20VC: Hiring 101; The Biggest Mistakes Founders Make in the Hiring Process | Fundraising; What to Optimize for, How Profitability Changes Leverage When Raising | SMB to Enterprise; When to Move, What Changes and Dangers of Moving Too Early with Daniel Yan

Daniel Yanisse is the co-founder and CEO of Checkr, a leading HR technology company, currently valued at $5 billion. During the journey, Daniel has raised over $679M for Checkr from some of the best including Accel, Bond, Coatue, GV, Elad Gil and IVP to name a few. Prior to Checkr, Daniel was a software engineer and helped develop prototypes of the Mars Rover for NASA. Daniel has been recognized in Forbes “30 Under 30” and recently Checkr was recognized by Forbes as one of America’s best start-up employers. In Today’s Episode with Daniel Yanisse You Will Learn: 1.) The Origins of Checkr: The $5BN Company How did Daniel come to co-found Checkr? What was the a-ha moment? How did Daniel's experience with his prior company impact how he thought about building Checkr? What does Daniel know now that he wishes all first-time founders knew when they started? 2.) Hiring 101: What are the single biggest hiring mistakes Daniel made in the early days of Checkr? How does Daniel structure his interview process for new candidates today? How has it changed? How does Daniel test for ego and humility in the interview process? How does Daniel approach giving feedback today? How has it changed over time? What does Daniel believe is the right way to let someone go? How long does one give a team member who is not performing? 3.) Fundraising 101: How does Daniel advise founders going out to raise today in the challenging market conditions? What terms should founders optimize for? What terms should they not optimize for? What are the single biggest mistakes Daniel sees founders make when raising? What does Daniel wish he had done differently with Checkr's raises? What was the hardest raise for Checkr? Why was it so hard? What was the outcome? 4.) Going into Enterprise: Why does Daniel believe they went into enterprise too soon? What was the result of this? How does Daniel advise founders on when is the right time to go into enterprise? What changes in both your company and your product when moving to enterprise? Items Mentioned in Today’s Episode with Daniel Yanisse: Daniel’s Favourite Book: Accelerate: The Science of Lean Software and Devops: Building and Scaling High Performing Technology Organizations

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

• 0:00Harry Stebbings?

  We are back. Welcome to 20 VC with me, Harry Stebbings. And today, I'm thrilled to be joined by Daniel Yanis, co-founder and CEO at Checker, a leading HR technology company currently valued at $5 billion. During the journey, Daniel has raised over $679 million for Checkr from some of the best, including Rich Wong at Excel, Bond, Co2, GV, Elad Gil and IVP, to name a few. And prior to Checkr, Daniel was a software engineer and helped develop prototypes of the Mars Rover for NASA. I'd also want to say a huge thank you to Jules at IVP, Carl at Middesk and Ali Raghani at YC. Some amazing questions and suggestions today, and I so appreciated that. But before we dive into the show today, alternative data is rapidly gaining popularity among investors today,

• 0:42Harry Stebbings?

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• 1:24Harry Stebbings?

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• 2:08Harry Stebbings?

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• 2:49Harry Stebbings?

  Angel List handles your company's incorporation, banking, cap table and fundraising process, all in one single place. This allows founders to focus on building. If you're a founder, you can launch your company at stack.angelist.com forward slash two zero VC. Whether you're a founder or a funder, you're in great hands with Angel List. But now I'm so excited to hand over to the one and only Daniel Yenice, co-founder and CEO at Checker.

• 3:19Speaker 01

  You have now arrived at your destination.

• 3:23Harry Stebbings?

  Daniel, this is such a joy to do. I heard so many good things from Ali, from Anu, from Richard Excel, actually. So thank you so much for joining me today.

• 3:30Speaker 02

  Thanks, Harry. I'm excited to be here.

• 3:31Harry Stebbings?

  I'm excited for the conversation. I want to start there with a little bit of storytelling. We look at Checker today and the big valuation and the incredible team. But where did it all start and what was that aha moment for you?

• 3:42Speaker 02

  Yeah, it all started in my living room with my friend Jonathan, co-founder and engineer. We're hacking, coding different side projects and one of them was the early version of Checker. We had many startup ideas that we're playing with, but this one came from our previous job. Like many B two B startups, you might find a problem or a gap in your work and then you had to build something better. Jonathan and I were both engineers on demand delivery startup and the startups was hiring lots of contractors. We were looking at the background check process that was a bottleneck to hire people fast and with a good experience. And after looking at the Options on the market who realized there was a gap and no great solution. So we said, hey, I think we can build something better here.

• 4:26Harry Stebbings?

