#426: Ryan Denehy on How To Be A Startup CEO

Ryan Denehy is a 3x entrepreneur and the founder/CEO of Electric, which is revolutionizing IT support with the world’s first automated IT platform. His previous two startups were both acquired by public companies. In this conversation, we discuss the 3 jobs of a CEO, hiring and firing, the most underrated startup hire, how to communicate with a board of directors, and why you can’t outwork bad people. ======================= Get fresh, pre-measured ingredients and mouthwatering seasonal recipes delivered right to your door with HelloFresh, America’s #1 meal kit. HelloFresh lets you skip those trips to the grocery store, and makes home cooking easy, fun, AND affordable! Go to http://www. HelloFresh.com/pomp90 and use code pomp90 to get $90 off including free shipping! ======================= Athletic Brewing is re-imagining beer for the modern adult. We love beer. But we also love being healthy, active and at our best. No matter your motivation, if you want to keep a clear head and drink healthier, we are here for you. Athletic makes non-alcoholic beer that you don't have to compromise to enjoy. The beers are fully flavored, clean ingredient, and a fraction of the calories of full strength beer - they fit in any occasion. Check out http://www.athleticbrewing.com for more details and free shipping nationwide. ======================= Smart investors know being early is critical to success in crypto. CoinList is where early adopters invest in, earn, and trade the best new crypto assets before they list on other exchanges. Try CoinList Pro and be first to trade on network launch. Sign up via coinlist.co/pomp and earn $10 in BTC after you trade $100.

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Ryan Dennehy is a three-time entrepreneur and the founder and CEO of Electric, which is revolutionizing IT support with the world's first automated IT platform. His previous two startups were both acquired by public companies. In this conversation, we discuss the three jobs of a CEO, hiring and firing, the most underrated startup hire, how to communicate with a board of directors, and why you can't outwork bad people. I really enjoyed this conversation with Ryan, and I hope you guys do too. But before we get into the episode,

• 0:42Anthony Pompliano?

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• 1:26Anthony Pompliano?

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• 2:07Anthony Pompliano?

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• 3:01Anthony Pompliano?

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• 3:40Anthony Pompliano?

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• 4:24Anthony Pompliano?

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• 5:09Anthony Pompliano?

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• 5:52Anthony Pompliano?

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• 6:36Anthony Pompliano?

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• 6:54Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 7:20Anthony Pompliano?

  All right, guys. Bang, bang. I've got Ryan here with me. Thank you so much for doing this, sir.

• 7:25Speaker 02

  I'm stoked to be here.

• 7:26Anthony Pompliano?

  Absolutely. Let's jump right into your background. You've built and sold two companies and now working on your third. Kind of walk us through your journey to becoming a three-time startup founder and CEO.

• 7:36Speaker 02

  Yeah, very first company got started young. It was an online ad network called Banquet and basically we sold ads on other people's extreme sports websites. And so that was as big of a business as it sounds like. We were about a million dollars in revenue when we got acquired. It was sold the business to USA Today Sports on New Year's Day, 2008. I was in my junior year at Hofstra and barely graduated while, you know, trying to work for a public company and finish my work there.

• 8:11Speaker 02

  Stayed there for four years, had a good time. Ultimately, while I loved the ad business in some respects, I just couldn't see myself selling squares and rectangles on webpages for the rest of my life. I left in 2012 with my co-founder from that company, a guy named Rod Davis. Moved to San Francisco, started a company called Swarm. It was a retail analytics platform for small business retailers. So we could tell you foot traffic, conversion, sales in a web dashboard. That was a slightly better business. Still really challenging. We attempted to build our own hardware, which I would not recommend to any founder. But we ended up having a really great outcome, sold the business to Groupon in November 2014. And at that point, I moved back to New York. Run and I went our separate ways.

• 8:56Speaker 02

  He's, you and I are still, you know, best friends. He started a company though called Blackbird, which was later acquired by Surf Air, which will be going public soon through its back. So that worked out, has worked out really well for him. I got back to New York in 2016 and started Electric. And so the premise for Electric is pretty simple. We do managed IT support for small and midsize companies, but we sell it as a subscription SaaS solution with some services. So, you know, instead of having some, you know, the old way of doing it, right? Some random local dude IT consultant who takes a day to return your call, right? You work with Electric. We integrate with Slack and Microsoft Teams. You have a web-based dashboard. You have an awesome account manager.

• 9:39Speaker 02

  So we've really kind of modernized IT management. So that business is doing very well. We have about 250 employees, raised about $60 million. We're doing kind of mid eight figures in recurring revenue. And yeah, that's probably the fastest I've run through my highlight reel. So I'll turn it back to you.

• 10:00Anthony Pompliano?

  Explain what IT support is for those that don't know.

• 10:04Speaker 02

  Yeah, well, you know, nowadays in 2020, you know, what it means is basically three sort of major food groups. The first is SaaS management, right? So you've got companies now, the average business we work with is about 100 employees and they're using anywhere from 50 to 75 different applications, right? 10 years ago, you might've used five, right? So just SaaS management, doing that in a really cohesive, efficient, secure way, that's a big responsibility. Then it's device management. So if you have 100 employees or even if you have 20 employees or 200 employees, you got to make sure that those computers, that you know where they are, that they're secure, that they're running correctly. So we handle that. And then the third piece is network and server management. So if you have some physical infrastructure,

• 10:47Speaker 02

  making sure that that's running correctly, that it's secure, tie it all together into sort of, you know, one cohesive, easy to manage solution. So pretty straightforward.

