Episode 126

Bojan SImic: How to Raise Millions in Venture Capital Funds

Bojan Simic is the Chief Executive Officer & Chief Technology Officer of HYPR (spell it out). Bojan’s vision is for the elimination of shared secrets and his experience in authentication & cryptography serves as the underlying foundation for HYPR technology and company strategy. Previously, he served as an information security consultant for Fortune 500 enterprises in the financial and insurance verticals conducting security architecture reviews, threat modeling, and penetration testing.

April 2021 that HYPR closed series C Funding of $35 Million doubling the company's total to $70M.

Bojan also serves as HYPR’s delegate to the FIDO(Fast IDentity Online) Alliance board of directors, empowering the alliance’s mission to rid the world of passwords

Transcript
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Welcome to the business MRI podcast.

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I'm your host, John Barker.

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We have a returning champion today.

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Boy SIMIT.

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He is the CEO of hyper H Y P R E in it.

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Who mission is to rid the world of passwords.

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They have.

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Fishing proof multifactor authentication program.

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They have re uh, raised over $70 million to revenue from companies such

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as Comcast, MasterCard, and Samsung to name a few billion also serves

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as hypers delicate to the fighter.

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The fast identity online Alliance, a board of director.

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And again, whose whole mission is to get rid of the world, uh, passwords.

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And they just released the press release that was last week about

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doubling revenue over the previous year.

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So I want to thank William for coming on and also say

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congratulations on the success.

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Thank you.

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It's a pleasure to be here again.

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And I appreciate the congratulations.

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Although in the startup world, you know, you're expected to

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double revenue every year, so Hey.

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Just, we keep saying that that's, that's how it's always feel.

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Good.

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So one of the, one of the things that I think, you know, we dove into on the, on

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the first one, a lot about the technology kind of your background, but I think,

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and I think you even kind of mentioned it and it was kind of a, my feeling as well.

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Really?

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What is that process?

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A deeper dive in that process of going through.

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As you called it painful experience.

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So trying to raise venture capital because maybe there there's a lot of people out

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there now you see this stuff all the time.

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Uh, there's a guy in it.

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There's a hashtag out there called we, we hack health and it's a group of basically

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tech professionals in the fitness.

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Uh, system, they just rang the bell on the New York stock exchange yesterday.

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And I was like, dude, that's like, awesome.

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Um, can't remember something zero T Chris don't if you hear this, don't

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don't yell at me for not rarely, but anyway, um, but being able to go through

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that process, kind of what you're envisioning is looking to as you grow.

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And I wanted to have that, that more in depth conversation.

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Um, so to kind of, to kind of kick that off, how did, how did.

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When you came up with, we've got, I've got a better tool.

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I got a better solution to get rid of passwords.

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And we want to really try to drive this forward.

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I mean, is this like a couple of guys in a garage scenario?

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Like the Google startup?

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I mean kind of, where was that?

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How did that begin?

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Yeah, it was kind of like that, except we were in New York city and we met at

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a Bitcoin meetup, but yes, very similar.

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Um, but yeah, look, it all starts out with just an idea or talking about a problem.

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Yeah.

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Hey, there's this problem.

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Ours was gee.

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There's a lot of fraud happening out there.

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And if you look at the least common denominator, it's because of the way

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that people are authenticating to things.

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And so from that point on out, you just get a few, uh, reasonably intelligent

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people in the room, but ones that are very stubborn, uh, as well.

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And don't like to give up on.

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No matter how bleak, uh, and outlook might be.

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And then you start to build technology and you take a step by step and

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eventually you need more and more capital to keep growing the business.

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Uh, and that's when you go out and you put your hands out to venture

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capital investors and, uh, you know, hopefully some of them take it back.

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So w with you guys, what did you have a baseline of like a minimum

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viable product and then VP that you guys got functioning first?

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Do you, did you have like some market test, a couple of small

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clients that you're trying to prove the concept before you started

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getting to that area of going okay.

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We've taken it this far with our small team, but now we really need to ramp up.

