Zelkova's Jay Levy on the founder-investor relationship
An Introduction to
What was it like the first time you started at a new school? This could be primary, secondary, or undergrad education. Take your pick. It probably felt pretty vulnerable, right? You know what it’s like at your previous school, but here it’s brand new. There’s a new building, new teachers, probably some new friends. It’s kind of like starting your life over.
This is not unlike what it’s like to start out as a B2B SaaS operator. Whether you’re starting a new job or starting your own company, it can feel pretty lonely. What really helps in both scenarios is having some sort of guide to get you through the tough times. At school it could be a counselor, and in SaaS it could be an advisory team. Even if you’re bootstrapped, you’ll need some sort of guidance along the way.
What’s extremely helpful is if you have an investment team on your side. I’m sure there are horror stories of operators who don’t get along with the investment team, which is why folks like today’s guest, Jay Levy, are so essential. In our discussion we went over the human element of running a SaaS business and how lonely it can get as a founder. Jay stresses, as a founder himself, how crucial it is to form a solid founder-investor relationship. All that and more in this episode.
What to do today:
- Follow Jay Levy.
- Schedule a time to meet with your leadership team to to discuss whether it’s time for an investor and the kind of investor that makes sense for you, your team, and your business.
What to do next quarter:
Find the right investor-founder relationship.
It’s well known how difficult it is to open and operate a business. What isn’t talked about enough though, are the lonely hardships that founders experience. Having a strong support system and advisory team would be ideal to help guide you through those tough times. And in SaaS, one area to look at to create a system like this is likely not one you’d typically think about as an option. In fact, it’s the least place you’d consider — your investor/s.
When you think about investors you likely think about them as strictly business and, a lot of times, even unpleasant. But, finding the right investor is key to the success of your business, and not only because they're providing the funding, but because they can also become that support system that you need. The investor-founder relationship is a business relationship, but it's also a partnership. As Jay explains, “It's very much like dating… it's a long-term engagement… ”
Founders can feel extremely doubtful about their vision at times. Having an investor that believes in their vision can make all the difference. Jay went into detail and explained to us what a strong and healthy investor-founder relationship should be and how to get it there.
How to establish and maintain a healthy investor-founder relationship:
Get to know each other.
Meet in person and be honest and vulnerable.
- It’s important to meet in person and see their eyes, how they react and respond. You get a true sense of whether you connect or not.
- Ask about each other’s inspiration. As the founder, what inspired you to start the business? As an investor, what inspires you to invest in it? This will help you understand the direction to take the business.
- Do you have a common goal around the business and its growth? There has to be an alignment of values, as it’s the most important factor for the business relationship to grow in the right direction.
- Consider the type of investment both the founder and investor want. And get to a place that’s beneficial for both, and all parties involved.
Personalize the relationship
Even in business and investment relationships, bringing the human factor into the relationship makes it more successful.
- Sit with each other and discuss pain points, fears, and areas where help is needed. Founders should have the space and opportunity to talk and express themselves without reservations or fear of coming across as weak.
- Open communication and delivering on promises is key as it builds trust and loyalty. There will be differing opinions, but ensure both sides are considered.
- Investors and founders need to go through hard times together. Difficult times are inevitable, but they’re great opportunities to strengthen the partnership and attitude toward every aspect of the business.
Knowing when and how to listen
Good listening skills can provide you with a deeper level of understanding.
- Practice listening actively to understand. Focus on what the other person is saying, instead of planning what to say in response, as you would during a debate or conversation.
- Take away any possible distractions like phones or laptops and have a focused conversation.
- Be present and pay full attention to what the other person is saying. Making people feel heard and understood is one of the most important ways to maintain a good working relationship.
Businesses who meet regularly with their investors are more likely to succeed in the fast-paced startup world.
- Being a startup founder is a full-time job and some founders start with a lot of fear and doubt, and as an investor you can help ease that fear by giving them the confidence that you believe in their vision.
- As an investor, spend some time understanding the skills and capabilities of startups and their founders and how you can encourage them to grow.
What to do within the next year:
Whether you're a founder or investor, and depending on where you are in the process (in a partnership already or still looking), use the tips above to either develop your current investor-founder relationship, or to start off on the right path.
Keep in mind that this will be a long-term relationship, so take your time and be open and honest. It will only make the partnership stronger in the long run.
Who should own this?
Founder and leadership team.