• 10:56Anthony Pompliano?

  Absolutely. And one of the things that I really appreciate about kind of the way you approach building companies is you are very straightforward, right? So there's no kind of bullshit here. You're like, look, you learn on the job. It's really hard. If you're good at it, then it can be very rewarding. But like, the celebritization of founding companies and being a startup founder doesn't tell the whole story. And you basically through Twitter and kind of a bunch of different mediums, explain like, here is what it takes to do this. And maybe sometimes you do it well, and sometimes you don't do it well. But like, this is what it kind of entails. Where does that interest come from? Or like, why are you drawn to sharing that type of information?

• 11:37Speaker 02

  I think because I was so bad at my job for so long.

• 11:42Anthony Pompliano?

  That's a good reason.

• 11:43Speaker 02

  My first two companies were dumpster fires. You know, we ended up having good outcomes, but every possible mistake, I mean, we were talking about fundamentally flawed business models, mixed with the wrong talent at the wrong times, mixed with, you know, me and Rudd and I, when our first two companies, not knowing anything about how to, you know, manage the people who worked for us, not knowing how to manage up to the board. And so, you know, every day, it wasn't a question of like, oh, is today going to be a good day? It was like, how many fires am I gonna have to contend with today? And so, you know, it wasn't until, it wasn't until the tail end of my time running Swarm back in like, 2014, where I finally had been doing this for so long, and just screwing up enough things,

• 12:28Speaker 02

  that it just sort of clicked that like, this, you know, the sooner I can acknowledge that I suck at a lot of things, and the sooner I can get really focused on seeking out answers from people who have done the things that I've done before, like, the better I'm gonna get at the job. And the better I get at the job, the more fun I'm gonna have, and the more successful the company's gonna be. But it's just so hard, even if you think of yourself as a relatively high EQ person, it's so hard when you have, when you have all this confidence driving you as a founder, to also admit that you really don't have all the answers. And then in most cases, you're probably gonna be wrong, and that you've got to turn to other people to get the answers. So, once I saw the benefits of actually... Just kind of embracing that mindset.

• 13:12Speaker 02

  All of a sudden, I started learning faster. I started doing better. My company started doing better. And so to me, it's just something I'm really passionate about and like to talk about.

• 13:20Anthony Pompliano?

  Absolutely. So you've got this one tweet where you said, look, here's the three jobs of the CEO, right? You said recruiting, storytelling and awareness. Maybe walk us through why are those the three things that you feel like are the most important to focus on?

• 13:33Speaker 02

  Yeah, I mean, it's cliche at this point to point to the fact that like, oh, the team is everything. But it is right at the end of the day, like a software business is a completely fictional concept. Right? Like we don't sell anything. I don't have a warehouse full of electric licenses somewhere. I don't have it to sell, you know what I mean? Like, end of the day, like our company and really any technology business is just a collection of people who all generally believe in the same thing and agree to work on something together. Right? And so the quality of the company you build is entirely contingent on the quality of the people. And not just the quality of the individuals, but can I can I hire a group of people who are all going to work well together? Right? One of my, one of my board members, Tim Harvey, he, you know, he said this to me.

• 14:17Speaker 02

  It's like, dude, it took me till my third time being CEO to realize it's not about the best talent. It's about the best team. And those two things are not always the same thing. And so, you know, when I think back to my first, you know, my first two companies, almost every problem that we had, almost every business problem that we had was actually a people problem. Right? And I see this all the time when I get a founder who calls me and is like, hey, like I got a sales problem. And it's like, no, you have a, you have a people problem. And the people problem is that you actually have a marketer who's not delivering any leads. And you have a product person who's not shipping what the customers want. Sales are actually the least of your worries. Right? And so I think it's just, it can't be emphasized enough that the only way you're ever going to build a company

• 15:00Speaker 02

  that's, that's really going to be worth anything is focusing on the people first, focusing on the team. So, uh, so that's the first one. The second one, storytelling, you know, as a, as a, as a founder and CEO at every stage of the, of the journey. You're only as good as what you can get people to believe in, right? Metrics are great, but at the end of the day, if you're trying to secure financing, if you're trying to hire those great people to come work for you, if you're trying to get the story in front of the big customer, if you're trying to explain internally what's going on to sort of keep morale high, you have to become an expert at distilling things that are extremely complicated and frankly, most of the time, not that interesting.

• 15:44Speaker 02

  And make them very simple and very exciting. It's not dissimilar to like one of the core principles of pop music and like writing pop music is taking something that's really unique and making it so that everybody can understand it. And therefore, anybody can be a one-hit wonder as long as people get what you're doing. I mean, it's no different with storytelling in a startup. In fact, it's even more important. Like, how can you take something as unsexy as IT support and get to a place where people are throwing tens of millions of dollars at you and leaving their jobs to come work for you, right? So, and there's a skill to that, but you just have to do it a lot, right? And the third piece, which I think makes the first two work really well together, is awareness.

