20VC: Investing; A Game Of Access Or Picking, Why Technical DD At Seed Is Irrelevant & Why A Contrarian Mindset Does Not Always Lead To Optimal Returns with Leo Polovets, Co-Founder & General Partner @ Susa Ventures

Leo Polovets is a Co-Founder and General Partner @ Susa Ventures, one of the west coast's most exciting new seed funds. They have investments in the likes of previous guests RobinHood, Flexport, Andela, LendUp, and Qadium, just to name a few from their stellar portfolio. As for Leo, Prior to Susa, Leo was one of the first engineers at LinkedIn in 2003, then worked on payment fraud detection at Google, then designed and built the data cleaning and deduping engines at Factual. He is an angel investor in over a dozen companies, including DataFox, Boomtrain, Lumoid, and Momentum Machines. In Today’s Episode You Will Learn: 1.) How Leo made the transition from the world of operations with LinkedIn to co-founding Susa Ventures? 2.) How does Leo evaluate the supposed success that comes from investing with a contrarian mindset? This that the only way? Is investing merely a game of access without picking? 3.) If one is to follow the crowd, there is often a high price? What is Leo's approach to valuation sensitivity? At what stage does price become unreasonable? How does Leo instill a sense of disciple and rigor in maintaining this mindset? 4.) How does Leo react to founders who raise large sums of capital on slowly increasing caps? How central should dilution be to the mindset of founders when raising? 5.) Why does Leo think there is very little valuable to be gained from enaging in technical due diligence at seed? What else does need to be examined pre-investment? Items Mentioned In Today’s Show: Leo’s Fave Book: Traction: A Startup Guide To Getting Customers Leo’s Fave Blog: Mattermark Daily, 25IQ Leo’s Most Recent Investment: TalentIQ As always you can follow Harry, The Twenty Minute VC and Leo on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Foundersuite makes the leading CRM for raising startup capital. Since March of 2016, Foundersuite customers have raised over $130M in seed and venture capital. Foundersuite’s CRM sits on a database of over 50,000 investors, which will help you quickly populate your fundraising funnel including a beautiful and easy-to-use investor update tool, and the recently launched a new portal that helps investors and accelerators track their portfolio companies on a single dashboard. For a whopping 40% off a Monthly or Annual subscription use the code “20MinuteVC” at checkout. Greenhouse Software designs tools that help companies hire great people and ultimately build better businesses. Greenhouse works with over 1,500 of the world’s most innovative companies such as Airbnb, Slack, Snap Inc. and Lyft. A wrong hire is not only costly for a company but can also turn an employee into an unhappy one. With Greenhouse’s Applicant Tracking System, companies can make well-informed decisions and hire qualified candidates who are empowered to do the best work of their careers. Anybody who has a company that’s scaling quickly but has trouble hiring and retaining the right people. Visit www.greenhouse.io today to discover how your company can grow.

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 you can see more from me and behind the scenes on Snapchat at H Stebbings with two Bs. It would be fantastic to see you there. However, to today's episode and I'm so thrilled to welcome a guest I've wanted to have on the show for a long time. Having had his partner Chad Byers on the show many months ago, I've become immensely excited by the Susa Ventures portfolio. So I'm thrilled to welcome Leo Polovets to the hot seat today. Now Leo is a co-founder and general partner at Susa Ventures, one of the West Coast's most exciting new seed funds. They've made investments in the likes of previous guests Robin Hood, Flexport, Andela, LendUp and Cadium, just to name a few future unicorns from their stellar portfolio. As for Leo, prior to Susa, Leo was one of the first engineers at LinkedIn in 2003.

• 0:41Harry Stebbings?

  He then worked on payment fraud detection at Google. He then designed and built the data cleaning and deduping engines at Fatchel. He's also an angel investor in over a dozen companies, including Datafox, Boomtrain, Lumoid and Momentum Machines. And I do also have to say a big thank you to Chad Byers for the intro to Leo today, without which this episode would not have been possible. But before we dive into the show today, you must check out Founder Suite. Founder Suite makes the leading CRM for raising startup capital. Since March of 2016, Founder Suite customers have raised over $130 million in seed and venture capital. Founder Suite CRM sits on a database of over 50,000 investors, which will help you quickly populate your fundraising funnel, including a beautiful and easy to use investor update tool and the recently launched new portal