  I do want to discuss your leadership. It was really something that I discussed a lot with your cap table before the show. And when I was chatting with them, there were a couple of areas that were very much commonalities in the discussion points. So let's start on delegation. I think most founders suck at it, especially first time founders. So when we think about delegation, how do you and how did you extract yourself from the weeds of what you didn't need to do? How did you put the support structures in place?

• 4:50Speaker 02

  Yeah, I would agree that first time founders suck at it. I suck at it a lot. I might still do. So it took me a while to learn how to delegate because like a founder, you want to make sure everything's perfect and good. And I have a high bar. So I think for many years I was very bad at it. I think you have to force yourself to do it as a founder. There's so much you can say about like the person and everything, but I think for many founders like me, I have to hearing the feedback that this is not going to scale. I have to prioritize other things. I had to force myself to let go of some areas. I think one thing that helps is to then focus my mind on other things. So if you can focus your mind on other bigger problems that only the founder can work on, like finding new types of customers or launching a new product or fundraising.

• 5:35Speaker 02

  Those are activities that only the founder can do. So for me, it does help myself to focus on other projects so I can delegate more of the day to day.

• 5:42Harry Stebbings?

  Do you not think that everything can be delegated away essentially? Launching a new product, a product manager can do that, a great product manager. Fundraising, I agree. Setting the mission, I agree. Hiring a C suite as well, but pretty much everything else can be delegated away, don't you think?

• 5:58Speaker 02

  Yeah, absolutely. Everything can be delegated, but in the early days, there's always going to be some gaps in your startup, right? Like you might not have a head of sales or a head of product or recruiting team. So you can go push hard in the areas where there's no coverage. The best thing you can do is hire someone. So I completely agree that the highest leverage activities you can do as a founder is hiring the best bench and C suite and VPs you can. Setting the vision, that's only something you can do. Finding the values and the purpose of the company or mission, being the cheerleader of the company in the media, fundraising. Those are some of the highest leverage activities only the founder CEO can do. Also, spending time with customers is very important and I don't think you should delegate all of that. Founders should stay close to the customer.

• 6:43Harry Stebbings?

  I think hiring is the area where most founders make the biggest mistakes. When you look at your hiring, where did you make the biggest mistakes, Daniel?

• 6:50Speaker 02

  Yeah, I made every mistake in the book. I think I hired over twenty plus. I kind of stopped counting leaders over time. That didn't work out for one reason or another after some time.

• 7:02Harry Stebbings?

  Was that commonality in why it didn't work out?

• 7:05Speaker 02

  Yeah, lots of common problems. So first, it's normal that leadership hires don't work out. Between one and two and one and four executive not don't really work out in any company. So it is just a very hard thing to nail and you can never be a hundred percent in hiring leaders. I mean, it's just hard because you only spend a few hours to evaluate someone and then you're gonna have to work with them for thousands of hours. So it's just a flawed process in general. For me, the common reasons. One is oftentimes you're attracted by this shiny resume, really amazing experience and pedigree of the person. And because the person's background and experience is so exciting at some of the best companies, you might overlook some of the other gaps or flags that might not make this person the best for your company.

• 7:49Speaker 02

  For me, one thing that I overlook too many times is we have a core value check of humility. And sometimes I've compromised on that and hired some people that had a bit too much ego, I think, and that led to issues. That might be one of the main reasons for failure in my companies. People who have some ego or prioritize some of the personal agenda ahead of what's best for the company or for the team. But I've also hired people who had too much large scale experience and were too early for them. That's also another comment I hear from other startups. You hire a big exec who is amazing, who'd work at the FANG companies and is gonna really be the adult in the room that scales everything. And sometimes you're just too early. You're not ready for this type of leaders.

• 8:32Harry Stebbings?

  How do they most often show themselves to be not ready? The FANG leaders coming with the enterprise badges and the bigger accreditations, how do they show that they're not actually a fit?

• 8:42Speaker 02

  Yeah, the way I see it is, so there are large scale executives who have scaled, you know, teams with hundreds or thousands of people. When you're in a company like this, what you do day to day is very different. You have a lot of other senior leaders, you do a lot of planning, you do a lot of delegation. You're quite far from the day to day, the customers, the spreadsheets, the calls, et cetera. If you have to go from that to then a very chaotic environment where there's no infrastructure, no team, no process, nothing. And you have to get your hand dirty and make the first documents and spreadsheets and all of the hires yourself by hand. Some people can do it, but it's really a shock to the system. And for most leaders, they realize that it's just not the best skill set match for them. Because they've perfected the way to operate at scale.

• 9:26Speaker 02

  It can also be related to ego sometimes, like when people are used to having a huge staff with chief of staff and EA and all kinds of bench and direct the team. And only do like reviews, getting back to doing everything yourself, not everyone is ready to do that.

• 9:39Harry Stebbings?