• 16:27Speaker 02

  You just have to have, you have to get to a place where you can be a spectator to your own thoughts. Right? So like every day, you're going to have stuff that blows up. Every day, you're going to have people mad at you. Every day, you're going to have things that you're uncertain about. But to be able to step outside of yourself constantly and say, "Why am I feeling this way? Why are things going this way? Like, am I doing a good job?" You can't, you can't let it get to a place where you just go into some like tailspin of anxiety. I mean, I've been there as have probably most people. But you've got to constantly be able to just get to a place where you can take a step back and really ask yourself the tough questions. "Is this going well? Am I being a jerk? Do I have the right people on the team?"

• 17:12Speaker 02

  You know, because ultimately, like, the most businesses that wind up being successful...

• 17:18Speaker 02

  It's because they avoided the things that killed them, more so than it was because they were really brilliant and executed on a bunch of amazing things.

• 17:26Anthony Pompliano?

  Absolutely. And one of the things that you talked about a little bit there in recruiting, but you've elaborated on is this idea that like, just as you can't out-train a bad diet, you can't outwork bad people on the team. Talk a little bit about how, I'm assuming you learned that lesson by experiencing it and then came to the realization, but kind of how do you think about that today?

• 17:49Speaker 02

  Yeah, I mean, everybody's been in a situation, particularly whether you're a business owner or you're a manager of people, or you're on a team that's where you're working with colleagues, where everyone at some point in their career has been in a situation where you're just going in circles, you're going in circles, you're in meetings, everyone's talking past each other, nobody can agree to goals, or you agree to goals, but you kind of know that no one's ever gonna hit them. And when those things start happening, almost always what that means is that is that you've got the wrong person on the team, or maybe it's the wrong, it's the wrong people. And I think that the problem that a lot of people have, I certainly had it, was that most people don't really know what excellent looks like,

• 18:32Speaker 02

  don't know what world class really looks like. And so it's easy to be in a situation where maybe you're managing somebody, or you're colleagues with someone, and they went to the right school, they have all the right experience from, you know, some other company they worked at, they're a nice person, seemingly, right? And so that it's, but you wake up six months later and you're like, we've gotten nowhere on this initiative, we've made no progress on this thing, and you're just continuing to go in circles. It's like, guess what? What's the common denominator? That person. Maybe that person's you, right? I don't know. But, you know, that's, that's, that's the single biggest thing, and we're CEOs often...

• 19:11Speaker 02

  Make mistakes and frankly nuke their businesses is that they have the wrong people on the team and they either take too long to realize that that's the root cause or they know that that's the root cause and they don't act fast enough.

• 19:27Anthony Pompliano?

  Yeah, one of the things that I think a lot of this gets back to is like communication, right? So it's the CEO communicating to the people, people being able to communicate back to the CEO and kind of horizontal and vertical communication. I remember at Facebook in 2014, when I was working there, basically product managers interview prospective product managers and they kind of have this unique hiring process. And that year I said, hey, I want to get much better at interviewing. So I just, every time there was an opportunity to do it, I would just volunteer and say, hey, I'll interview that person. And in it, one of the tracks is basically like a

• 20:05Anthony Pompliano?

  made up situation, like a war game almost, right? So you would say to somebody, hey, Ryan, you're in charge of this team here at Facebook. You go home on Friday, everything's great. Monday morning you come in and traffic to your product has dropped 50%. What do you do? Right? And basically you just talk through them and kind of as they begin to tell you what they would do, you would feed them more information. And I'll never forget that during that exercise, I probably did, I don't know, somewhere between 80 to 100 interviews in doing this. One person said, the first thing I would do is I would immediately alert every stakeholder that we had a problem.

• 20:38Speaker 02

  There you go.

• 20:39Anthony Pompliano?

  One person. And I remember being like, this person is the person that we need to hire because they've done this before. They understand how important communication is, like they're team oriented, like just all the things you're talking about. It was so interesting that only one out of all of these people jumped to, let me communicate first. Everyone else said, let me solve the problem. Let me jump in and try to figure out the answer. And I think that that is kind of the differentiation between somebody who's high quality and then somebody who may be good, but they're not kind of that world-class, highly experienced person.

• 21:11Speaker 02

  I mean, you're totally right. I mean, communication is the thing that either makes or breaks most relationships.

• 21:18Speaker 02

  Business or, you know, personal, right? And most people know that, right? And, and, and that's something that we've, at least at Electric, you know, the way that we run the company now is like, it, we've acknowledged the fact that it takes maintenance, it takes effort, it takes, you know, I was talking to my, my VP of Product this morning and, you know, we, we were talking about the fact that, yeah, as an executive team, we all came together very organically. Everybody kind of hit it off right off the gate. We did a bunch of hiring last year, so we basically doubled the size of our exec team about a year ago. One of the things that we were talking about is that there's this tendency when you have people who already are very aligned and getting along well and everyone's kind of clicking.