Do us a favor?
Part of the way we measure success is by seeing if our content is shareable. If you got value from this episode and write up, we'd appreciate a share on Twitter or LinkedIn.
00;00;02;07 - 00;00;23;07
What was it like the first time you started at a new school? This could be primary, secondary, or even undergrad education. Take your pick. It probably felt pretty vulnerable, right? You know what it's like in your previous school. But here, everything's brand new. It's brand new building, new teachers, and definitely some new friends. It's kind of like starting your life over.
00;00;23;24 - 00;00;42;06
This is not unlike what it's like to start out as a B2B sass operator. Whether you're starting a new job or starting your own company, it can feel pretty lonely. What really helps in both scenarios is having some sort of guide to help get you through the tough times at school. It could be a counselor and in SAS, it could be in an advisory team.
00;00;42;08 - 00;01;04;07
Kind of like what we try and do for you on each of these Protect the Hustle episodes. Even if you bootstrap, you're going to need some sort of guidance along the way. What's extremely helpful is if you have an investment team on your side. I'm sure there are horror stories of operators who don't get along with their investment team, which is why folks like today's guest Jay Levy are so essential.
00;01;04;20 - 00;01;28;08
In today's discussion, we went over the human element of running a SAS business and how lonely it can be as a founder. Jay stresses as a founder himself, how crucial it is to form a solid founder investor relationship. All that and more is coming up next from panel. It's Protect the Hustle, where we explore the truth behind the strategy and tactics of B2B SAS growth to make you an outstanding operator.
00;01;28;16 - 00;02;04;11
On today's episode Patterns yourself, Patrick Campbell interviews Jay Levy about the investor founder relationship. We talk about what makes a great SAS community the three types of investors focusing on the interpersonal side of the business building and maintaining the founder investor relationship and embracing the silence during investor meetings. Timestamps to each section are listed in the show notes, and after you finish the episode, check out the in-depth field guide that will help you understand the founder investor relationship.
00;02;06;07 - 00;02;08;07
Isaacman. So who are you? What are you guys do?
00;02;08;17 - 00;02;19;01
Jay Levy I'm with Zoho Ventures Early Stage Fund. We were based out of New York for 14 years. We recently actually moved to Miami. So I live in the you and everyone else, huh? US and everyone else. I'm from.
00;02;19;01 - 00;02;20;24
Miami. Okay, So you get you got some.
00;02;20;29 - 00;02;34;12
I got a little bit like I feel like I didn't just like rush back there, like, you know, ahead of the curve, say, But at first I was like, What the heck am I doing back in Miami? And I love it now. I really do. So they're building a great community down there. So we'll see where that all plays out from.
00;02;34;12 - 00;02;48;15
A community aspect, because New York obviously has a deep community. Obviously out in San Francisco Bay Area here where we're at is really good. What what makes a great community? Like what is Miami starting to put in that's going to make it a great ecosystem for investing founders, etc..
00;02;48;15 - 00;03;05;14
And when we started Zipcar over 14 years ago, New York didn't have that great of a community for tech. It had a great community for finance and other industries, but it wasn't known for startups by any means. There was a handful of venture funds and I think really what it comes down to is it's a lot of pieces of puzzle, right, that build a community.
00;03;05;14 - 00;03;25;15
So are incubators I think are incredible for building community. Right. Techstars came in to New York with Dave Tisch years ago and that really helped the ecosystem. So I think bringing more incubators, South Florida educational facilities, getting them involved, getting more founders down there, getting more successes. And it's not going to be one silver bullet. It's going to be a mix of a lot of different things.
00;03;25;15 - 00;03;42;20
And over time, yeah, hopefully Miami and South Florida will continue to grow. That community that's been growing very quickly. I think there was a step function because of COVID with the growth of the community and all the press that Mayor Suarez was able to get the city and what he's doing with Web three and Bitcoin and that was a step function up.
00;03;42;20 - 00;03;58;21
And now we've got to really get the rest of the pieces together with some real big wins, great talent, some incubators, education, everything. That could be a great place for founders. I'll tell you, the lifestyle is great. I play tennis almost every day. Everything's clean. It's beautiful. It's it's a great place to live. Coming from New York, that's great.