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What were some of the milestones or checkpoints that you had before even

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starting going down the VC path?

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Yeah, so they're like really forties.

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That is what we call them in, in technology.

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Um, or in building a company when, when you're looking to raise capital,

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um, the forties are technology, right?

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Is the tech good?

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Uh, the second one is tracking.

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What traction do you have with your technology and with your product?

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Um, the third one is timing is the thing that you have going to make an impact.

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Is it going to be a viable business in the immediate to short term and a four?

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It is the team.

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And if you have all four that's phenomenal, that means you're probably

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not going to have a very difficult time raising venture capital.

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Did you know those forties when you started or did you learn that?

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Was that a learning?

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I learned, I learned the hard way, cause that sounded very polished.

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And like, you've done that before and I'm like, hold on a second.

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If you know that going into this.

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No, actually I am, when we first started, we didn't have any of those.

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So, um, you know, myself and my co-founders, you know, we're

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first time founders and so.

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That immediately takes the team part out of it completely, you know, not

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only are we first-time founders, but we also have never really built

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anything historically of constant.

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Yeah, you got a lot of people right now that raised venture capital because there

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were employee 120 at Google or whatever, you know, and they go out and raise money.

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And that's why you see all these people on LinkedIn with like X, Google,

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X, Facebook, X, whatever, um, as part of their fundraising strategy.

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We didn't have any of that.

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So the team thing was just completely shot.

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Um, timing.

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It was debatable, you know, we were going to people and say like,

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you used to get rid of passwords.

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Uh, and, and while everybody's like, yeah, passwords are terrible.

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I don't like passwords is the timing, right.

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For adoption in the immediate term.

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So that was very much debatable, debatable whether or not we had that.

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And I'll tell you right now at that time, this is circa 2015.

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We did not have it.

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Um, so we had to look at traction and technology.

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And so we went out and we built an MVP, uh, and we talked to some potential

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customers of at it and we polished it.

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And then we.

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Basically came to the understanding that we want to raise any

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venture capital money whatsoever.

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We had to get traction with the technology that we had built.

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And so, uh, it wasn't until we did that in a meaningful way that we actually,

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uh, were able to secure funding.

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There are many people today that are able to get funding without any sort of

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MVP or product it's because they, they have the team and the timing piece.

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Much more flushed out.

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Did you go into, so did you go into the process of going,

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Hey, we've got this idea.

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We want to build this solution set.

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This is the problem we're trying to solve.

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Did you go into it knowing at some point we're going to go have to raise money

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to really get this where we're going or was that kind of, you, you kind of

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went so far and you're like, oh wow.

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We need help.

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Yeah.

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We knew that we were going to need capital, uh, and a fair amount of.

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Um, none of us are, you know, independently wealthy.

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To the point where we can just not have a paycheck for years and

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years, try to bootstrap a business.

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So for us, we always knew that we needed a capital, so it was always a race against

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the clock, um, of like, okay, when.

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When our families and loved ones, I get sick and tired of us draining through

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our savings account and not paying the bills, you know, uh, to the point where

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you have to pull the parachute and possibly get a real job, uh, to, you know,

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so that, that was always the balance.

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Uh, and it's not always the easiest conversation to

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have with people who depend.

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Sure did.

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So you go through the process, you got your MVP, you've got some you're, you're

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getting some traction, you're getting some good feedback at the point that you said,

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okay, we think we're good enough to go out there and start doing some outreach.

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What, what did that prep work look like when you, when you thought you

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had, w you kind of reached that base?

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Well, and those early days, and this was our first time doing it.

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You, you just Google it and like, what do I do?

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All right.

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And people's blog posts come up and all that type of stuff.

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And, you know, first thing you do is you put together a pitch deck, right.

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And in that pitch deck, you, uh, you're, you know, you should

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have plenty of market data.

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You should have plenty of research.

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Uh, we had some of that.

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We, you know, some of it we did not, um, and really like.

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We didn't pick any particular point in time.