• 1:23Harry Stebbings?

  that helps investors and accelerators track their portfolio companies on a single dashboard. Founder Suite is used by startups in Y Combinator, Techstars, 500 Startups and every other major accelerator. And listeners of this podcast can get a whopping 40% off a monthly or annual subscription using the promo code 20MINUTEVC at checkout. That's 2020-minute VC. Check it out today and take advantage of this exclusive offer. Speaking of incredible software, Greenhouse Software designs tools that helps companies hire great people and ultimately build better businesses. Recognized as the 2017 Best Place to Work in the US by Glassdoor, Greenhouse currently works with over 1,500 of the world's most innovative companies such as Airbnb, Slack, Snap Inc. and Lyft.

• 2:05Harry Stebbings?

  A wrong hire is not only costly for a company, but can also turn an employee into an unhappy one. Greenhouse's applicant tracking system, companies can make well-informed decisions and hire qualified candidates who are empowered to do the best work of their careers. Anybody who has a company that's scaling quickly but has trouble hiring and retaining the right people, visit greenhouse.io today to discover how your company can grow. However, enough from me, so I'm now delighted to hand over to Leo Polovets, founder and general partner at Susa Ventures.

• 2:34Harry Stebbings?

  Leo, it's such a pleasure to have you on the show today. Huge thanks to your fantastic partner and former guest Chad Byers for the intro, but thank you so much for joining me today, Leo.

• 2:43Speaker 01

  Thanks, Harry. I'm really excited to be a guest.

• 2:45Harry Stebbings?

  Now, I'd love to get started today by discussing how you made your way into what I call the wonderful world of VC.

• 2:51Speaker 01

  I think like many of your guests, I ended up stumbling into it by accident. So my background is I was a software engineer for about a decade. I was really lucky in my career. One of my first jobs is I joined LinkedIn back in 2003, right when they raised their Series A.

• 3:04Harry Stebbings?

  Wow.

• 3:04Speaker 01

  So, you know, like I said, I was really lucky. I happened to know one of the co-founders from an internship I had in college. And so I spent a couple of years there, just when the engineering team was like five, six people most of the time, got to work on a lot of cool projects like LinkedIn Jobs and LinkedIn Group. And just really enjoyed that experience. Like when I came into it, I didn't know a thing about startups. You know, that was, that was a very informative career move for me. And so I spent a couple of years at LinkedIn and then went over to Google where I worked on payment fraud detection for about three years. They had a PayPal competitor called Google Checkout. You know, I was basically one of the people writing code to try to find and stop fraudulent transactions, like people using stolen credit cards and things like that. And so I spent about three years there, you know, really liked it, but then really started missing the feel of a small company.

• 3:45Speaker 01

  So I started looking around to go back to a startup and ended up joining a really cool company in LA called Factual, which provides location data to others. So, you know, if you, if you have like the Yelp app open and you're trying to find places nearby, you know, a lot of times when you have mobile apps like that, Factual is the one providing that location data. So I spent four years there. By the end, you know, I, I felt like I'd grown quite a bit as an engineer and was ready to maybe start my own company. But I think there are two types of founders. There's the kind that they'll just dive in and figure it out. And then there's the kind that are really methodical and they want to, you know, go read a bunch of books and talk to a bunch of people and learn as much as they can before trying something. And I'm definitely more in the second camp. And so. Trying to figure out, I've been at a couple of companies when they were going from fifteen people to fifty, but I'd never seen that one to five, one to ten stage. So I wanted to learn more about it.

• 4:28Speaker 01

  And by coincidence, a week after I left Factual, one of my friends came up to me and said, hey, we're starting a seed fund. We have a couple of business partners and we want to have a technical person on the team to help us do like, you know, the tech evaluations, do you want to try it out? And that to me seemed like such a cool opportunity that I had never anticipated and didn't think I'd ever get again. So I decided I'd do it and I thought I'd do it, you know, maybe for a year, maybe to use that as a way to learn about, you know, what it's like to build an early stage company and then go out to build my own company. And what happened instead is I fell in love with the VC job and, you know, that was about four years ago. And so I've been at SUSE Ventures ever since.

• 5:00Harry Stebbings?