00;03;59;00 - 00;04;17;03
It's kind of funny because it's been fun watching Miami. You know, there's a lot of fun, like Twitter meme, stuff like that. But it's been kind of fun watching Miami because, you know, it's almost like there was a little bit of a base there and now it's like going really quickly. I know Mayor Suarez and even you can argue from the governor side, like also get a lot of things to kind of set this up.
00;04;17;16 - 00;04;39;08
But there's no like one person, you know, who's like, I'm going to set this up, Baba, You have a bunch of like, is it just each investor like you or each like founder, like just really talking about it, recruiting talent, trying to invest in the ecosystem. What makes an ecosystem go from maybe a little nascent or maybe incubating to like, okay, we're actually building this thing like, since no one's in charge, I think.
00;04;39;08 - 00;04;55;07
It's just going to be time continuing What's happening, right? And the people that you know, that know Miami, right? And you're like, you go to Miami, you got to meet with these three or four people. They know everyone there and they've been there for a while and they're really helping. And they really care about the ecosystem. And they're kind of the old school people and they're critically important.
00;04;55;07 - 00;05;05;23
And Miami's fortunate to have a bunch of those people and they really have taken a grasp. Those of us that are relatively new there to help get our footing down there.
00;05;05;28 - 00;05;11;12
I'm sure it's like that. The actual tactical pieces are like early events, you know, Happy Hour.
00;05;11;12 - 00;05;28;01
Is Weekly Happy Hours, get startups and founders. And, you know, the other beautiful part about Miami is everything's outside. So it's much more communal, right? So you don't have to worry about getting in. It's just come to this event, it's outside. People do things in parks, so it's much more open to everybody in a lot of ways.
00;05;28;05 - 00;05;45;08
That's awesome. Yeah. And I think like what's really kind of fascinating too, is it's the money and the recruiting I think really helps, right? I was part of the Boston kind of resurgence from like 2012 to like today, where Bos has been around for a long time. So there's a lot of different cycles.
00;05;45;08 - 00;05;47;09
We've done a lot of deals in Boston. It's been great for us.
00;05;47;09 - 00;06;05;22
Yeah, I just remember how having like a little bit of a central like list or a couple people who are always like putting on events or like, you know, paying for the booths, you know, that type of thing just really help because you kind of there wasn't like there was all this fragmentation. It was like, you know, in Miami kind of has that vibe because it's like we're going to make, you know, Miami great.
00;06;05;22 - 00;06;14;02
Keith for making his comments, going to Barry's, all that kind of stuff. In addition to eight sleep, talking about our recruiting X, Y, Z people, those types of things.
00;06;14;02 - 00;06;16;29
You know, Jason Calacanis brought his this weekend podcast.
00;06;17;18 - 00;06;18;26
Oh he's there like full time.
00;06;18;26 - 00;06;33;28
No, no. But they did their first in-person event with Saks and the whole crew and they had some great events and apparently people are trying to sneak into them. They had to have security all over the place. People were crawling under fences. And that's this is like, okay, something's happening here and people like to be here.
00;06;33;28 - 00;06;48;04
Yeah, it's kind of funny. Like you look at some of these ecosystems. I was also in the Utah ecosystem, which is kind of up and coming. But then you look at like Austin, right? Like Austin, it kind of had this like real big resurgence and it just kind of like leveled off and it's come back. I think, with the COVID stuff.
00;06;48;04 - 00;06;58;26
But like, what do you think really will turn and maybe you haven't thought about this, but like what turns like, I don't know, like, like a miami into a New York or you know, we can't really compare it to Silicon Valley because, you know.
00;06;59;08 - 00;07;26;19
I think some some winds, right. Like what made New York New York was there is capital, not necessarily startup capital, but then there were some winds that came in. Right. And people saw the saw the potential. Right. And then so off that. So you got to gather that snowball. And I think what you successes from Miami companies because what happens is the executives in go start other companies right it branches off too So you go from one company to two dozens to hundreds.
00;07;26;28 - 00;07;37;24
Maybe switch topics to like you as an investor, Right. Cause you've been in the game for a while now. Actually, maybe, maybe back up even like, why invest in like, what's your journey to here? Like, I'm sure you didn't come out of the woman I know. Yeah.
00;07;38;17 - 00;08;03;09
So I've always had an interest in startups. So about 15 years ago, when Larry and I formed Zuckerberg, we saw a need in the New York market for early stage capital. It wasn't there. There was a handful of funds, most of which writing larger checks two or three or 4 million. Some of them had, quote unquote, what we call it a seed funds term didn't exist back then, but they would apply the same rigor and diligence to a $3 million check as they would a $300,000 check.