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We just started sending out feelers, uh, crafting different

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messaging that we thought might resonate with potential investors.

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And look, these investors, they love talking to founders.

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They love talking to startups.

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It's literally their job, right?

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So any one of them will typically take a meeting with you.

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If what you have is compelling enough and the market is potentially big enough.

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Um, but you know, that's the easiest one.

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One of the things that, and I wish I could find it.

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I read a book on venture capital probably 10 years ago and I

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couldn't, I couldn't find it.

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He kind of lost it to time.

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One of the things that I kind of remember reading is that they there's a, there

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was a balance between the idea, but also the kind of the founding teams, their

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personality, and kind of their drive.

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Did you find some of that in the early phases where people were trying to

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fill you out as a person, as much as the business idea that that was kind

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of behind there to see if you have.

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The drive the chops or whatever those intangible characteristics are.

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Yeah.

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Like, look at that.

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Um, that's critical because the T I mentioned the forties

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T the team is probably the most important one, uh, by far.

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And so that's why a lot of times you see.

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People raising venture capital with a good team without any

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sort of product or anything else.

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Uh, it is very rare that a group of people will, or a set of

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founders will raise capital, uh, without, um, without a good team.

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Um, they have to have just overwhelming traction, you know, like we, um,

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we have to have, we had to have a fairly significant amount of revenue.

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With marquee customers before we were able to raise venture capital because

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we did not have, you know, we were not able to check the team checkbox

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because we just weren't proven enough.

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And if you're an investor, a venture capital investor, you're, you're looking

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to invest in a group of people that you think will ultimately grow the business

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10, a hundred times from what it is today.

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And that just requires experience.

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And I guess going through those, I remember you saying, I believe

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it was, you were rejected seven to eight times during that process.

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What, you know, and I remember we kind of briefly touched on it, but

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when you were, when you would do your, your pitch, where you getting feedback

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of going, Hey, you're missing this or were they kind of keeping their

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hearts, their cards close to the chest?

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For whatever reason, but for you to be able to iterate your, your presentation

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next time, or go fill those gaps that you are missing, whether it was in the

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team or you needed more marquee clients or something like that, where you getting

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actionable feedback from that process.

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Yeah.

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Some of them will give you very good feedback.

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Like the investors that really take the time to understand

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what you're trying to solve.

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They will give you a really good feedback, even if they choose not

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to invest at that point in time.

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But a lot of them will just say, uh, You know that the timing is

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right for this type of solution.

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Uh, let's talk again next year.

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You know, that's a very typical response or my favorite is, uh, let's

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stay in touch, you know, we'll see how your quarter finishes and then

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maybe we'll have another conversation.

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Um, you know, so, so the thing is they will, it is very rare

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for an investor to just tell you.

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Absolutely no, because they want to, you know, keep their options open.

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At all times, but most of them will say, okay, not right now, or let's

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talk later and so on and so forth.

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And frankly, that's okay because the founder investor relationship is not

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one that just comes out of nowhere.

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Um, a lot of the investors that we work with today and the ones we

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worked with in the beginning, we had pitched them three or four times.

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We had known them for a year plus by that point.

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So they had, they had seen us pitch to them, get feed, give us feedback, us,

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reiterate our approach, improve our pitch, improve our product, get more

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traction, come back to them and say like, look, we still haven't given up.

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We still believe in this.

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These are the improvements that we made.

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Look at it.

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And only then where were you able to actually get investment?

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So all the investors that gave us.

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You know, gave us funding and our first funding round, we had known already

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for quite some time and it pitched them multiple times and had been

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turned down multiple times by them.

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So, yeah.

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Okay.

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So when you, when you're talking about the, all the, the number

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of rejections you went through before you finally got that first.

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That may have been, somebody may have, it may have been the

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same one that said not yet.

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Not yet.

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Not yet.

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Oh, okay.

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Now we're ready.

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No, that was 78.

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That was 78 different investors.

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Okay.

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That's what I was getting to I'm like, or was that truly seventh grade?