  What fantastic, anyone that loves the VC world as much as me is automatically a great guest. Um, but I do want to start today. Uh, as most of my listeners will know, I love the theme of being contrarian. So, uh, something I always love in a guest is the contrarian thoughts. But you're so contrarian that you even disagree with being contrarian. So talk to me about this and why this is.

• 5:24Speaker 01

  I would say I'm not, I'm not against being contrarian, but I definitely don't think it's the only path to success. I think what's really important is just to be, you know, a critical thinker and to really look at, you know, e- each investment opportunity you see thoughtfully and critically. And, and sometimes that gets you to a contrarian point of view and sometimes it gets you to the consensus viewpoint. And I think you can make money with either view. And so, you know, on the contrarian side, it's great because you have no competition. You know, you see some investment, you're the only one that wants to do it, that's great. On the consensus side, there are definitely companies where everyone thinks they're going to do well and then they end up doing well. And so the challenge is, you know, if the company can take two or three funds at their seed round and there's ten or fifteen or twenty funds that want to get in, like, how do you become one of the, the small number that actually does get to get in?

• 6:06Speaker 01

  And so I think, I think you can make a lot of money on that side too, which is, you know, having a great reputation, a great brand, uh, being able to really help founders. They will let you in into an obviously good opportunity. There's nothing contrarian about it. It's just going to be a good company.

• 6:19Harry Stebbings?

  No, that makes perfect sense. I mean, it, it does lead to a, a belief that I hold that most don't agree with me on. And I normally get shot down wherever I say it, but I fundamentally don't think that venture is. A game of contrarian thinking. I think it's a game of access. So with that in mind, I mean, do you agree with that access not picking thesis?

• 6:38Speaker 01

  Do you mind if I add something to the last answer? Cause I had a couple of thought experiments that I thought.

• 6:42Harry Stebbings?

  Yeah, I'd love to hear them.

• 6:43Speaker 01

  Okay, so I I think, you know, on the on the access versus contrarian side, I think two kind of thought experiments that might help. And one is, you know, the first experiment is like, let's say you're an amazing founder coach and every time you work with a founder, you really help them. And helps them get to the next level, maybe like helps them get to, you know, building a public company. And a couple of top funds like the Sequoias and the Excel's notice, and they give you a deal where if you advise their founders, they'll give you a hundred K or two hundred K. Valocation every round you do. So if you had a fund that just did that, where all you did was follow on to these other top funds, like that would be an amazing investment vehicle. And there's nothing contrarian about it. Like, all you do is just follow the good investors. So that's the first thought experiment. The second one is, let's say like a really great founder starts a company tomorrow like Elon Musk.

• 7:24Speaker 01

  And he says, you know, I want to do a seed round. I want some people around the table to to chat with. I'm gonna raise five million dollars at a twenty million dollar valuation. I bet almost every VC in the valley would want to invest and there's a good chance it's a great investment. And again, there's nothing contrarian there. Like, everyone knows Elon Musk's a really accomplished guy. There's a good chance this next company will be successful. So the trick is not being contrarian there. The trick is if a thousand people want to invest, how do you become one of the, you know, two or three or four that actually gets to do it?

• 7:49Harry Stebbings?

  I- indeed, often when it's such a competition, there's real pressure on pricing. And many investors gain access through overpaying on the rounds. I'm intrigued. What's your take on valuation sensitivity?

• 8:01Speaker 01

  Yeah, so I think there's there's kind of this myth that if you see the next Uber or Facebook or whatever, you should pay any price to get in. And I think there's definitely some truth in that, but I think the problem is that for a lot of VCs, almost every company you see, if you're investing. You have some kind of belief that it could be the next Uber or Facebook. And the problem is, you know, if you overpay by fifty or hundred percent. For one deal or two deals in a thirty deal fund, that's not a big deal. But if you do it for all of your deals or most of your deals, now your cost basis may be doubled. And now that means that, you know, even if you would have had like a great Forex fund, now it's a two X fund because you paid twice the price to get into everything. So, you know, I think very seldomly, you know, you kind of pay any price. To get in, but usually you should try to have more discipline.

• 8:42Harry Stebbings?

  In terms of that discipline, how much of a role does and should that play for you in particular? And how do you ensure that it stays intact? Do you benchmark it against anything?

