and I think Skylar is very honest about this, the product never had Slack's quality. But it was, it was, you know, two, three years um before Slack, all the right thoughts, all the right kind of. But I, I think besides product quality, you know, we were also just, just was not the right time for that kind of product.

• 16:45Harry Stebbings?

  And a favorite question of VCs to entrepreneurs is why now? Why now is this technology going to make it? So is that a question that you always like to ask to prevent situations like Skylar's?

• 16:56Speaker 01

  No. And so, and I'll tell you why. I'm not too sure how good we are, you know, calling shots on whether cycles, technology deployment waves are for real or not. And if the next wave is going to be the one to back. And I think as VCs, so let's take Bitcoin and the blockchain. You know, we don't know, there's a lot of, you know, kind of frankly lame hindsight comments now. Well, I'm so glad I didn't invest in Bitcoin. Where, uh, that's, that's silly because if something like that comes along, uh, with such a, you know, promising platform and protocol like technology, you should be deploying capital in it. You should be backing entrepreneurs. You know, maybe you don't want to bet the farm on it, but you should probably be a part of that wave.

• 17:40Speaker 01

  And if it doesn't work out, fine, that's part of our job and then let, let's look for the next one. So I personally don't try and call the shots on whether technological waves, if the timing is correct.

• 17:54Speaker 01

  I'll I'll I'll try to, but I I don't think I'm very good at it.

• 17:57Harry Stebbings?

  And talking of a team's brutal honesty, we often hear the CEO or the chairman say, we need a, we need a world-class CTO. We need a world-class VP of Marketing. So what should they be really focusing on when making those hires in the core executive?

• 18:11Speaker 01

  So I think there's there's two things. So hopefully your board is very encouraging in terms of you spending money on people that can help in increase quality of of of the product, the company and and and grow the the product and the company. And if you don't, then then that that that's obviously your problem. Um. The one thing that the board should hopefully protect you from and and have give you good guidance is on hiring the the the wrong people or sorry, the right people too early. Because sometimes you can bring in somebody who really only works well if they have fifty engineers supporting them, two VP of engineering's below them. And and and they're they're gonna fail in your environment and they're gonna be frustrated, you're gonna be frustrated.

• 18:56Speaker 01

  So I think there there is something to be said for sophisticated conversation, but having said that, the board should always be leaning forward on spending on people. For the team, often it the the it can be a little bit intimidating because everybody kind of feels like a little co-founder at the beginning, and then all of a sudden you're building a hierarchy. Um. And all of a sudden, there's people coming in at top and oh, these people are earning three much as I'm as I'm earning. And I think the best entrepreneurs, it's a very early on, make it clear to the team that the organization is gonna change over time and that's gonna make it more valuable. And the employees' equity and their association with the firm is also gonna get more valuable.

• 19:39Speaker 01

  And when we bring in a CTO and we pay him, you know, three times your salary and everything else, it's because this person is older, has more responsibility, and we're gonna get a return on investment on this person for your career and your equity. And this is why, you know, I I I need everybody to be supportive. Um. But it's very common, but I think if you frame it that way, typically good teams will be supportive. And what I will also say is that if you bring in a really good. VP of Engineering or a CTO, often the team will really like that because it'll increase their skill set and good developers like working with other good technical people. So it's often, it's often really liberating.

• 20:23Harry Stebbings?

  And now it's time for my favorite, the quickfire round. So your favorite book and why?

• 20:28Speaker 01

  The road. I hate reading business books. I think they are nauseatingly predictable and they should be half a page instead of two hundred pages. So you're not going to hear a business book from me. I like reading blog posts and summaries. But I think the road from a Cormac is, is, is, it forces you to confront yourself with a really dark and, you know, deeply human and unsettling thought and environment. And when I read, I like to really get out there and not read about business.

• 21:00Harry Stebbings?

  Does the narrow exit funnel in Europe concern you and why?

• 21:04Speaker 01

  No, because the capital's global, highly mobile. The biggest cars in Europe are Google, Microsoft, SAP. And I don't, I don't care. And now Chinese companies, Chinese companies, Japanese companies. I think that that makes it less of a problem. So big companies will be, sorry, great companies will always be bought. I do think it's a problem, but it's not keeping me up at night.

• 21:31Harry Stebbings?

  The sector you're most excited by and why?

• 21:34Speaker 01

  I'm not excited by any sector. The most, the most excited about economies being broken down into atomic, highly efficient atomic units versus inefficient big entities. And that applied to every single sector.

• 21:50Harry Stebbings?

  And then your favorite newsletter or blog?

• 21:53Speaker 01

  The Economist Espresso. We did every morning, six AM.

• 21:57Harry Stebbings?

  Your productivity tools. What are your must haves apart from obviously Wunderlist from Chad?

• 22:03Speaker 01

  Yeah Slack and Wanderlist and they we have them integrated with each other. Um and then I use Inbox from Google.

• 22:10Harry Stebbings?

  And then Bitcoin, fly or die?

• 22:13Speaker 01

  Fly, but differently.

• 22:15Harry Stebbings?

  And then let's finish on the investment pipeline. Have we made any investments yet? What are we looking at? What are your thoughts?

• 22:21Speaker 01

  Close to a couple, but nothing we're ready to announce yet. We're very, very enthused, but not, not ready to announce anything yet.

• 22:29Harry Stebbings?

  Well, Kieran, thank you so much for coming on the show. It's been an absolute pleasure hearing the founding journey of Blue Yard.

• 22:34Speaker 01

  Thank you, Harry.

• 22:37Harry Stebbings?

  Absolutely fantastic to hear the founding journey of Blue Yard today from Kieran. And do not forget, if you would like behind the scenes footage of me and Matt Mazzio from Lowercase chatting about all things tech, Chris Saka and green stretchy bodysuits from Chris Saka, then do sign up for the newsletter on thetwentyminutvc.com, where you can stay up to date with all the new episodes and updates. And we would love to hear your thoughts on the new podcast brought to you by Sasta, which is Jason Lemkin and I basically bringing you all the latest and greatest from the world of SaaS. It really would be fantastic to hear your thoughts on that. And you can tweet us at JasonLK and at Harry Stebbings and your feedback really would be so appreciated.

• 23:20Harry Stebbings?

  Thank you so much as always for tuning in and we look forward to seeing you on Founders Friday.