  So when is the right time to hire them? You've raised a lot of money, I think the last valuation was four and a half billion. When is the right time to hire these experienced, like Fang badge logos?

• 9:50Speaker 02

  Yeah, so first I would say some of the best leaders are the leaders who might not have the most amazing resumes or companies in the past. The ones that are really smart, hungry, wanting to get their big success in tech. So those can be some of the best talents that can be underrated. I think you have to hire them for what you need in the next two years. So if you look at the scale that they've operated at and you project yourself one or two years in the future. Let's say if you have a hundred people in the revenue team and you plan to be two to three hundred in the next three years. You hire someone who has experience at two, three, four hundred people. I wouldn't hire someone who's led a two thousand revenue org person. There's gonna be risk there, especially if they haven't done smaller scale or startups in a while.

• 10:34Harry Stebbings?

  Say it doesn't work out, how do you think about the right way to let someone go? And how long do you give someone on determining whether it does or it doesn't work? Cause you've got to give them a little bit of time.

• 10:45Speaker 02

  Yeah, so in the early days, I was following the Y Combinator playbook that says hire slow, fire fast. So I did fire fast many people, maybe too fast, I think. I was too fast to pull the trigger and let people go. You do need to give them some time and so founders, I would say, suck at giving feedback. There's many reasons why for some days it's hard to give constructive feedback to senior leaders. But you do need to give them feedback to talk about it with them and to give them, I don't know, I would say three to six months is a good period of time to try to course correct. And then if it doesn't work out, you have to have that hard conversation. So it's hard, it's a balance. You don't wanna be too fast, so you don't give anyone a chance and you don't learn through the process.

• 11:26Speaker 02

  But you also don't wanna let it drag for a year, which will really impact your culture and your company performance.

• 11:31Harry Stebbings?

  Before we touch on like the conversation of letting go, how do you think about giving effective feedback today? If most founders suck at it, how do you approach it? And what would you advise founders, having probably not been so good at it before and now being much better?

• 11:42Speaker 02

  So I think there's two things. So first, it's important to give feedback often. And I think I was worried about giving feedback because I had five to 10 constructive pieces of feedback, which were mostly like negative feedback. And I knew in my gut that if I just keep sharing this negative feedback, the leader is not gonna enjoy receiving that feedback. So then I would just not share it. What I do now is changing the ratio of like positive feedback to negative feedback. So always start with one, two, three things that actually the leader does well or has done well recently. So start with positive feedback and then at the end, one thing that they can work on to improve or do better next time. And I think delivering feedback this way to leaders, but also to anyone in general, works way better

• 12:26Speaker 02

  than just bombarding them with 10 things they could do better, because that's just demotivating for anyone, independent of your seniority.

• 12:33Harry Stebbings?

  Have you ever heard of a shit sandwich?

• 12:36Speaker 02

  Yeah, it is a little bit of the shit sandwich, but you don't have to be a sandwich and you also don't have to like sugarcoat it. I think you can say, hey, this was great, great delivery on this, great hire. I think one thing we can work on is attention to detail, be closer to the customer. It doesn't have to be the shit sandwich, but there's definitely that balance of positive and negative.

• 12:56Harry Stebbings?

  The negatives they continuously don't improve on and it's not working. How do we let people go? What's the right way to let people go?

• 13:04Speaker 02

  That's hard. I don't know if I'm any good at it. I think you just gotta be transparent and care for the person. After repeating multiple times the same feedback, hopefully it's not a surprise for the person. So I think you're gonna have to increase over time the intensity and make it clear that this is becoming a big problem. I think it's too easy to just deliver it. You have to say, no, this is becoming an important issue. So I think have clear feedback that gets stronger and stronger. And then when you get to the final decision, you just have to share it as is. And then I think what helps a lot for people is how you do the process after the announcement. Being generous on severance and pay, crafting the departing message together with the person so that it's positive.

• 13:48Speaker 02

  Committing to helping them on reference calls and to find another job. I think all of those little details on how you let the person go and how you support them and you're fair during that process. That has been helpful. At Cheka, we've been generous and positive and helpful when we let someone go. And so that has helped us to keep good relationships, even with people who are not here anymore.

• 14:08Harry Stebbings?

  When you look at team building now and you look at it over the last years with Cheka, what would you have done differently knowing what you know now?

• 14:16Speaker 02

  Yeah, so back to the leadership journey and I used to hire lots of execs, not find a good fit. And then there would be a lot of leadership churn over time. And I think that's the case in many fast scaling startups, if you see lots of execs come and go and come and go. And I think during the pandemic in the last couple of years, thanks to the help of my coach, something changed and we started to hire a good team. And so I didn't invest enough into team building, personal connection building, events outside of work and really getting to know each other at the personal level. And I think that's one of the most important things to keep leadership team happy together.