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So it was probably a lot more than how, how hard is that?

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I mean, w where you think every time you're near.

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All right, we got it this time.

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And to, to keep it, I mean, how do you, cause there's a mental,

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there's a mental thing there.

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How do you know, keep pushing through that?

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It can be heartbreaking, you know, especially like once you get to the

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point where you get through that initial meeting and then you get to the broader

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partner meetings, you know, and then you're presenting to an entire group

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of investors that work at that firm.

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And then, you know, you think the pitch went extremely well and.

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It's still doesn't happen.

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Uh, like those are the worst ones.

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Um, but you know, it's just about being resilient.

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It's about, you know, having conviction in what you're doing, um, and sticking

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to it for as long as you possibly can.

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There are many, many great ideas out there, many great products out

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there, many great MVPs, uh, that have been built that just didn't

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have the right founders in place.

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Who are willing to stick it out, to take the company to the next level.

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Um, and sometimes that's really all it takes.

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So what was the process like when you are told?

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Yeah, we're going to stroke you a check.

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It was like, okay, how much.

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You know, it was about, well, this is where all the paperwork comes into play.

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Right?

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Because at this point you're a small company, handful of people, you have

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to get all your legal stuff in place.

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Right.

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You have to get your company's valuation.

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You have to incorporate the proper way.

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Right.

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Are you a Delaware Corp?

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All that stuff.

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Right.

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Um, so all of the paperwork stuff happens.

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All the background checks.

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Everything else.

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Uh, and then, and then you start walking or slowly jogging on the,

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uh, on the venture capital treadmill.

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And there is no getting off once.

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Elaborate.

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What, what do you mean by the venture capital treadmill?

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So typically what you, what you do is when you go to raise venture capital,

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like you have a discussion with your investor, who is your partner now?

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So any investor that chooses to go to.

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Committee and say, I believe in this company, I believe in these

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founders, we need to invest in them.

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They're kind of putting their neck on the line of it as well.

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So you're really partnering with the investor.

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It's very important to have a great relationship there.

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So what you do is you talk about how much money you need, how much

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money they're willing to invest.

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Um, and then you come up with a.

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Uh, about what you're going to do with that money, what you're going to spend

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it on and in what period of time.

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And so typically you will come up with a two year budget.

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You get that you get a chunk of money and you need to come up with a

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two-year budget of what you're going to do with that money to spend that

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money over a two year period, because investors have to recognize value

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for their investment at some point.

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So it's not like they're, you know, it's not like they're getting

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any residual income or revenue or anything based on their investment.

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They don't actually recognize value or they don't actually cash

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out anything unless your business is acquired or you go public.

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Right.

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So they're just sitting there in limbo more or less.

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Um, so you really come up have to come up with a two year

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budget typically to spend them.

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And hopefully within those two years, you spent that money appropriately

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to the point where you've gotten more proof points in those forties to

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get another venture capital funding.

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Okay.

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So that's when you go from, what do they call it around a

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round B round CE or something.

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Okay.

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Now, when you, when you get this, I, I, are you looking for more

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than just the capital resources?

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Are they bringing part of their network into this?

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Are they bringing additional management oversight?

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Because.

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They've had resources that have been there, done that type of thing.

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Are they bringing that to the table as well, to help

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accelerate, you know, your ramp?

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Yeah.

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A lot of them investors have taken so traditionally Metro capital

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investors decades ago, you know, they provided primarily capital.

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Um, but in the last 20 years or so primarily the last 10 years really

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venture capital investors have really started to build out additional,

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um, Uh, value adds that they provide to their portfolio companies.

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So like some of our investors have been just amazing in helping us

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recruit, like helping us get really good senior people to help take it,

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take the company to the next level.

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Other investors have been better at making introductions to potential customers.

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Uh, others have been really good at helping us get our

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stuff together with regards to.

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Uh, our back office processes, you know, how do you, like you're

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a small company, you just raised some capital, you don't have money

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to hire a full-time lawyer team.

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Right.