• 8:51Speaker 01

  Yeah, so a lot of times, even though every company is different, a lot of times you'll see comps in terms of kind of like the general quality of the founding team or the idea or the traction they have. And so I think a lot of times, even before a founder says what valuation they're thinking about or about what valuation some other investor offered to them, I'll have some number in my mind. And so if they're ten or twenty percent away, that's fine. But you know, if I was thinking it should be a six million dollar pre and they said they're raising a twelve million dollar pre, that's usually when either I'll walk away or we'll try to have a negotiation and then see if we could make something work out.

• 9:22Harry Stebbings?

  How does the communication look for you in terms of communicating, conveying your, not confusion, but maybe potential disagreement with regards to valuation? I've had it in the past few weeks. How do you convey that in a non disrespectful way?

• 9:37Speaker 01

  That's a really good question. I think usually what I'll do is I'll just be honest and I'll say something like, hey, I really love your company. You know, I think you and your co-founder are a really great founding team. I have an issue with the price, which is on the market with other companies, I'm seeing prices like this. You know, I talked to this company and they have this much annual revenue and they're raising at this valuation. And you have, you know, half the revenue at like twice the valuation and it's hard for me to get around that. And I think usually people take that pretty well.

• 10:04Harry Stebbings?

  In in in terms of kind of overpaying for deals, how do you react then to founders who raise large, large sums of money on on slowly increasing caps?

• 10:14Speaker 01

  Yeah, so I'm I'm of two minds about it. I I think on the one hand, if you're never able to raise a large sum amount of money at a single cap and you know, you have to do it kind of in a in a staggered way, then then that's kind of what you do because you know, that's better than just like giving up on the company. But I think so that one class of founder kind of does it out of necessity. The other class of founder does it because they're dilution sensitive or, you know, they're they're trying to just maximize their their valuation over time. And I think that approach is usually a mistake. And and so the example, you know, I often give people is, say you have two scenarios you were thinking about. And one is you could raise a million and a half at a five pre and the other one is you could raise five hundred K. At a four pre, make some progress, you know, raise another five hundred K at a seven pre, make some progress, raise the last five hundred K at a ten pre.

• 10:57Speaker 01

  And so whether you raise all of it on five, or you raise a little bit on four, seven and ten, most people think that the four, seven, ten approach is way better because the valuations go up so much. But it turns out, I think it's within about half a percent of dilution. One gets you to like seventy seven percent ownership for the founders and the other one's like seventy seven and a half. So it's basically a wash, but doing it in different, doing the fundraising in different stages has several major costs and risks. Maybe before right now, so one is it takes up a lot of founder times because instead of one fundraising process, you run three. You also have a lot more uncertainty with the runway because you know, you never have a year and a half of runway, you're always kind of at like four, six or eight months. And as a result of that, the third thing is you can't make larger investments. So maybe if you had a million and a half in the bank, you know, you do something really ambitious, but instead of five hundred K, you're more worried about like, you know,

• 11:42Speaker 01

  am I going to run out of money in a few months? I need to like really make it last. And the final thing is, you know, if things don't go well and maybe you raise at like a four, six and an eight pre instead of four, seven and ten, you actually end up having more dilution than if you just raise everything at five.

• 11:54Harry Stebbings?

  Absolutely, and often down round potential. I, I am intrigued though, you said about the runway there. I often struggle in terms of thinking about the optimal runway, you know, often I agree with constraint enforces creativity. With that in mind, is eighteen month the optimal? You know, Jeff Clavier at Soft Tech often advocates for longer, your twenty four to even thirty six month. What's your take on kind of optimal runway periods that you would advise for?

• 12:18Speaker 01

  So I would say eighteen plus months is good. It varies a little bit. So I mostly invest in B two B companies and one thing that companies want to take into account, I think when planning runway is the sales cycles. So for a lot of businesses, the sales cycle might be, you know, three or four or five months. So eighteen months of runway would be pretty good because you can spend a few months to launch your product, then you can sell it for a few months and then within a year, maybe you get some of your first customers closing and making revenue. But sometimes you might have, you know, sales cycles that are a year or two years, creative selling to banks or Fortune five hundred companies. So in that case, you probably wouldn't want to raise for more runway. In general, the way I think about it is the, the two main constraints are dilution and how much time you have. And so you want to maximize how much time you have, but at some point the dilution just gets so

• 13:00Speaker 01

  Ridiculous that you can you can give away half your company for three years of runway, but I don't know if that's a good choice.