• 22:00Speaker 02

  There's a tendency to actually under invest in those relationships and say, hey, you know what? Like, hey, you know, me and Pop, we get along like we're all good. We don't, we, we don't need to set aside all this time. We don't have to, you know? It's the, actually, it's the opposite. It's that if you actually are lucky enough to have that chemistry with your coworkers or with your boss or whatever, those are the relationships that you want to double down on. And you have to be really, really intentional about cultivating trust and figuring out everyone's, you know, kind of unique communication styles and, and investing in the quality of those relationships. Because you're only going to get so far, sort of just getting there by accident or sort of getting there, getting there organically. And I mean, that's just where I've seen, just at other companies, you know,

• 22:42Speaker 02

  otherwise very high performing, high potential individuals just go sideways because of bad communication. And so I think that'll be, that'll be an issue most humans have probably till the end of time. But, uh, you know, it's an important thing to focus on because of that.

• 22:57Anthony Pompliano?

  We, we've talked a lot about kind of the executive team communicating with each other or also communicating with employees. You mentioned earlier, kind of managing the board or managing up to the board. And talk a little bit about kind of the communication there. And most CEOs, especially first time startup founders, they've just never had a board of directors before. And so kind of talk through a little bit about the relationship between being a founding CEO, the board, how you communicate and manage kind of those outsiders slash investors.

• 23:22Speaker 02

  Yeah, I mean, look, the board, the board is either going to be your biggest asset or at some point could wind up becoming very problematic. You know, most, most VCs have been doing this almost 15 years now. Like, most VCs really do want the founder to succeed. They want everything to go well, and they really want to have the founder's back. You know, Fred Wilson wrote a post recently about, you know, when it's time to fire the CEO. And I mean, even he said, look, it's only, you know, pretty extreme circumstances that that's, that's considered. But, but like anything, like what we were just talking about, you have to invest in those relationships. And so, one thing I did a really poor job with, I think in the early days of Electric and at my previous companies, was like, I didn't really understand or respect the fact

• 24:06Speaker 02

  that like, hey, the board, one, they're ostensibly my bosses, right? And so, like, you want to be communicating with your bosses a lot, too. You want to establish good relationships. But, but the third thing was like, the, the more open and transparent and clear and free the communication is, the more trust you build every time an email update goes out, every time a text message comes in, right? And the more trust that's built there, the, the more productive those relationships become. So like, in the early days of Electric, you know, I would get an email from like, you know, Bob Goodman at Best of Burden, he'd be like, hey, we should catch up. And I'd be like, oh shit, oh no, like, Bob wants to talk. And it's like, I'm just like one of a dozen portfolio companies, and he hasn't heard from me in a while, and he's curious what we've been up to, right? And I would rush and try to put together some big update, and it would be like this

• 24:51Speaker 02

  kind of awkward conversation. And I remember before we raised our Series B, he, you know, he called me and he's like, he's like, hey, so, he's like, you know, you really got to step your game up, you know? We're going to be bringing in some big money for this next round, and, you know, I think you just really got to step up the professionalism with how we kind of manage things. And, you know, once Jeff Richards from GGV, he led our, our Series B, great podcast that you guys did, by the way, a few weeks ago. Um, you know, he came in, I just kind of used that as like an opportunity to sort of turn over a new leaf and say, all right, everything, good, bad, and ugly, I'm going to be clear, I'm going to be concise. Anytime I have news that is material to the business, it's boom, it's, it's going to go to them. It completely changed my relationship with the board. You know, I send them updates almost weekly.

• 25:35Speaker 02

  They're not formal. You know, for example, our professional services group hit a big milestone on Sunday night. I just forwarded the email from the guy who runs that department of the board. And the board's like, hey, this is awesome. Great, thanks. Little bit of stuff like that every single week. By the time you get to the board meeting, everyone's like, not cool. Like, we know what's going on. Let's talk about the strategy, right? But it's just so hard for a first time founder, I think, and even some multi time founders to wrap their head around the fact that like your board, they are your friends, or at least they want to be. Okay, so you've just got to be honest and you've got to communicate often with them.

• 26:09Anthony Pompliano?

  One time, somebody said to me, the problem with boards and startup founders, especially first time founders who don't yet understand how to use the board, is that founders look at the board as a fundraising fundraising mechanism, right? They look at them as a potential problem solver. And then always looming over their shoulder is the board could fire me, right? Or the board could be adversarial in some way. And what he said is, the thing that people don't realize is like, if you tell others your problems, the right people will try to help you solve them. And who better to try to help you solve your problems than the people who are financially aligned with seeing you succeed? He was like, that's the key. Just continue to communicate good, bad, or ugly to them, and they will help you.

• 26:49Speaker 02

  Yeah, like in some ways, you know, I kind of like look at part of, I mean, ultimately, I'm responsible for everything, good or bad, that happens in the business. And I take that responsibility very seriously. But there's a part of the startup CEO where in some ways, you're also a little bit more of like the weatherman in the sense that it's like, it's also just your job to sort of report stuff and have a dialogue about why it's going to rain on Tuesday, not like thinking, oh, they're going to yell at me because it's going to rain on Tuesday. Like, it is what it is. You just have to be able to have the dialogue. And like, actually, Jeff Richards is a really good example of somebody who. You know, believes in that, but actually, you know, really embodies that as a board member. You know, we, we, right after he invested, we, we, we hit a little bit of a rough patch with, with the business.