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So they will lend you their attorneys, or they will, you know, provide you with,

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um, Paperwork and templates for meeting certain regulatory requirements, things

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like that, stuff that you, as a founder coming from, maybe a technical background,

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know nothing about, but they're there.

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They're ready to help you with a lot of those things

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that you may not have no idea.

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Like how do you do payroll?

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I don't know if you asked me today.

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I have no idea, but like when we got our first investors,

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like they helped us with them.

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Gotcha.

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Now, Does it make the subsequent rounds then as you continue to bump

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up your forties, you're, you're getting more higher quality clients.

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You can sit there and go, Hey, look, who's invested in this.

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Now, did that make the subsequent rounds much easier than, or did you still

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face some resistance in that process?

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It can be much easier depending on how well your business is doing.

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Um, so we've done four rounds of venture capital.

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Now there've been, there've been rounds that were far.

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And there have been rounds that have been pretty difficult, right.

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Just depending on how well you're doing in those different areas.

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Um, and it also really just all depends on the investor too.

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Sometimes you'll have more, um, you'll have investors who are bolder

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in their thinking who believe in the big vision of the company and their.

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Not not so they don't care so much about the nitty gritty details as much,

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they all care about them, but some don't care about them as much, whereas

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you'll have more conservative investors.

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They're like, they just look at the XP Excel spreadsheet.

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If the numbers don't make sense, they're not going to be able to move forward.

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And so it's about finding a balance because sometimes if you just have

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pie in the sky type of investor, Then, like, you know, everything's rosy

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all the time until it really isn't.

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Um, and then, you know, they tend to kind of.

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Behave differently at that point.

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Did, did, was there any reshaping when you, when you finally get this, you

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start getting the advisement from, from your investors, reshaping, the

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business model, or tweaking a little bit of what you're aiming for target

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demographics or things of that nature, that from where your initial path was,

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where you had to kind of, you know, you took a side step to go forward in a

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different path at all, or were you able to maintain kind of the, the initial.

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Original vision before you went the venture capital route.

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Yeah.

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It evolves.

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Right.

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And your investors will help you ultimately on figuring out

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the right go to market strategy.

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If that's what they know how to do.

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Um, and typically investors like with venture capital investors, a

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lot of people think that like you get venture capital investors that

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come in and just tell you what to do.

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That's hasn't been our experience whatsoever.

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Our investors have always just come in and said, Okay guys, this is what our

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portfolio companies that are outperforming significantly have in common.

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And here it is take advantage of it if you want to, or we're not

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going to tell you what to do.

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Gotcha.

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Right.

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Um, so, um, so for them, you know, Tell you to do anything in particular,

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but they will provide the guidance about how you take that guidance.

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Um, sometimes if you're a first-time founder like myself, you know, you kind

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of have a bit of a imposter syndrome at all times, or you're sitting in

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a room where like, it's, it's my first time being on a company board.

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Right.

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The person I'm sitting across from is on the board of 10 companies and

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has been doing this for 25 years.

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Like, what the hell do I know?

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You know, so it can be a bit of an imposter syndrome, but the fact

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is you just have to understand that they will never understand

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your business the way you do so.

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Not that you should take the things that they say or advise with a grain of

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salt, but just take it as input into.

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Making your business better, um, because, and they completely understand that.

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Um, so yes, our, our, our approach has changed in some regards, but

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the core value of our product and our business still is.

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Going forward, just, just a brief snippet, because I've never shared, you shared

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this with you before I was 22, I was part of, uh, a startup that received

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a, uh, eight figure investment after I'd been there for a year and a half.

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And we knew that that was the part of the goal.

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And.

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Some stuff was not shared with us.

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And then I had ran, uh, entire network operations at this point at this place.

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And no kidding.

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We went from Tuesday.

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It was one way and Wednesday, there was like a, an army of new people that

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just showed up and like blew the place apart from where it had been before.

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And that had just been.

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Own single experience again, you know, almost 20 years ago at this point.