00;08;03;19 - 00;08;19;27
And that, in my mind, didn't work because the companies are the same data points at least back then. And things have changed now with check sizes and things of that nature. Right. A $300,000 check 14 years ago is equivalent to a $3 million check today with the same data points. You need it for 300 you get now 3 million damn inflation.
00;08;19;27 - 00;08;39;20
Right? Exactly. But we saw an opportunity. It was very easy to start a fund back then from an investing standpoint, deal flow standpoint, because all you had to say in New York was, I'm writing checks. We got ourselves involved with some of the incubators really early. Techstars. We got involved with their second class out of Boulder, and that really helped propel us.
00;08;39;24 - 00;08;56;05
We had some early wins with some initial companies and we decided to keep at it and we're now on our third fund, 95 plus companies, 38 exits. I think we're at we've written checks 300 times. We're pretty much focused on B2B software. We like to do the seed, the seed extension and the A double down.
00;08;56;05 - 00;08;56;29
Yeah, yeah, yeah.
00;08;56;29 - 00;09;11;24
And we'll do most of our returns will come from the CDC extension, right? To be candid, we'll do the A when we need to signaling facts. We'd rather take that money we put into the and put into a CDO. But we invest the most invested in the companies six times so we do not care.
00;09;11;25 - 00;09;13;04
Which company was at can you would say.
00;09;13;04 - 00;09;26;29
Yeah I mean two of them actually locus energy. We invested, I believe six times and Crimson Hexagon and Boston Company, we invested and we did a bunch in Boston. We were on Crimson, helped Scout. We're in Spiro so Boston's and.
00;09;27;12 - 00;09;29;14
I'm a good friend of Knicks scouts and.
00;09;29;16 - 00;09;34;13
This was one of the first to really build the distributed model and wasn't forced to.
00;09;34;14 - 00;09;43;02
The number of arguments I've had about remote work with him just over like beers or coffee is just kind of funny. He's so passionate about it and like, he's done it really well and.
00;09;43;02 - 00;09;45;24
He's done it incredibly and he's went to bat for it.
00;09;46;08 - 00;09;53;06
That's and that's what I mean. Like he's so passionate about. Like, No, this is the way this is better for everybody, which is always really, really fun. So that's.
00;09;53;06 - 00;09;57;25
Very cool. Yeah, he was definitely, definitely ahead of the curve, to say the least, on that stuff.
00;09;58;00 - 00;10;04;05
And I know you and your crew have a reputation for being very founder friendly. You know, just.
00;10;04;05 - 00;10;08;24
Usually what you says there's a there's a few founders in the portfolio that might not agree with size one.
00;10;08;24 - 00;10;35;11
Review Glassdoor review here they're right. The reason I brought that up is not only because that's the way you structured things, like it sounds like you're like, no one's really like being founder friendly early on. That's our you know, it's both lucrative for us, but also the right thing to do. I think that there's obviously the cliche of like the investor, you know, not really providing value, not really helping when times are tough, not thinking about the founder.
00;10;35;11 - 00;10;52;17
And then there's stories of like just fantastic founders or investors who have like been there. You know, tooth and nail for and like what separates us too. How do you be a good investor? You know, because not every founder wants like that much help. Some want way too much help, I'm sure. Like, how do you how do you square that square that circle?
00;10;52;20 - 00;11;10;13
There's a lot to unpack that, right? So let me start with a few, like things that I always say. There's three types of investors, right? There's investors that will write you a check and add a ton of value right there. Investors that will write you a check and want quarterly or semiannual or annual updates. And that's it. Right?
00;11;10;13 - 00;11;28;07
And stay out of your way. And then there are investors that will write you a check and drive you nuts. The goal is to get the first two and not the third right. I always tell that the founders and the challenge around picking your investors, especially in what we're going through now with so much remote, so much digital, is you really got to get to know them.
00;11;28;14 - 00;11;47;15
And so much of that has to be in-person. Seeing the lights, their eyes, seeing how they react, going to dinners with them, seeing if you got right in. It's very much like dating. Right. And it's a long term engagement that you're going in. I tell founders all the time whether they've got an investor has one share or a million shares in your company, they can make your life miserable.