• 14:52Harry Stebbings?

  Okay, so what do you do within your leadership team specifically and as granular as possible to bring them together and create that unity?

• 15:00Speaker 02

  Yeah, so we do a little thing. So when Covid started and we moved mostly to remote, we started doing daily stand-ups. So we have a thirty minute daily stand-up with my leadership team every single morning. So that's been very helpful to have that personal connection. I message thread with my leadership team where we text each other and share things. A lot of them non-work related, like we share news about each other's family and what we do on the weekends and cooking things, all kinds of pictures from vacation. So that really creates a bit more camaraderie and connection. And then we have in-person events, dinners, sometimes we invite each other to each other's house. So those things have been super helpful.

• 15:41Harry Stebbings?

  You mentioned the CEO coach there. How often do you see them and for how long is each session?

• 15:46Speaker 02

  Yeah, so I have a session every two weeks for an hour.

• 15:49Harry Stebbings?

  Okay, got you. So a session every two weeks for an hour. What questions have you found most helpful and constructive for you in really shaping your thinking that they've posed to you?

• 15:59Speaker 02

  So I've had two different CEO coach over the years. My current coach, I think we've been working together for two to three years now. So I've worked on a few things with her. I think what was the most helpful within a coach is to have an independent person who can go and collect unbiased feedback from your leaders, from your board, and then work with me on an action plan on actually how to make progress on the day-to-day. Because it's easy to do a three sixty and you have this kind of theoretical feedback, but then how are you going to change every day and who's going to keep you accountable that you're actually improving your behaviour? So she's been very helpful, very explicit, just good experience. And she was able also to attend some meetings, so to be like a witness in the meeting and say, I see how you change your delivery, what words you use, the way you behave,

• 16:44Speaker 02

  or even your physical appearance in the meeting. Having someone hands-on with you is super helpful because no one can improve on their own. It's almost impossible, even if you're very self-aware. You need a friend to improve, whether it's like a therapist in life or a coach at in a professional setting. I do think you need others to help you, otherwise it's almost impossible for a human to change their behaviour without help.

• 17:07Harry Stebbings?

  What do you think you still need to work on? If you've improved in terms of the negative to positive mindset, you've improved your hiring style, you've improved the leadership morale, where do you still suck?

• 17:17Speaker 02

  Yeah, I mean, I can still improve on many things. So first, all of those areas, even delegation, I've improved, but I still have. A lot to go. I think I can improve more on being more inspiring as a leader, sharing more personal stories on storytelling. I think those are important areas where as an engineer, I'm not very good at it naturally. So I really have to stretch myself and learn this. Better listen as well. I still tend to have opinions and form my opinions quickly. So I have to be more patient and a better listener. So those are some areas I'm working on.

• 17:52Harry Stebbings?

  What would you advise others when it comes to CEO coaches? Having not had one and now having had two actually different ones. What would you advise other founders on when to get one, the type to get and how to use them?

• 18:03Speaker 02

  Yeah, it's been the best thing in my life. It did change my life. I don't know if I would have made it that far without this help. So I absolutely recommend it to any CEO. I think it's the best investment you can make. Many people tell me that they don't have the time to spend time with the coach. I think that's BS because having a coach helps you better prioritize your time, be more effective as a leader. And then what type of coach? I've interviewed a bunch, asked for referrals. I think the best thing for me was to interview a bunch of coaches. Ask them what type of leaders they work well with, share your weaknesses and areas to work on and test them. So I think doing some testing with a few different coaches might be the best way. The personal fit is very important.

• 18:45Speaker 02

  So most of them are happy to do like trial session, one or two coaching sessions. I would encourage people to try different coaches and see the ones that's best for them.

• 18:54Harry Stebbings?

  Totally agree with you. I think it's very much like a therapist actually, where different ones fit different people. You mentioned hiring where all founders, like a lot of founders, especially first time founders suck. I think another area is board management. I don't know any first time founders innately skilled at board management. And quite rightly so, it's a weird thing to be skilled at. When you look at board management, what do you think it takes to manage a board effectively? And what have you learned over the years with regards to it? You've got some big hitters on the board.

• 19:19Speaker 02

  I think there are similarities with managing your leadership team and managing your board. At the end of the day, it's also a team and a group of people who are here to work on the business and to help the business. So I think a few things. So first, it's important, I think, to be very transparent with the boards, just share the. Truth, what's going well and also what's not going well. You don't wanna sugarcoat or have just a rosy picture of your company with the board. That's gonna create a divide of understanding of where the company is and actually create more pressure. I think the board can be scary for founders too. So sometimes you wanna please your board and really take every feedback and ask immediately to heart and execute on it. But sometimes you might not be able to, or it could be conflicting feedback or maybe not the best thing for the company.