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And I didn't know if that was kind of across the board or how that kind of

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functioned or if it was kind of the, here's your thing, we're going to

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be your advisors and try to help you because obviously they want a return

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on their investment at some point.

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So at some future point down the road, How often do you have to,

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now that you sit there, you've got this new partner involved.

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How often do you meet to, to have to say here's the checkpoints that were going on,

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you know, milestone updates or court, you know, like quarterly meetings or annual?

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I don't know.

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Yeah.

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So we have like quarterly board meetings with, with everybody.

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Um, and then, but I will have as, as a COO, I'll have, um, I've touched points

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with certain board members, some Bibles.

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Oh, there's monthly.

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Uh, just to make sure that we stay aligned and we're on the same page.

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Um, because the thing that everybody hates is surprises, right?

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You never want to show up to a board meeting and like, you, you know, you,

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you unveil something on a slide and people are like, whoa, why didn't you

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know, why didn't you tell me this?

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You know, two months ago I could have helped you with it.

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So.

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Staying on the same page with investors is critical, but at the same time

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kind of understanding, you know, when it's too much, because a lot of

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them truly do want to be helpful, but sometimes they can be too helpful.

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Right.

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Um, and so finding that balance with each investor is different.

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So I have, you know, investors that I talk about the details

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of when we get on a call.

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And then investors, where we talk about more abstract topics.

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Uh, it's just about knowing who can help with what and when and how

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to, um, leverage that relationship.

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You just brought something and you just do.

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You went through different rounds.

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So you got a ton of different investors in there.

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Are you meeting with these guys each one individually, or do you do this in like a

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group, you know, or is there like a group setting where everybody that has kind

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of a piece sits at the table with that?

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So at the board meetings, everybody cottons.

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Um, and so typically, um, when you, uh, when you have a company

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board, you have board directors and you have board observers.

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So not every.

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Investor is a board director.

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And so really the, the observers have an ability to come to the board meetings, ask

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questions, be part of the conversation.

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But when it comes to like voting on certain things, the directors

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are the ones who do that.

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And so I tend to have regular touch points with all of my, um,

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directors and with my observers.

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They're less freaky.

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With, with the way that the, and I don't want to, I'm going to preface this with,

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you know, I don't want us to do obviously disclose anything that you feel is like

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an internal company, secret type stuff.

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So we'll keep it generic if you want.

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But what are you, you you've went through this process now.

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Um, you, you know, you went through four rounds.

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What are the return on investment expectations?

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And like timeframe, you, you know, I've I stuff I've read is, you know, most places

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are looking for a 10 X return because they know not everything is going to

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be a hit when they're venture capital.

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So they've got to make up for those ones that, that don't.

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But what w you know, you're, you're having those pitch meetings.

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You finally get it.

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Do you have expectations of, Hey guys, you know, we, we

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like what you've got going on.

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We expect you to either be acquired or go public IPO within a decade or

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five years or something like that.

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I mean, do they start putting.

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The parameters around that they get adjusted as you see

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how the market takes shape.

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So they don't, your investors will never, at least from my experience, they'll

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never tell you like what you should do.

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Uh, but you know, the expectation for them is to have a, uh, event

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within five to 10 years, you know, and depending on when they invested

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in how much they invested that, you know, their expected return will be.

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Um, and so really, you know, I've never, I've never really had the conversation

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with any of our investors around exactly what timeline they have an expectation.

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Uh, they understand that we're growing a business and every

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single year we'd need to be making meaningful progress like everybody's.

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And if that happens, then the outcome that everybody wants will occur.

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Um, so like typically.

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Yes, investors do want a 10 X return.

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Of course, a lot of them are happy with a three to five X.

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Um, again, depending on how long they have had that capital committed,

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you know, if you invest in something today and then a year later, you

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get a three to five X return.

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That's damn good.

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But if you invest something today and then seven years later, you got a 10 X return.

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That's.

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Uh, you you're equally happy in that regard.

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Right.

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So, um, and then there's companies of companies that become

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companies of consequence, right.