00;11;47;25 - 00;12;11;28
Right? Whenever we see an investor founder relations go south, there's unfortunately been a persona of who it is and why it's happened. And I'll throw it out there. It's a little controversial, but it's usually the middle aged, retired person who doesn't have much to do and is looking for something to do and thinks they can do it better and has an ego.
00;12;12;09 - 00;12;30;26
And and these are ego strokes. And that's when we've seen founder investor issues. So I always saw founders really get to know we're looking at a company right now I've said I will not write a check. I will not commit until we spend hours together in conference rooms and working through plans and making sure we can work together.
00;12;31;03 - 00;12;48;25
And listen, I might not be the right investor for you. You might not be the right team for us, but we got to get there. So don't just accept a check because someone says, I'm excited to write you a check for ten grand, 50 grand, 500,000. Like really get to know the person. And I think that building, that working relationship is how to start off that relationship, Right.
00;12;48;26 - 00;12;55;22
Do you think that's true for small checks as well? Because I could see someone being like a founder being like, Hey, it's a ten K check, 25 K.
00;12;55;29 - 00;13;15;02
I think it depends on who it's from, right? I think if it's a founder, founder and you see that a lot of smaller checks we see on cap tables are from other founders. They get it right so they can be more supportive. They understand what it is to be on that set table. I think you got to be careful when it's somebody who's investing who this isn't what they know.
00;13;15;17 - 00;13;30;16
And that's where you also run into challenges. It's like, you know, I do one deal a year, one deal every three years. You know, maybe I'm stretching myself a little, but then that's when you can run into problems.
00;13;30;16 - 00;13;48;15
It's really interesting what you said and you kind of you glossed over it because I think it's really obvious to you and it's a little enlightening here. It's just expectation setting, right? Like and do you think that investors don't they don't do expectation setting both ways, meaning investors won't set the right expectation, founders won't set their expectation. Investors, do you think that's the.
00;13;48;15 - 00;14;04;12
Crux of it? I mean, I think you've got to have that kind of come to Jesus moment together, right? And say, how are we going to work together? How can we be beneficial? And this is right for both of us. Are your expectations for what we're going to do and our vision the same as yours? Or are you least open to allowing us to run with our vision?
00;14;05;03 - 00;14;28;15
And that's where challenges happen. And I think a lot of investors don't appreciate how hard starting a company is and being the founder, CEO or co-founder co-CEO CEO, CTO. You know, we've surveyed our founders and I'm a big fan of Jerry Colonna and what he's done at Reboot. And I've been out to the VC bootcamps and they're a great experience.
00;14;29;01 - 00;14;47;03
You know, they're all about being a better board member. You know, that's kind of what the cover is of it. But it's really be a better person, be a better investor or be more supportive. And, you know, founders, we constantly hear this. They're afraid, they're lonely. Depression is incredibly high in founders, right? It's lonely at the top. And that's what they're dealing with.
00;14;47;04 - 00;15;03;08
Right. And I don't think enough investors focus on the interpersonal side of the business, right? Because at the end of the day, especially on the key stage investor. Right. So I'm betting on the jockey, right? You go to see these seriously like.
00;15;03;12 - 00;15;04;19
Spreadsheets of talent, a different.
00;15;04;20 - 00;15;26;10
It's different. It's a the business is already functioning right. Could it function as well without that CEO? Probably not. But it's not going to go out of business next day. Key stage company. It's all about the jockey, right? So we take that really seriously. I mean, one of the things that I always do, and I'm a big believer in get a board structure from the get go for a company, I think putting that framework in place is great for them.
00;15;27;09 - 00;15;45;13
After the board meetings, I want to sit down with the founder and really know what's going on in their life. How are they doing? Well, tell me what you didn't want to really say, right? Like in the meeting. What are you afraid of? Where are you be vulnerable. And challengers are afraid to be vulnerable in front of their investors because they fear it's going to show weakness.
00;15;45;21 - 00;16;01;03
And well, what happens when you do another check? Are they going to think I'm not a strong founder, strong CEO? So we really try to provide a space with our founders to be vulnerable, to open up and, you know, talk about what's going on. And one of the ways I do that is I'm not bought, I'm not a board member.
00;16;01;03 - 00;16;20;20
I like to be a board observer. So I don't have the same fiduciary duty as a board member does and as a founder. And it's actually interesting because we've had board member, founder, conflict and me as the Observer, I've been the kind of independent can kind of help jump through things with what's going on for them. So that's been a big area of kind of where we've had value.