• 20:01Speaker 02

  For me, a few years ago, there was pressure on financials, revenue growth, which is always gonna be some type of pressure from the board. Who wants, of course, the company to perform better. So I think it's important for the founder to listen, but also to be able to push back, to take some feedback, but also say, hey, from the five things I've heard today on the board, this is one or two that we're gonna work on. And it's okay to ignore or push back on a few other areas. You also have to put yourself in the shoes of the board member. Sometimes it can be really boring to go to three, four hour meetings, only reviewing dry financials. So I think keeping your board's interactions also fun and exciting and bring them in the fun of building the company is important to have.

• 20:43Speaker 02

  A light born team and also doing dinners and personal connection as well. So lots of similarities with managing the C suites.

• 20:50Harry Stebbings?

  I don't know why boards are three or four hours. I'm really sorry, I find this egregious, it's a waste of your time, it's a waste of other people's important time. Like you send the deck three days ahead of time, you have three strategic questions on a Google Doc. When do we expand with a new product? Do we hire a COO? And that's your discussions for the one hour. Financials are sent three days before and they can review them ahead of time. And if there's any serious problems, then they can bring them up in the board meeting in any other business. Why have a three or a four hour board meeting?

• 21:18Speaker 02

  Yeah, that's a good question. I think it can be more efficient. Things we've done is we send the board's information away ahead of time. All of the financials are already in the appendix, so we don't spend any time talking about those. And then we have debates mostly on products, strategy, go to market strategy, leadership structure, the topic you mentioned. So I think those are the right ones. It can be done efficiently potentially in one hour or two. Board meetings do. Tends to drag more and more, but I think if you can have three, four hours, that's actually proactive debates. You learn something out of it. The company makes progress after having strategic debates. That's a positive and I would say that's rare. Many board meetings, it's not adding value.

• 22:00Speaker 02

  It's actually creating more burden and work for the leadership team and the CEOs.

• 22:04Harry Stebbings?

  Did you feel insecure as a twenty two, twenty three year old? I had real imposter syndrome when I was like twenty and in venture. And yeah, I was very insecure. Did you have insecurities when you were young and what were they around?

• 22:16Speaker 02

  Yeah, I mean, I didn't have too many. My personality is quite confident, maybe overconfident. So I'm on the other side of the spectrum, which definitely was helpful for starting the company, taking all of the risk I'm taking, pushing forward and making fast decisions. So for me, I'm usually pretty confident in myself, which helps me not feel pressure or things like that. I have other issues that confidence comes on the other side and conflict with humility or empathy, being patient.

• 22:45Harry Stebbings?

  Have you ever drank your own Kool-Aid too much? You raise a ton of money. A lot of smart people say you're a genius at twenty three and you're like, yeah, I am. Yeah, I'm really good. Have you ever had the alternative where actually you get too confident?

• 22:58Speaker 02

  Yeah, it's possible. It's a hard balance, especially in the early years when you get a lot of traction. You think that any product we do, any move we do is going to be successful. And lucky that I got some punches in the face and we've had some very hard year in twenty nineteen, twenty twenty. When problems hit, it's humbling and I'm glad we've had some of that because otherwise you can tend to get too confident. So it's a balance. You want to be confident without losing your humility and perspective. So definitely I've been oscillating between some insecurity sometimes in the hard times and overconfident when things are good. But I try to to stay grounded.

• 23:36Harry Stebbings?

  Why were twenty nineteen and twenty twenty hard? And how did you deal with those really shit hit the fan times?

• 23:41Speaker 02

  Yeah, so twenty nineteen, we were starting to get some business headwinds because we grew very fast in the gig economy and with tech customers. And those companies like Uber, DoorDash and others went public at those days and started to suffer themselves. So that had a negative impact on our business. So our business was starting to slow down and then Covid hits. And during Covid, hiring stopped in many businesses and that really impacted our business. So those were the hardest times of the company. We had to make layoffs, we had to change our strategy, we had low morale. It was hard. It was some of the hardest times. And that was actually a good thing.

• 24:20Speaker 02

  If you know, for a high-growth, confident company, that was actually a good shock that, in a way, we needed to update our strategy, to change the product we do, to change some aspects of our culture.

• 24:31Harry Stebbings?

  Couple of things I'm really interested to hear your thoughts on, and it's, we're hearing a lot of advice, especially now with potential tides turning. And a lot of people are saying, oh, so many founders have raised so much money at high valuations that they're not going to be able to live into. When we look at the valuations, and I mean this with total respect, before with Chequer, they've been pretty high. And I've always thought, wow, that's pretty high. And then you've always done incredibly well and raised subsequent great rounds. But did you worry about raising at high valuations and being able to live up to it? And what would you advise founders, having been through some very competitive and high-priced rounds?