• 13:04Harry Stebbings?

  I'm interested in terms of kind of getting that we talked about the sales cycles there. Say, say we struggle and and eighteen months goes by and we still haven't hit what we'd like to and we're raising a bridge. I'm intrigued. I had Tim Chang at Mayfield on the show recently. He said, let's be honest, a bridge, a C two, whatever you want to call it, it just means you haven't reached product market fit. To what extent is that correct? And to what extent you actually not detest bridges and view them as a failure?

• 13:31Speaker 01

  A lot of times in the early days, actually, actually, really at any stage of a company's life when it's private, I think there are risks that still have to be addressed. And in the early days, you know, those risks are pretty fundamental, like, is this the right product to build? Or, you know, is this the right team to build it? And, you know, later stage, it might, the risk might be different, which might be like, you know, can you find the right executive team? Or or can you keep growth up at like fifty or hundred percent a year as you get a really big piece of the market? And so I think what happens is seed stage, you raise some money and implicitly or explicitly, you have three or four risks that you want to address. So you want to show you have the right product. You want to show you can make money off of it. And I think the good bridges are the ones where you had a checklist of four things and you hit three of them. And you need a little bit more money to prove that the fourth one is not a big risk either.

• 14:13Speaker 01

  I think the bad bridges are where somebody spent a million or two million dollars of their seed round and they focus on things that nobody ever considered a risk anyways. And then so they check zero or one of the four boxes and now they want more money. But, you know, a lot of times that doesn't make financial sense to an investor.

• 14:29Harry Stebbings?

  Absolutely. I I am intrigued, though. It's talking about kind of financial sense and and DD behind deals. Obviously, as you said at the beginning, kind of you were at first on boarded due to your technical skills and capabilities to do the DD. So I want to talk about the technical due diligence and your thesis on this at the seed stage, when applied to those very early companies. What's your thesis and how should it be approached at this stage?

• 14:51Speaker 01

  It's another interesting question. It's funny, actually. One of my most popular blog posts of the last year or two was I wrote this long post on why I don't really do technical diligence at this point. And I think it caught people by surprise because they figured, you know, I'm an engineer at heart. So like, shouldn't I be looking at the technology when I look at a startup? And this is how I started out when I started VC about four years ago. Where you know, I spent most of my time trying to figure out how good is the technology? How good is the CTO? And it took me a few months to realize that that was probably just a waste of time for everybody. And there are a few reasons for that. First of all, in the early days, a lot of times the code is, you know, throwaway or prototypes or just like changing very rapidly. So it's hard to, it's hard to judge it in a sensible way. It's kind of like trying to judge somebody's like napkin outline for a book. Like you kind of get an idea, but it might change so much.

• 15:35Speaker 01

  It's, it's very different from, you know, judging the final draft. So that's one piece. The other piece is now that I've been doing this for about four years, I've probably worked about 50, 60 companies and tracked a lot more that we ended up not investing in. And it's very rare for me to see companies fail because of the technology. It's almost always the product market fit is not there or the team isn't able to recruit as much as they'd like. Or there were, you know, something along those lines. And so because the technology is almost never a driver for failure, we end up just not looking at it that much. So basically try to figure out like, are the founders strong? Could they recruit other good engineers and employees? And then also, do they have general broad skillset that they need for a project? So for example, if a project needs deep learning, like one of the founders should know deep learning. But otherwise, we don't really drill into the technology that much anymore.

• 16:17Harry Stebbings?

  I'm intrigued at the, at the C stage with companies progressing up the funnel. One of my good friends, Jason Lenken at Sasta, says the best investors are those that essentially know the benchmarks to get the next round and then have the ability to go and help the startups raise it. To what extent do you agree with that thesis? And to how much of a role does a follow on funding attaining play in your schedule?

• 16:38Speaker 01

  Yes, I think it's probably 80% of how I view my role in the sense that, you know, the ultimate goal is to help a founder build a huge company. And a lot of times the next milestone to get there is to figure out what you have to prove and prove it so you could raise more money. And unfortunately, like, you know, I, I think a lot of times people hope that there is a seed round and it's the last money they raise. And in reality, that, that's rarely the case. So for us, you know, even though sometimes rare occasions, like trying to move towards a series A might take you in a different direction than trying to move towards building a huge company. Usually they're very well aligned. And so for us, like, you know, we really try to help people figure out what do they have to prove out to reach the next set of investors? How do they hone their pitch? Who should they talk to? I would provide a lot of intros. So I think we see that as a big part of the value we provide with the fund.