• 27:34Speaker 02

  And there was some stuff that we needed to fix. And I called him and I was just like, dude, I think we got to take some growth projections down a little bit. I think we got to make some staff changes. Like, I know this is a little sudden after, you know, we got the deal done. He's like, he's like, dude, I don't care. He's like, I'm, what I care about is the next five years, not the next five months. And he's like, I'm just glad you're calling and telling me now, not six months from now or a year from now. We got a much bigger problem on our hands, you know? And it's like, what ends up happening and the advice I would give a lot of founders is like, I can't tell you the feeling of relief that will wash over you when you have the hard conversation, because it's never as hard as you think it's going to be. And you're going to walk out of your office that night going, wow, oh, man, like now that's off my chest.

• 28:18Speaker 02

  You can actually start solving the problem.

• 28:20Anthony Pompliano?

  Yeah, I wish I had that conversation six months ago or three months ago.

• 28:23Speaker 02

  Yeah. Well, you know what I saw? Cause when I was at USA Today and when I was at Groupon, you know, both were public companies in the midst of, of, you know, pretty colorful turnarounds, right? And so I think part of what gave me the, the motivation to be more proactive on having the hard conversations at Electric was living through, you know, two turnarounds at public companies and watching what happens if you just bury problems forever and ever and ever. It's like, guess what? Then someone who's not you is going to come in and flip the lights on and start rummaging around in your business and start telling you how to make the sausage. And usually that ends up with you not having a job anymore. So it's entirely avoidable.

• 29:01Anthony Pompliano?

  Absolutely. You talked a little bit earlier about when you have the wrong people, being able to kind of get rid of them and get the right people in there. One of the things that I've seen in founder after founder after founder that is very hard for them to get comfortable doing is firing people. Talk a little bit just about kind of your own experience with having to fire people and kind of how you've gotten more comfortable with it over time.

• 29:25Speaker 02

  Yeah, I mean, look, it sucks and everybody at some point in their career goes from having never fired someone to having to let somebody go for the first time. And, you know, I remember back in my first company, right after we got acquired by USA Today, we had a guy in the team who I was always complaining about. I just didn't think was the right fit. And so I reported to my co-founder, Rudd, because he became the GM of the group once we got acquired. And he ended up getting promoted. I became the GM and he's like, first order of business, you gotta let go of that guy you've been complaining about for the last three months. I never fired anybody before. I was, I mean, I was, I wanted to call out Sid for the whole week. So, so I went home and I watched Hard Knocks on HBO because, you know, what I found was that these NFL coaches are really good at letting people

• 30:10Speaker 02

  go, you know, because they have to release like half the squad, you know, before the season starts or whatever. And so I just watched a bunch of Hard Knocks episodes and I was like, okay, like, you just gotta be, you gotta be direct, you gotta sit down, you just gotta kind of gotta do the thing. So whatever. So I got through it and it ended up, ended up being fine. But, but sort of fast forward to today, the, the biggest thing that we've realized is that you're never going to bat a thousand, you're never going to hire, always make the best hires. The key is being really clear in the expectations in the first, you know, month, two months and figuring out as soon as possible. And then, you know, what I always tell the company is that all attrition is regrettable, right? If we realize that we've, that we've hired somebody and they're not living up to the

• 30:55Speaker 02

  standard that we, that we want at the business, that's our fault. We shouldn't have hired them and we should have figured that out before we extended them an offer, before they left their job, before they came over here, right? And so, so that's always been my stance at the team here is like, it's always our responsibility if someone's not a fit. And so, and we have to treat it as such. And so as a result, one, we're really clear about expectations so that it's, it's not a surprise, though no matter how hard you try, it always is for some people. And then the second thing is, we try to be pretty generous with, with severance, more so than one might be for somebody who might have only worked at your company for a month, just because. Our responsibility, you know, we're half the reason that we ended up in that situation.

• 31:38Speaker 02

  And so I think if you can, if you're clear with people and you're a real, like a decent human being about it, send the message to the rest of the Yorg and to that person, wherever they end up next, that, you know, that you're the kind of company that cares about people.

• 31:52Anthony Pompliano?

  Absolutely. One of the things I'm really interested in is as you guys continue to build Electric and you're providing this IT support, you've got all the internal challenges and just kind of being the CEO, running a business, growing it. But there's also some challenges that your customer base has experienced with the COVID-19 pandemic, the economic shutdown. Talk a little bit just about how you've been able to balance dealing with your internal just scaling obstacles that every business is kind of goes through, but also then having at the same time, your customer base go through just changes, right? Some of it, some of your businesses may actually be benefiting from it, some of it may be being hurt by it, but just how have you guys thought through that or how to deal with that?