• 25:07Speaker 02

  Yeah, I do a lot. We've been quite conservative on all of our fundraises. We rarely fundraised really too far ahead of our scale. We've always been a profitable business, which most companies are not. So actually, we're lucky to not push the valuation too high. We never fundraised at thirty to a hundred times revenue multiples or things like that. We actually always had pretty reasonable, I would say, lower valuation than other companies. And we were very careful with the amount of money we raised. We have almost no burn and are profitable most of the time. So I've been more on the conservative type side of the spectrum. And I'm involved with many other startups and companies. I always try to coach them on not raising too much money and then being stuck, running out of money.

• 25:51Speaker 02

  Money and having to do a down round, which is a horrible situation. So I think the risk is high now, especially with the crazy valuations from the last year or two. But knock on wood, I think with Checo, we've been careful not to push the valuation too high and also to make sure we're always profitable or very close to profitability. Then you own your own destiny. If you're profitable, you can always keep pushing for a few more years and catch up to whatever valuation of the day your company is at.

• 26:15Harry Stebbings?

  The other element that people say is actually when you raise at such high valuations, it's just impossible also to get great talent. Because when you're valued at ten billion, what's the upside for someone coming in with equity when it's ten? Are you going to be a twenty billion public company? Okay, it's two X, it's not as good as it could be if you're gonna ten X it or twenty X it in early. So how do you respond and think about that piece of advice?

• 26:36Speaker 02

  Yeah, I completely agree. I think you've got to be careful. There's many, many reasons why raising at too high of a valuation is going to be a negative for your business. So all of those are fair points and you need to be able to justify valuation today and have a compelling story for new hires and how you're going to three, four, five X this valuation in the future.

• 26:56Harry Stebbings?

  You said there about kind of working and advising many companies and founders. Other than raising at high valuations without justification or without credentials to do so, what are some other big fundraising mistakes that you see? I'm intrigued, Daniel.

• 27:08Speaker 02

  Yeah, back to fundraising. I think the most important fundraising is who you work with, so the quality of the investor. And so too many times founders focus on the number and so the high valuation. And then you can end up raising very high money from low quality investors or hedge funds who might be too aggressive and not really help your company. So I think that's the most important is the quality of the investor. Not to overstress the dilution and the economics. You can use competition to negotiate. So overall, when you get multiple term sheet investors, if you do some basic negotiation, you're gonna get fair terms. But I think hiring, working with a good partner in investors is the most important. I've seen many situations where the investor backed down or backed off the company or didn't finish the deal

• 27:52Speaker 02

  because it was just a transaction or conversation. They were not attached to understanding the company's long-term potential.

• 27:59Harry Stebbings?

  What was the hardest fundraise for you? When you look back, was there one fundraise that was there to get over the line?

• 28:04Speaker 02

  Yeah, I think it was our Series C hardest. I mean, overall, we've been lucky. I've had really fast, easy fundraises because the business, we've been performing well and we have a good team. But the Series C was one of the hardest because we got the term sheet for the Series C and then our revenue slowed down a little bit. So we missed the quarter in terms of revenue targets compared to what we had in the Series C pitch. And the investors in the Series C started to get worried and we haven't closed the round. So we actually had to negotiate very slightly some of the terms to get it back on track and close it. I'm grateful that the investors were flexible and friendly, but there was one that was harder.

• 28:42Harry Stebbings?

  Do you think that's reasonable?

• 28:44Speaker 02

  It happens, I think, in the early stage. It happens all the time, but I think as you start to get very late stage and raising money from New York investors and mutual funds, they're going to be a bit closer to judging you like public investments, the accuracy and the forecast and those things are becoming more important. So you just have to change your fundraising strategy a little bit. It's very different from a Series A where everyone knows that the projections are open to the right, but not guaranteed.

• 29:09Harry Stebbings?

  Just two elements before we dive into the quickfire. I promise you, when you think back, what was like the best decision you made for the company? It could be raise a round pre-COVID, it could be hire a certain person. What was the best and what was the worst? Where like, I wish I hadn't have done that.

• 29:24Speaker 02

  Oh man, hard question. The worst decision for sure was to go too early into the enterprise. So after we had really good traction in the gig economy with tech companies, I read Crossing the Chasm and so I decided, okay, let's expand to enterprise customers. And that was the worst decision I've made. I was super naive on what it takes to go enterprise. And so I think we lost a bunch of time and money and to go too early into very big enterprise customers who are not tech companies.

• 29:52Harry Stebbings?

  What were you naive about that? What did you not see that it took you going in to see?