• 17:22Harry Stebbings?

  Final question before we dive into the quickfire is we often hear about at your stage kind of seat series A and the progression between the two fundamental stages is the series A crunch, the mythical series A crunch. So to what extent have you seen this play out for you and how much of a prominent role do you think it plays out in the wider tech society today?

• 17:42Speaker 01

  I do think investors have gotten more picky at every stage, you know, just because there's so many more opportunities for them to choose from. So I would say we've seen it a little bit in our portfolio, but it hasn't dramatically, you know, affected the overall portfolio. I would say we had a few founders where they wanted to raise and it turned out that they needed a little bit, you know, more traction or validation. So they would kind of go back to work for, you know, three or five months and then they'd be able to raise after that. And I think in general, like the people, the founders where we weren't sure if they'd be able to raise, like they've struggled and the ones where we were pretty sure they'd be able to raise around. Maybe it wasn't quite the valuation they wanted, but I think all of them ended up raising around.

• 18:16Harry Stebbings?

  I do want to dive into a quickfire with you there where I say a short statement and as you know, sixty seconds per answer. How does that sound?

• 18:23Speaker 01

  That sounds great.

• 18:23Harry Stebbings?

  So let's do your favorite book and why?

• 18:26Speaker 01

  I have a lot of favorite books. I would say one that I enjoyed a lot about a year or two ago is this book called Traction by Gabriel Einberg and Justin Maras. And that book basically focuses on picking a marketing channel. And what it talks about is that, you know, a lot of times people start a company and when they start doing marketing, like whether it's, you know, ads or SEO or something like that. They pick like one of two things, either pick the thing they're experienced with or they pick the thing that worked for their competitors. And the book kind of claims that that's a mistake because a lot of times, you know, you have to like find the undiscovered channel or find the thing that works for your company specifically. And so I really like that approach where they they lay out this methodical guide to here's how you look at, you know, twenty or thirty channels and pick the best one.

• 19:05Speaker 01

  But I also found a lot of value in the way they were explaining the problem, which is that a lot of times people will do the thing that's either comfortable or seems easy or, you know, it kind of seems easiest to start. And sometimes that's the best thing to do in the long run, but a lot of times, like if you had spent more time upfront and were willing to do things that maybe you were less familiar with, it would have had a much better outcome.

• 19:24Harry Stebbings?

  What would you most like to change in VC and why?

• 19:28Speaker 01

  I would say, don't know if this will ever happen, but I would love to see a good public reputation database. For VCs, I think most VCs are great and then a small number are not. And because there's no public repository of people, you know, saying what it's like to work with a specific investor. A lot of times, like both the good and bad investors will be able to get into rounds. And sometimes you watch that from afar and kind of go like, oh, I wish the founder, you know, took money from the other investor that offered the money. But I also think that, you know, sometimes like the bad investors give the whole industry a bad name because they're never called out by name. But you hear these stories of like the investor really screwing over the founder, not always, but often that's kind of a small group of investors doing that.

• 20:05Harry Stebbings?

  You never know, it could be the next twenty VC product, a public database, I love it. What's your favorite blog or newsletter? What are the must reads when they come in?

• 20:14Speaker 01

  I really like the Mattermark Daily. I think it's a great daily overview of like some of the best writing and, you know, the events happening in the venture startup ecosystem. Another blog I like a lot is Twenty Five IQ by Trent Griffin. I think he works at Microsoft, but he kind of publishes a weekly blog post on basically summarizing all of the materials he's read on a famous investor. Like sometimes it's a public market investor, sometimes it's a venture investor. He does a great job of kind of distilling how investors think.

• 20:40Harry Stebbings?

  And then talk to me, you've seen many pitches now, what's been the best pitch and why was it the best?

• 20:45Speaker 01

  I think one of the ones that really stands out to me is we invested in a company called Flexport, which is they they basically help take the pain out of managing international shipping. You know, so if you if you're shipping something from China to the US, you need a truck on each side, you need a boat between the ports, you need insurance, you need all this stuff. It's really painful to do, you know, before you need like fax machines and voicemails and things like that. And so the founder was really compelling for a couple of reasons. First, he made the pain point just incredibly clear through through stories and examples. And I think also just he he gave a very clear picture of just how large the market was. And usually when people say, you know, they're going after like a five hundred billion dollar market, VCs roll their eyes. But in this case, I think it was it was clear that it was a very large market.