• 32:33Speaker 02

  Yeah, well, I'll tell you what's been really interesting is that the more internally focused we get in terms of hiring great people, taking care of them, you know, fostering really productive dialogues around tough issues, makes us better with how we deal with our customers, right? And so I'll sort of explain that, but you know, if you think about, if there was ever a year to sort of like earn your stripes as a, as a CEO, like this, this was definitely one of them, you know, between, between COVID, between, you know, a lot of the things that are happening, you know, socially and politically. And what's different now versus, you know, even five years ago, is there's a much different expectation put on CEOs, particularly startup CEOs, around their stance and their voice

• 33:16Speaker 02

  and their involvement in these things that are, that, you know, that are, that are happening in the world. And so I think the, the challenges that I've seen other companies run into are that, you know, these founders and CEOs get so paralyzed over, you know, being afraid to say the wrong thing, that they either wait too long, they say nothing, or they don't really say anything at all, right? They issue some bland statement that was run through marketing or whatever. And at the end of the day, as I said before, it's like, companies are a collection of people, right? And so what the employees want, and ultimately what your customers want, is they want to hear from you, the human being, they don't want to hear from you, the venture-backed CEO who's watching every single word.

• 33:58Speaker 02

  Now, obviously, you have to exercise some discretion, but for example, you know, back in the beginning of June, or that last weekend in May, you know, when there were, you know, a lot of the protests started happening in, you know, across America. Yeah, it was Saturday afternoon, I was standing in my kitchen and I was like, I was like, shit, like, I don't know why I have to address this. We have a very diverse, you know, group of employees here, like, what do I say, what do I, you know? And finally, I just like, God, I was standing in my kitchen, I get on my phone, and the first thing I said in the email was,

• 34:32Speaker 02

  "I haven't sent this email yet because I was afraid that I was going to say the wrong thing, or that it was going to come off disingenuous." Like, I literally just, I opened the email with that, just to let everyone working here know, like, "I don't really know, but here's how I feel, and I'm just going to put some words down on paper." And the response is amazing. People were like, "I'm just glad you said something, glad you spoke from the heart." And so, you know, in contrast, I'm on a bunch of CEO, like, email threads and stuff. I saw a lot of companies just get smoked because the CEO would hide in a room with their head of HR for a week, saying nothing. And it's like, I think when in doubt, you just got to default to, uh, you know, you got to think of your employees almost as if they're an extension of your friends or your family. And it's like, what would you say on a phone call with a sibling or a friend, right?

• 35:16Speaker 02

  Kind of treat it like that, don't overthink it.

• 35:19Anthony Pompliano?

  Yeah, and I also think that this idea of setting expectations is really important as well. Like, by simply saying like, "Hey, I haven't sent this because I've been scared of saying the wrong thing." Like, you're taking ownership of the fact that, like, here's why this hasn't gone out yet, and two, by the way, here's my vulnerability. So if I say the wrong thing, like, I was already worried about that. Right? And it almost is, in some weird way, when you tell people, especially in communication, the vulnerability, it seems like they immediately become much more empathetic in the way that they kind of receive the message, and also they're much more understated.

• 35:49Anthony Pompliano?

  Standing if maybe they disagree with you, right? Or they they have a different viewpoint. It's just like, hey, look, Ryan's doing the best he can with the information he has and like, so am I. And we may not see eye to eye on especially really polarizing controversial topics. But I appreciate the fact that the person who's leading the company I work at has the courage to say what he believes, how he believes it, and kind of help us all move forward together. Right?

• 36:15Speaker 02

  Hundred percent. I mean, look, everybody, I think about this all the time, like, every person on the planet has some battle they're quietly fighting, some more publicly than others, but like, everybody's got something inside that's not going well, some vulnerability, whatever. And so, you know, I think as a leader, as long as you can just show people that like, you're just like them too. I think it gives you a lot more leeway in terms of, you know, not, not, it sort of diffuses any tension that might be there. People just look at you like a human. I mean, we did, I sent a note out yesterday, you know, ahead of the election, I basically, you know, what I opened it with was like, listen, I have no unique point of view on politics or election law or anything like that. Okay. But here's a few things that are purely fact based

• 37:00Speaker 02

  that I think we should all take into consideration. Yeah. And I think in the, and the note went over well, because ultimately I was just saying like, I'm not an expert on this, but like, here's some facts, just so that we can all, you know, kind of align on a few things. And that type of stuff goes over well with people.

• 37:14Anthony Pompliano?

  Absolutely. One of the things I've been really interested in too is, and we will close on this, is just as the CEO of a business, there's lots of social issues now. There's obviously the election kind of uncertainty. There's just a lot of non-business activities that are going on. And, you know, I always joke and say that if companies were purely capitalistic in nature, and they didn't worry about anything else other than optimizing profits, then there would be no politics in the workplace. There'd be no social issues that you'd ever have to deal with. Like, it would just be machines, basically, right? Every company would just have like, none of the other things that they have to consider. Obviously, though, these companies are made up of people, as we've been talking about. And so those people have political ideologies, they have certain positions on social issues. We've seen CEOs.

• 37:59Anthony Pompliano?

  Kind of take a couple of different approaches. Some CEOs say, hey, look, we want you to express your opinion here. We want you to kind of feel comfortable having every conversation you'd possibly want. We've also seen the other end of the spectrum, you know, kind of the Coinbase approach of like, hey, we are a mission focused company and there's no room for politics in the workplace. How do you, maybe not so much just like which end of the spectrum are you on? But just how do you think through the aspect of like, the people who work here have other interests other than just coming to work here every day and operating like a robot? And how are we going to kind of deal with that along with trying to build the company?