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Where an investor can say I was the first investor in that company.

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Um, and so, you know, like the first, the guy that first

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invested in, in Google, right.

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Like, right.

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Because those types of reputational investments improved.

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Your standing within the entrepreneurial community because the venture capital

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landscape is very competitive.

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Like these guys compete with each other all the time on deals and that

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reputation is really important to them.

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I knew, uh, employee number 30 at.

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Pre IPO.

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He retired at 32.

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So there, yeah, that's my that's my claim to fame from 20 years ago,

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obviously is AOL around anymore.

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Do you guys have, you know, the product that you have with hyper

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or can be considered really niche in the cyber security space?

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As part of your growth strategy, and again, feel free to disregard

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the question, but to acquire other technologies to bake and more

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encompassing other areas, or what's your.

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Or is it just continuing to expand your, uh, the product in its current state?

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Excuse me, the client base in the, in the, in this case.

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Yeah.

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Our primary strategy is to kill the password right now.

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Right.

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So when, like, I think that's some people consider it niche in the security space.

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Absolutely.

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Um, but when we think about the companies that come to mind, when you

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think about a startup or a successful.

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Tech company in your mind, right?

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You like, what are the S what are the companies you think of?

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Right.

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I think of like Google, right?

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I think of like Facebook, I think of apple.

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Right?

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I think of stuff like those are the companies that everybody knows.

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I even think about, you know, places like AOL, right.

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To some extent, like that was, that was all over the place,

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you know, in, in the nineties.

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When you think about businesses and their applicability at internet

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scale, like, so let's just think about some things that every single

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person on the internet has in common.

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Well, we all use a browser.

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Thank you, Chrome or whatever you're using.

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Right.

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Google.

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Um, we, we all use a search engine typically.

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Google.

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Um, pretty much everybody has some sort of social media, like,

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like an Instagram or a Facebook.

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Um, but even more prevalent than any of those.

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It's like every single person on the internet has a password.

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It's not just one, they have hundreds.

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So when we think about the scale of the problem and the opportunity size over.

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It is huge.

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It's dry.

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It's like we're sitting here, like w we sit here and often talk about

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like, oh, you know, companies need MFA, blah, blah, blah, blah.

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Yes, they do.

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And that's the thing that's really critical today because it's all

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over the news and lapses just hacked this company or that company.

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But like, when we think about the actual scale of what our

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businesses accomplishing.

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It's massive.

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Right?

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And so if we're successful at that, or the next 2, 3, 10 years, like there is

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a, there is a reality in which we're sitting here in 10 years talking about a

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hyper in the same way that we are talking about Google or Facebook or those, right.

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If, if that is the.

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For me to log in to us to do this podcast, I had to sign into three different things

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and use two different MFA tools because of the way they live, they were linked.

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Exactly.

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And that was just to record this podcast.

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So going and going in.

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Um, no, and that's awesome because th the problem, the problem is gigantic.

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And I, and I'm glad to see that there is, you know, other people

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that in the vestment, whether they had a tech background or

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not, I don't, you know, obviously.

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You know, someone like Comcast or I'm sure MasterCard, you know,

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the ones that I mentioned at the beginning, uh, understand, understand

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that from a technical perspective, uh, how, how was the, your

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expectations going into the process?

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How did it meet the reality of what you went through, you

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know, um, from your standpoint,

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When we first started and we had an MVP and we spent a lot of money

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on a conference booth or a, uh, on a booth at a conference and we

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showed up and we crushed it, dude.

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Like we were awesome.

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Like, it was amazing.

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Like we, we spent a bunch, much money on a booth.

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We had so much interest in our product.

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Like we were, I think the number five best product in ZD net.

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That week, like we were between Facebook, which was Oculus and, uh,

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LG, like in between them was hyper.

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And we were like an eight person company at the time or something.

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And we were like, wow.

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You know, the, the venture capital money is just going to come pouring in now.

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And like, we had a bunch of investors come.

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You know, to our booth, talk to us, take our information, follow

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up with us after the conference.