00;16;20;20 - 00;16;33;22
I'm a semi trained corporate coach. I went through a bunch of the classes. I loved it. I read a lot of the books and yeah, actually Jerry and Reboot pushed me to do that. So big fan of them and what they've done for me and ultimately for our companies.
00;16;33;25 - 00;16;53;02
Yeah. And so something you said that I thought was really really valuable is the founder fear element because I think a lot of people like we all know it, but we don't really talk about it as much as that, especially in the sea stage. There's a ton of founder fear of not just like, Can I do it, but also if this thing happens, the business will go under.
00;16;53;02 - 00;17;15;20
Whether it actually would or not doesn't matter, because I think that, you know, all the things around I don't know how to do this. I don't know how to do that. And that's that's that vulnerability that's really hard to like show when there's a check or something that is needed for that survival or perceived survival of something. And so I guess is is it as simple as you doing some of those tactics you just talked about, which is, hey, what are the things you're not telling me?
00;17;15;20 - 00;17;18;14
What are the things you fear that you're not talking about? Like anything like that?
00;17;18;14 - 00;17;39;12
It is, but what it takes is really building that relationship over time, right? So getting that building that trust together. Right. And I tell founders, whether it be me or someone else, observer or a board member, try to have that one board member that you can have those real candidates conversations with and that true honesty, who then can be your champion within the board also and help you walk through things.
00;17;39;12 - 00;17;58;08
So who's that board member that you're going to call first when it hits the fan and isn't going to judge you and is going to sit down and say, okay, like, you know, I'll come right over, let's sit down in a conference room and work through this together. I think that's incredibly important. I think the board relationship needs to be a collaborative one and a lot of times it's not, unfortunately.
00;17;58;15 - 00;18;15;04
And I think that's on both parties. But the founders can do a lot to help build that collaborative nature. Keep your investors updated, not just monthly or quarterly updates. You have a big win. Let us now immediately text it. Like I always say that I know I'm in a good place when I'm getting texts at 930 at night from a founder.
00;18;15;11 - 00;18;26;27
That's when you know you've got a good relationship. And that should be I think the goal of all I say to investors is to get to that type of place with their founders.
00;18;26;27 - 00;18;40;09
Again, technically not to ask you how do you make friends, but by kind of like how do you build those relationships? Because I'm sure you have, you know, you have a ton of relationships with people you haven't invested in, right? Then you have a ton of relationships that people are like, Is there something that you've done to like, speed that up?
00;18;40;09 - 00;18;45;29
Do you go and, like, visit them for like half a day once their checks written like that's like, what do you what are you doing there to kind of like speed that up?
00;18;45;29 - 00;19;00;21
But before I mentioned, I like to spend a lot of time with the founders. You know, after it's I mentioned I like the board structure, but it's also delivering on the promises you made. Right? So if you say, Hey, I'm going to see X, Y, Z, you're going to do X, Y, Z, do it, do it quickly. Right.
00;19;00;23 - 00;19;23;09
And report back. Right. And then also take the time to read the updates, re read the materials and, you know, check in with them on tax. Hey, what's going on? How are you doing? Like I'm at this. I saw this, I saw this company. What do you think about them? That's the other thing is what I don't think investors do enough of is if you see a company tangentially related to a company you're invested in centered over the founder for their opinion.
00;19;23;24 - 00;19;41;28
Right. Flip the tables. Let them become the expert. Right. And frankly, they know more about it, right? Like I'm constantly asking founders what marketing stack they're using so I can kind of get an idea of what other companies are doing and take. So I think it really is like show them that you're there to support them and ultimately don't fight for the final point, right?
00;19;41;28 - 00;19;57;08
That's the big thing is it's not about the final point, right? So when it comes down to rounds or things of that nature, really make it a express to them, you know, if you're doing a funding round what your needs are, hear what their needs are and see if there's a middle ground that you can both compromise on.
00;19;57;10 - 00;19;59;13
And I think that really helps build a good rapport.
00;19;59;17 - 00;20;17;03
Build a relationship, you know, a rapport. It's a lot of standard stuff and a lot of like stuff you just mentioned that's like nice in terms of like making sure you flip the table, which I really like when you're dealing with some of these founders who aren't given some of this back to you. Like have you had that situation or you've already kind of vetted that beforehand.