• 38:37Speaker 02

  Yeah, well, okay, so I think the first, the first thing in just sort of going back to sort of the early stages of company building is the most overlooked hire in every startup is a great head of people. Right?

• 38:52Anthony Pompliano?

  Why?

• 38:53Speaker 02

  It's a combination of HR and talent, right? So we hired a VP of people, Jamie Coakley a couple of years ago. And I can't tell you how big of an unlock that is for me as a CEO for the rest of our leadership team. To have somebody, if we all believe that a company is just a collection of people, to have somebody whose sole focus is, is to just look after sort of the health and wellbeing of this group of people. Right? It's just companies wait, wait, I mean, we waited too long, but we nailed it. And it really, you know, nailed the hire and ultimately got around to it. But companies wait way too long. And the reality is like, if you believe that, that the people side of the business is that important, you just, you have to invest in having somebody to sort of run that. So that's, that's a huge thing that most companies overlook that you just, you gotta, you gotta get it dialed in.

• 39:38Speaker 02

  The second piece is what, what I always try to get people to understand and what we really believe in here is that

• 39:46Speaker 02

  using the company as a force for good is inherently a competitive advantage and a force for good. So I don't care, you know, how, you know, sort of how rigorous your like moral compass is. At the end of the day, if all you are is just a purely capitalist profit driven person, it's still better business to be a good human and to be inclusive and to have a diverse, you know, team and a diversity of opinions. And so, you know, for us, I think when, you know, back in, you know, June, July, when a lot of companies were announcing like, oh, we've donated a hundred thousand dollars to the ACLU or we did this, we did that. Hey, look, that's fine. That's, those are all, those are all really good causes, but. Internally, we looked at it and we said, our payroll is going to be $35 million next

• 40:29Speaker 02

  year. If we can can make our recruiting processes even a little bit more diverse, a little bit more inclusive, I have a $35 million money cannon that can actually create real change in real communities, right? And so, you know, and the sort of follow-on effects that that has in terms of the company culture that you build and productivity, all that stuff, it's all very obvious. You know, Salesforce is a great example of a company who I think really led the way on this. You know, Mark was his like 111 kind of pledge approach. And I can't tell you the number of Salesforce executives who I've spoken with over the years were like, that's a big reason they went there and it's a big reason they stuck around. So, you know, I don't know if that directly answered the

• 41:13Speaker 02

  question, but we've tried to orient the company really around that is like, how do we use the whole thing as a force for good? And then, and then in return, you know, we have a diversity of employees who all have different opinions and different things that they care about. But like, at the end of the day, they recognize that we're trying to do good and running this company. And as long as their opinions and their interests don't, don't hurt anyone, then, then that's what diversity is all about. We support it.

• 41:39Anthony Pompliano?

  Yeah. What's so interesting about your answer is it really highlights just the complexity of all of this. There is no black or white answer, right? There is no kind of single magic bullet of like, hey, here's the pot, the position to take. And if you take that position, then it's going to solve all your problems. Like, there is complexity, and that's ultimately a net positive if used the correct way. So I think that makes a lot of sense. I always wrap up every interview with the same two questions, and then you'll get to ask me one question to finish it. The first question is, what is the most important book you've ever read?

• 42:14Speaker 02

  That's interesting. It's gonna be.

• 42:18Speaker 02

  A less shallow answer than it probably sounds like, but when I was in high school, I used to walk around with a copy of Barbarians at the gate. And I probably read it five times. And it was, I think, you know, I hadn't, I was just in the early days of starting a business, but it just, it was so colorful and so fascinating reading about these crazy, you know, leveraged buyouts and all this stuff, which I had no, you know, didn't know anything about that stuff at the time. But like me as a high school kid realizing like, yo, this is, this is business, like, you know, it just, it just opened my eyes to just, you know, what, you know, kind of what was possible and just how gnarly things were. And so, I mean, I've read plenty of books that are, that are much more

• 43:02Speaker 02

  impactful, you know, professionally, I'm staring at a copy of Tape Sucks, which is Frank Slootman's book, which is awesome. I've already read it twice. But now Barbarians at the Gate, I think because I read it as a 16 year old was hugely influential.

• 43:17Anthony Pompliano?

  It's a great book and Tape Sucks is another good one. So those are two good suggestions. What about the second question, which is more fun? Aliens, are you a believer or a non believer?

• 43:27Speaker 02

  I big time. I mean, come on, you can't, you can't, if you just, if you just look at the data statistically, there has to be alien life. It's we had a, in one of our weekly exec team meetings, we went off on a tangent for 10 minutes at the, at the beginning of our meeting and we like genuinely debated it. And I think we, we all came to the conclusion like, there are for sure aliens out there. And maybe it's like some worm on some, you know, moon outside of some random planet, or maybe it's intelligent life, but it's definitely out there.

• 43:57Anthony Pompliano?

  Yeah, I tend to agree with you, but we'll, we'll, we'll see. There's some deep signal coming from the galaxy supposedly. I was reading this morning. So we'll, we'll see what's going on there. You could ask me one question to to wrap us up. What do you got for me?