• 29:56Speaker 02

  I mean, the enterprise is just a completely different beast. I was naive in terms of how those customers think, how little they understand tech and software and how you really have to adapt your entire product to them. So I was naive. There's just hundreds and hundreds of features and custom things that. Large enterprise customers want and we're definitely not ready to push back on that and to build the right product for them. And also the sales process, everything is way more expensive and harder. And so we got some wins, but it was so expensive in terms of sales and marketing and product delivery. That it was not a good decision. It was way, way too early for us. It's important to take your time to grow into the enterprise and we went directly for like the Fortune one hundred.

• 30:40Speaker 02

  That was a big kind of go to market and product mistake that I wouldn't do next time.

• 30:45Harry Stebbings?

  Is it difficult to then retreat?

• 30:47Speaker 02

  Very difficult, yes. And we're still in need a little bit, I would say, because once you have a multimillion dollar, very big enterprise customer and they keep asking for more features and you keep not being able to do it for them. It's very hard because you don't wanna have that churn and lose that big logo or that big revenue. So yes, very, very hard to retreat from it.

• 31:05Harry Stebbings?

  Okay, so that was the worst decision going too early into enterprise. Final just question on that one. Do you not kind of blame other people though for that in the way that like, I'm sure everyone said to you, SMB market is shallow, you're gonna run out of customers fast, you need to move into enterprise and that's logical.

• 31:22Speaker 02

  There's no one to blame into it. It's just me. It's just strategy decision and it's me at the end of the day. So no, that's fine. I think that was a good learning.

• 31:31Harry Stebbings?

  What was the best decision then? Where are you like, yes, I deserve a medal for this?

• 31:36Speaker 02

  Maybe if I can pinpoint one or two, starting the company to be an API first. The way we did it, I think was really good and today it still differentiates us. So building an API, being an API first company and being focused on the developers, that has been magical for us. Brought us so much growth, so differentiated, still helps us win today. Another one is we've done some pretty good M and A and acquisitions early on. We're a data company at Checker and I decided earlier on to buy some of our data suppliers and supply chain, which was a non-obvious decision and that has been a very good investment and move. So yeah, I would send those up too.

• 32:19Harry Stebbings?

  That's a super non-obvious decision and for a first time founder also, it's hard to do. What would you say your biggest lessons are on how did you M and A well and how did you integration well?

• 32:30Speaker 02

  Yeah, so I think now we've bought five companies so far, so lots of learning along the way each time. And we just announced our biggest acquisition with hundreds of people recently. So at that scale, it's a lot of work. M and A's trick is hard is more failure than success in an M and A. Most companies buy others and it doesn't work out. For us, it's been pretty good. So far, we haven't bought companies that we had to deeply integrate the product and the platform. That's a very hard thing to do. So the suppliers were already integrating with that.

• 32:57Harry Stebbings?

  You let them run as standalone businesses?

• 32:59Speaker 02

  Yeah, they're standalone businesses. All of the M and As we've done was either standalone businesses or very small teams, which is easier to integrate. And then focusing, I think, on the culture is very important. I think most M and As fail because of cultural issues and kind of treating the people at the acquired companies not as well as your own company and forgetting about what it means to them. So in the last integration we're doing right now, we're trying to be very people first and very focused on the employee experience of the team being acquired. So that's been helpful.

• 33:30Harry Stebbings?

  Love that. I do want to move into my favorite, which is a quick fire. So I say a short statement and then you give me your immediate thoughts. Does that sound okay?

• 33:37Speaker 02

  Yeah.

• 33:37Harry Stebbings?

  All right. What's the favorite book and why? You mentioned Crossing the Chasm. I love that book. Tell me, what's your favorite book and why?

• 33:43Speaker 02

  Yeah, lots of business books. I don't know if I have a favorite, but I'll share with you the latest I read that I like a lot. It's called Accelerate. It's a book about engineering and DevOps, but it's very readable by any non-technical people. And that's the first book that gave me the answer on how to measure engineering in a tech company. Cause that's actually one of the hardest things to do and engineers push back on it. And that book was very clear on how to measure engineering quality and velocity in the best companies.

• 34:10Harry Stebbings?

  Have you met Iso at Athenian?

• 34:12Speaker 02

  Who?

• 34:13Harry Stebbings?

  His name's Iso Kant. He runs Athenian, which is an incredible startup that measures the performance velocity of engineering teams.

• 34:21Speaker 02

  I have not, but yeah, we'd love to.

• 34:23Harry Stebbings?

  You'd like him. Tell me, what is the hardest element of your role with Chaka today?

• 34:26Speaker 02

  Hiring. Hiring is, takes a lot of time and energy. It's a very hard thing to do. Still haven't cracked it.

• 34:32Harry Stebbings?

  What's the hardest role to hire for today?

• 34:34Speaker 02

  Oh, it's whatever current leader I'm hiring. I mean, right now I'm hiring for the head of revenue and so it feels like the hardest to hire.