00;20;17;03 - 00;20;46;06
So what I always say is the relationship is going to change over time, right? We're a seed investor. I don't expect when Sequoia or Andresen comes in to one of our companies with a $50 million check, or they're going to have their views, they're going to have their ways, and that's slightly fine. But what the founders know is and this typically happens, is when someone from a later stage finds one of the board members is on their ass and they don't know how to deal with it, they know they can pick up the phone and have that conversation with me.
00;20;46;06 - 00;21;07;27
And that happens, right? And that's the rewarding part. I listen. The other thing is I can't be involved in every company throughout the entire journey that makes this business like this is not scalable already. Let's let's make it less scalable. As, you know, trying to be on 60 boards. So, you know, we tend to be super involved in the first two or three years and then again actually pretty involved in the M&A because we've had so many exits, we can help there.
00;21;08;00 - 00;21;29;08
So that tends to be and then you get to the the B, C, and D, and these investors are better suited. They're seeing more companies at those levels to be able to find the advice. I'm seeing more companies at C in early stage level to provide advice. And so I think it's also as an investor, knowing your time and place and getting back to where I said earlier, the we're actively seeing things go wrong with that.
00;21;29;23 - 00;21;41;04
So I'm an investor. That investor also doesn't understand why it's maybe time for them to step back. And I think understanding when it's time to step back as an investor and early stage investors are critically important also.
00;21;41;05 - 00;21;57;12
Yeah, So we laid a foundation, we built a relationship. We kind of vetted that before we got into it. We're hopefully like getting a really good communication between the founder, founder and you, or as an investor being a great board member or being a great investor. Like what else? Like what else is on that list? I know there's a.
00;21;57;12 - 00;22;14;13
Lot perch that from being a better board member because investor to me thinks pre investment, right? You're supportive investor of board member once you've invested. I think it's a lot of what we've been talking about is really being there for the founders, being there for the team, helping them out where they need it and what they need at time, and also knowing when to tell them you can't help.
00;22;14;13 - 00;22;32;24
It's not your expertise, right? We can't know everything and that it can be as valuable as helping at times or pointing them in the right directions. And then it's also taking the learnings from other companies and obviously and honestly, as best we can. But you know, what have we learned in other places? What have we seen? Right. It's your company.
00;22;32;24 - 00;22;48;16
You've got to run with this. You're going to make mistakes. If we can help you avoid some of those stakes. We're doing a great job, right? And then it's really like being a sounding board. I mean, the one I always get is we always say any company in the SAS company, you're going to hire and fire your first head of sales.
00;22;49;09 - 00;23;12;04
You're going to hire them probably too quickly. They're not going to have the passion. You have the founder, right? Every founder wants their head of sales, have the same passion and conviction and belief that they do. Okay, give me 80% company, right? They're getting a salary commission and a few points if that like they're not going to have the drive that you have I want to say and every company that person has been let go.
00;23;12;04 - 00;23;28;19
And really what it comes down to is I get those phone calls and it's usually the phone call is like, are you not approving this from a, you know, check the box standpoint? Like, can I just talk through this? And usually it's too late. They've tried. So I think a lot of it just being a place to have let founders vent.
00;23;29;00 - 00;23;45;23
And that's what coaching is really about, right, is let people talk and they know the answers themselves. Help them get the answers out of them, Right? No one investor should know a founders business better than the founder, and I think that is critical for both founders and investors to realize.
00;23;50;24 - 00;24;09;00
When I think it's really important to like have a state that almost plainly within the relationship because I think is a good number of investors who kind of do the same thing that founders sometimes do and try to like front in like, Oh, go. But obviously you have 60 investments, you're not on 60 boards, but there's a lot that you're looking into.
00;24;09;00 - 00;24;26;21
And in those coaching sessions, I guess my next question is around like how do you sometimes structure those, right? Like people are coming in, you're letting people vent, that type of thing. When do you kind of know when to kind of like push and push back and when, you know, to kind of just be that sympathetic gear. And it's probably not there's not a framework for it, But.
00;24;26;21 - 00;24;45;25
You embrace silence, right? And people don't like awkward silence. And what do they do? They talk, right? So if you just sit there, you let someone talk, they will tell you everything. So I read some stat that apparently, like when you're listening, it takes 18 seconds before the average person interrupts.