• 44:09Speaker 02

  Well, yeah, seeing as how your listeners are a lot of folks who are kind of hobbyist investors in one way, shape or form or another, what's one trend, whether it's a trend, an asset class, an individual company, though you probably don't want to be giving stock tips on air, but what's one thing, if you had to place a bet that you think is an overlooked bet for 2021 for people who are investing, what would it be?

• 44:36Anthony Pompliano?

  Yeah, so I don't know if there's necessarily one, there's probably just a theme, and the theme that I always talk about is like the fringe of society. So right now, if you said to me, like, what are the things on the fringe of society that maybe like your weird friend is into, right? It's kind of the way I think about it. And like that one weird friend who you're, you can't figure out, like, are they just weird, or are they actually smart and just thinking about different things? But like, okay, so space, psychedelics, cryptocurrency, right? I mean, like, that's all the things that everyone's got that friend who's always like, on the tip of the spear of like, the weird stuff. Well, what we found is that weird stuff usually makes its way into the mainstream, right? Or some good percentage of it. And so just take the three things I just named there, like, space, now's not weird. Like,

• 45:19Anthony Pompliano?

  now everyone's like, yeah, of course, like, space is going to become much more popular. 10, 15 years ago, like, that was kind of fringe. Like, you're telling me you're gonna like, launch a rocket and then re-land it? That was a crazy idea. I think cryptocurrency, maybe like, five years ago was super fringe?

• 45:32Speaker 02

  Yeah, I'm literally having flashbacks to being at Zach Prince's apartment in 2016, and he takes a sip of his drink, and he's like, Daddy, have you been buying any Bitcoin? And I'm like, you're nuts. You're crazy.

• 45:46Anthony Pompliano?

  Right? So like, five years ago, crypto was like, super fringe. You have that one friend, Zach Prince, who ends up going to build BlockFi, right? Who's like, kind of like, out there. Now, I think psychedelics is a huge place, right? Although, like, the drug decriminalization that's happening, like, there's just a whole area there that, like, I frankly don't understand really well.

• 46:06Speaker 02

  There's a great company called Mindbloom, another friend of mine, similar to the Zach Prince story, but a few years later, my buddy Dylan, he goes, hey, I'm starting this company, it's ketamine therapy. And I was like, you're nuts. You're gonna get VCs to give you money to send people ketamine in the mail. And, you know, I'm already regretting not investing. So I think you're totally right with this recommendation.

• 46:28Anthony Pompliano?

  Yeah. And so, like, the reason why I say it's a theme, more so than just like, one asset class, if you will, or one kind of industry, is Okay, we just identified three. There's probably 10 more that like that one friend is already thinking about that just hasn't seeped enough into like the mainstream for like me to know about yet.

• 46:45Speaker 02

  Well, think about like esports, right? Like there's going to be a professional gaming league for World of Warcraft. 10 years and people are like, no.

• 46:54Anthony Pompliano?

  Absolutely. And if you again, uh, play VS, right? If you look at like what Delane's built there.

• 46:59Speaker 02

  Oh, yeah.

• 47:00Anthony Pompliano?

  They basically built an entire national system, uh, that mirrors the NCAA, right? But for gaming across all these schools. And so it's just, I think that a lot about like, investors are rewarded for one being early and two being right. And a lot of times when you're early, that means you have to do something different than everybody else. And so like, sure, are there people that will spend all of their time trying to figure out, you know, is Starbucks current, uh, revenue multiple too high or too low? And what's the future earnings, uh, based on, you know, their rollout plan and their, and their international expansion and like, oh, sure. And there's people who are good at that. That's not me, right? And that's not where my interest lies. Instead, my interest is much more in like,

• 47:42Anthony Pompliano?

  what's that next thing that people are going to be talking about in five years? That they're like, wow, remember when I was talking to Ryan and Ryan mentioned to me like this thing and I thought he was crazy? Well, now it became a thing.

• 47:52Speaker 02

  I mean, I remember when I had, you know, my, my best, my best performing seed investment to date has been a company called Stadium Goods. Uh, these guys raised less than $10 million, sold for $250 million to Farfetch'd. That stock is now ripping. Was awesome outcome for everybody. But I remember in 2015, when they started the company, you know, and I was trying to make interest to investors for, for Jen and John. And then people were like, oh, I don't know. Like, are people going to care about sneakers, particularly like used ones? This and that. It's like, dude, streetwear literally is, is the next wave of high fashion for, you know, millennials and Gen Z. And it's like, so yeah, I don't know. I feel like if I could, if I could sum up this, this, this whole podcast, that my two big takeaways are. Be a good human and bet on the fringes.

• 48:37Anthony Pompliano?

  That is a fantastic way to wrap this up. Where can people find you on the internet or find out more about Electric?

• 48:44Speaker 02

  Yeah, so the best thing is if anything I said about Electric sounds interesting, just go to electric.ai. And if you want to find me on social, I am @DennehyXXL on all platforms.

• 48:58Anthony Pompliano?

  Awesome, man. Listen, thank you so much for doing this. I think people are really going to like this one and hopefully people will have a bunch of takeaways. So I'll do it again in the future.

• 49:05Speaker 02

  Yeah, looking forward to it. Thanks.