• 34:42Harry Stebbings?

  Head of revenue is tough, head of people's tough as well. What purchase under a thousand dollars has made the most impact to your life?

• 34:48Speaker 02

  On my home office, like a year ago, I started to invest into better equipment and definitely my MacBook docking station. Amazing. Just saved me so much time.

• 34:59Harry Stebbings?

  What would you most like to change about the world of startups, Daniel?

• 35:02Speaker 02

  All of the entitlement around crypto and money and like using super smart people and super cool engineering for the most stupid things ever.

• 35:13Harry Stebbings?

  How do you think about changing that?

• 35:14Speaker 02

  I don't know if it's gonna change. People have fun on Twitter and other places talking about those things, but sometimes it's just wasted opportunity for me. We have all of these resources and smart people. There's so many problems in the world around environment and water and social and opportunity for people. And all of the smart engineers are working on million dollar NFTs to sell. And I love Web three and NFTs and I think it's the coolest technology in opportunity in the world. It's just the early applications are a little bit underwhelming.

• 35:43Harry Stebbings?

  Tell me, who's the unsung hero from your cap table who's done the most to help? If you were to have one?

• 35:48Speaker 02

  Yeah, there's definitely one. His name is Pascal Levi Garbois. He's actually my first angel investor and he's helped us over the years all the time. And it's been eight years so far. So he's been the young sun hero.

• 36:00Harry Stebbings?

  You can have a billboard anywhere. Where is it and what does it say?

• 36:04Speaker 02

  So we did start having billboards in the Bay area for the first time in the last year and it's been great, actually. I was just in New York and there's just so many people there and so much going on. Would be great to have a billboard in downtown New York.

• 36:15Harry Stebbings?

  Tell me, final one. What do the next 10 years hold for you and for Checker? If we do this in 2032, where will Checker be?

• 36:22Speaker 02

  Yeah, I mean Checker will be a great HR tech software platform who continues to grow and innovate for customers, continues to drive our mission to build a fairer future and give second chances. I would hope that fair chance and second chance hiring, which is my passion, giving chances to people who've been in prison, becomes more mainstream. And for me personally, I guess I'll be a dad and family guy in 10 years from now. So that's gonna be an interesting shift.

• 36:46Harry Stebbings?

  Daniel, it's been such a pleasure. Thank you so much for the time today and I can't wait to finally meet in person.

• 36:51Speaker 02

  Thanks, Harry. It was great and fun to meet you.

• 36:56Harry Stebbings?

  I love the honest discussion there, especially on hiring. I want to say huge thank you to Daniel for being so open with that discussion. Incredible to hear. But before we leave you today, alternative data is rapidly gaining popularity among investors today with leading funds already using it for automating deal sourcing, improving investment decisions, generating outperformance and more. Core Signal, a leading alternative data provider, offers some of the most popular data categories on the market, including raw data on professionals and companies collected from public web sources. These data sets, consisting of hundreds of unique data points, provide a 360 degree view of any company worldwide. With more than 20 sources and monthly updates, Core Signal's rich company data is invaluable for the modern investor.

• 37:39Harry Stebbings?

  Go to coresignal.com/20vc and download their free ebook that explains the various benefits alternative data offers for VCs. Once again, that's coresignal.com/20vc. And speaking of incredible tools like Core Signal there, from websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a really beautiful online presence and run your business. There are three things for me that really stand out about Squarespace. First, mobile optimized websites. All websites are optimized for mobile. Content automatically adjusts, so your site looks incredible on any device. Pretty awesome. Second, email campaigns. Squarespace makes it super easy to grow and engage your audience

• 38:22Harry Stebbings?

  with Squarespace email campaigns. Say what? No other provider needed? That is music to my ears. And finally, SEO tools. Squarespace takes the guesswork out of SEO, so you'll get found in search by more people more often. And if that was not good enough, go to squarespace.com/20vc for a free trial. And when you're ready to launch, use the offer code 20vc to save 10% off your first purchase of a website or a domain. And last but by no means least, AngelList. They've been a key partner for me in managing my investments. I love using the AngelList platform because it abstracts away all the complexity and operational burden of fund management, whether you're running SPVs, a traditional venture fund like me, or even a rolling fund. AngelList

• 39:05Harry Stebbings?

  Has you covered. I'm also super excited about their new product, Angel List Stack, which is purpose-built for founders. With Angel List Stack, you can create a fundraising-ready startup in just a few clicks. Angel List handles your company's incorporation, banking, cap table, and fundraising process, all in one single place. This allows founders to focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or a funder, you're in great hands with Angel List.

• 39:36Speaker 02

  As always, I so appreciate all your support. Have a wonderful 4th of July weekend, and I cannot wait to bring you some very special episodes next week.