00;24;45;25 - 00;24;50;23
Oh, wow, 18 seconds. Interesting. Like before someone.
00;24;51;01 - 00;25;06;26
So we're having a conversation and I'm telling you something, right? I'm giving you my thoughts or my feedback to 18 seconds before you're interjecting, Right? We don't do a good job of listening, Right? And because we're constantly thinking about what we want to say next, right? You're saying something. I'm thinking about what I just said.
00;25;06;26 - 00;25;08;28
I'm thinking about my next question. How do I guide it?
00;25;08;28 - 00;25;32;12
Yeah, Yeah. And taking the phones out of the room. Like one of my biggest pet peeves is having laptops and board meetings from an investor standpoint. Because what's on my laptop, my email, my text messages, Instagram, Facebook, like distractions. How about like sit back with the notepad and be present like, well, what? Can't wait 2 hours? Yeah. And if there is something you typically know that's going on and you take a break and you check it.
00;25;32;12 - 00;25;46;15
So that's always been one for me. I'm like the guy in the board meeting with like an old school notepad and, you know, taking notes and sitting back and like, listening and everyone's like typing away and you look at the screens that they're you're not like, take taking notes from the meeting.
00;25;46;20 - 00;25;48;08
No, I see plenty of emails, but yeah.
00;25;48;13 - 00;25;53;22
There are emails, right? Like, how can you be present? So I think being present is critically important.
00;25;53;22 - 00;26;09;27
Also right now it's really good advice on a number of levels. I guess interesting enough, like I know you talked about investing and like getting started, but when you were growing up, you know, was this what you wanted to do? Like why not be a firefighter or why not be, you know, a chef or whatever else other thing?
00;26;10;03 - 00;26;12;24
So growing up, I always want to do something with finance. I knew that.
00;26;12;24 - 00;26;14;06
Okay, so you were like in it to win it.
00;26;14;06 - 00;26;31;03
You know, I always I grew up in a very entrepreneurial family. I always I grew up in South Florida. I left I went to Rutgers because I want to be close to New York City, knowing that if I stayed at this is I'm 41. So that was, you know, 20 years ago, if I stayed in South Florida, I'd wind up the only thing in finance I could be was a stockbroker.
00;26;31;03 - 00;26;46;12
And that's what I wanted. And I was fortunate. When I was in college, I started a company with two other guys. I was a second employee. We grew to 500 people. I saw the birth, life and death of a startup in my dorm room, and then I went to work for Morgan Stanley after that. So I got onto Wall Street.
00;26;46;12 - 00;26;58;12
So I always knew I wanted to do something entrepreneurial along with something related to finance. I didn't necessarily think it was going to be the side of it, but I love what I do. I get to work with great people and I'm spoiled because I get to pick companies I want to work with.
00;26;58;14 - 00;27;08;19
That's great. And do you think that that experience of being an operator like before you're an investor, does that matter? You think, like, should I look for that as a founder, looking for investing?
00;27;08;27 - 00;27;28;17
Absolutely. You know, and in fact, you know, I'm been doing it for 15 years, so I'm further away from operating. But I have a partner in a winery that called up fruit Wines that I use as a test for for a lot of the software, a lot of the ideas to stay with it. Right. We do, you know, online wine sales and I love it.
00;27;28;17 - 00;27;41;20
And, you know, it keeps me kind of as a founder also at the same time, because it's very easy for an investor to relatively quickly lose those skills. And I wanted to figure out how to keep a school.
00;27;41;26 - 00;27;45;02
Ask Ben, where can people find you anything you want to plug?
00;27;45;02 - 00;27;53;21
Yeah, they'll cover ventures. So. ZIELKE Via the SI.com or at Twitter at Zivkovic the Elko VA.
00;27;53;21 - 00;27;54;26
AVC Very cool.
00;27;55;16 - 00;27;58;14
00;27;58;14 - 00;28;26;20
A huge shout out to Jay for doing the podcast. Now you have insight into the founder investor relationship. Today, we talked about what makes a great SaaS community. The three types of investors focusing on the interpersonal side of the business building and maintaining the founder investor relationship and embracing the silence during investor meetings. If you want to support Padel and the show would really appreciate it if you left a five star review of this podcast or the equivalent rating wherever you listen or watch.
00;28;27;00 - 00;28;34;29
Thanks for listening. Make sure you subscribe to and tell your friends about Protect the Hustle, a podcast from Paddle.