• 21:28Speaker 01

  And then I think it also felt like he was the right person to build this company. And part of that was he was my age, he was kind of like early mid thirties at the time. And he had been doing importing and logistics probably since high school or so. So he just had so much credibility and to this day. You know, at SUSE, we've made about fifty investments over the last four years. And Flexport was the only one where we made it like we basically made the call during the first meeting where we just said, okay, like, we want to be a part of this.

• 21:52Harry Stebbings?

  Nice, fantastic. No, I have Ryan on the show. He's unbelievable in every aspect. Uh, but then I want to finish today with the most recent public announced investment and why you said yes to that.

• 22:02Speaker 01

  So, uh, one investment that I'm not sure if it's announced, but it's on their website and it might be on our website. Uh, is this company called Talent IQ. And so they provide APIs for dealing with people data. Uh, so a lot of times, you know, if you have like a CRM or recruiting database, you have a lot of information on people you talk to. And that information goes stale very quickly. Like they change jobs, they change email addresses, maybe to get married and change their name. So Talent IQ basically provides, you know, data and services to help keep that data clean and up to date. So we invested for a couple of reasons. First of all, the founders are really amazing. They're probably among the hardest working founders I've met and almost every founder is hardworking. So I think that's, that's really like an exceptional thing. And they're also, they don't have egos, so they, they take feedback very well. They just want to become better as entrepreneurs. They want to build a huge company.

• 22:47Speaker 01

  They're not trying to like have everybody think they're great. They're actually trying to be great. And so I, I think that's, that's a really great personality trait to have. And then also we're just really impressed with how capital efficient they were. They raised a little bit of money in basically a pre-seed round. And then they, they managed to use that to build up the team quite a bit to reach pretty significant revenue milestones. So we're just really impressed with everything about the company.

• 23:07Harry Stebbings?

  Well, Leo, thank you so much for joining me on the show today. Uh, as, as I said, I heard so much from Chad and from Seth. So thank you so much for joining me on the show today.

• 23:14Speaker 01

  Thank you so much. It's been a pleasure to be on.

• 23:18Harry Stebbings?

  Again, I want to say a huge thank you to Leo for giving up his time today to come on the show and a big hand to Chad for making the intro to Leo, without which the show would not have been possible today. And if you'd like to see more from us, then you can follow me on Snapchat at H Stebbings with two Bs. Or you can follow Leo on Twitter at L Polovets. It would be great to see you there. However, before we leave you today, you must check out Founder Suite. Founder Suite makes the leading CRM for raising startup capital. Since March of 2016, Founder Suite customers have raised over a hundred and thirty million dollars in seed and venture capital. Founder Suite CRM sits on a database of over fifty thousand investors, which will help you quickly populate your. fundraising funnel, including a beautiful and easy to use investor update tool and the recently launched new portal that helps investors and accelerators track their portfolio companies

• 24:01Harry Stebbings?

  on a single dashboard. Founder Suite is used by startups in Y Combinator, Techstars, 500 startups and every other major accelerator. And listeners of this podcast can get a whopping 40% off a monthly or annual subscription using the promo code 20MINUTVC at checkout, that's 2020-MINUTVC. Check it out today and take advantage of this exclusive offer. Speaking of incredible software, Greenhouse Software designs tools that helps companies hire great people and ultimately build better businesses. Recognized as the 2017 best place to work in the US by Glassdoor, Greenhouse currently works with over 1,500 of the world's most innovative companies such as Airbnb, Slack, Snap, Inc. and Lyft. A wrong hire is not only costly for a company but can also turn an employee into an unhappy one. With Greenhouse's applicant

• 24:46Harry Stebbings?

  tracking system, companies can make well-informed decisions and hire qualified candidates who are empowered to do the best work of their careers. Anybody who has a company that's scaling quickly but has trouble hiring and retaining the right people, visit greenhouse.io today to discover how your company can grow. As always, I so appreciate all your support and I cannot wait to bring you Friday's episode with your fine founder and CEO at Laurel and Wolf.