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And we, so we, we find ourselves in this position where like, after this

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president, after this, uh, conference, we had like just a calendar full

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of meeting invites with investors.

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And then we started pitching all of them and they very quickly realized that.

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We didn't have the team, the traction, the timing, or the technology.

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Um, and so reality smacked us in the face really hard.

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And we had to go and really fight, uh, and build, uh, in order to get

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the eventual outcome that we want.

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I never asked, you know, I never hit me to ask this in the beginning.

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When you, how long was the time period from your, like your first pitch to

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an investor to you got that first?

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Yes.

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Are you talking about that?

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Like your thing, like six, like 18 months.

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Okay.

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Yeah.

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Which was about, which was about.

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Was that 18, 15 months longer than we thought.

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Okay.

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I was close.

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Yeah.

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So the thing about venture capitalism, it always takes twice as long as you think.

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And then how long you talked about, you know, is that we're having a circular

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conversation, then you get your yes.

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So how long is the process from yes.

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Do you see that you can execute on funds in the, in the account based

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on the budget that you created?

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Is that like a lengthy process as well?

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Or is that like.

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Yeah.

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He said, okay.

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That's, that's why, you know, I didn't know how long the

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legal process comes in there.

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And when somebody says that, I imagine, I didn't know if this was like a

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shark tank thing and mark Cuban says, here's the check in right there.

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So the lawyers off the off screen.

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No it, and like, it's not like shark tank whatsoever.

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Um, and so maybe, maybe that's part of the reason we were so naive in our approach

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because we all watched shark tank too.

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Um, But yeah, like, look, you know, in, in, in venture capital and in

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technology in particular, you know, um, sales is, or, or, um, businesses

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are expected to have, you know, very fast growth and that's investors want

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to invest in high growth companies.

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Um, otherwise they would just say, you know, if you want to have a business

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that grows incrementally and you want to.

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Take your time with it.

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Just go to a bank and get alone.

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That's uh, that's the alternative.

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Gotcha.

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So let's I want to get you, I'll get you to summarize a little bit

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of what we've talked about for anybody that's they're sitting there.

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They've got their idea.

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They're sitting at their home in their basement doing this.

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What would you say are like the, you know, the top five do's and don'ts.

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Prior to going out there to be successful and minimize the rejections

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of looking for, for outside capital, top five do's and don'ts how many ever.

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Yeah, so one, um, so dues for me are, you know, make sure you have

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a team that you can trust and is in it to win it for a longterm.

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Cause as I mentioned earlier, you'll need.

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A lot of these investors, you'll meet them several times and you want

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to make sure you're meeting with them with the same group of people.

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Um, two is obsess over talking to your customers or your potential

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customers, um, sharing their stories and being able to articulate how

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you're solving these problems for them is the most important thing.

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Uh, three bring as much objective data as you possibly can into any.

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Right.

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So market analysis, trends, research numbers, reports, stats, all of this

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stuff is really, really important to build credibility with your potential

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audience, for practice, practice, practice, practice, the pitch, and

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presenting, and just be extremely confident in your approach because an

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investor will say, well, I don't think this will work just your face and.

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You have to be bold and confidence that yes, it will work.

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And this is exactly why, um, even if they are able to billion, they're both the

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billionaire who has backed 50 companies.

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Right?

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One of my favorite things on the internet is, um, I think it's, Bessemer's

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anti-portfolio um, where on their website, they have a list of companies

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that they have turned down previous.

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Uh, and exactly what they told to the founders in their rejection letter.

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And they have like Google and Facebook and like all this stuff on there,

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uh, of when they rejected and then why they rejected, um, which is

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really, really interesting to see.

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Um, and then, uh, I guess five would be, I guess I should do

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a don't, um, don't assume that.

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What you're doing is a great fit for every investor that you see.

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Uh, some investors are just not the right fit for your space.

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Um, some investors are just not the right fit for your culture

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like myself and my co-founders will you live in New York city?

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We behave a certain way.

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We have a certain attitude and certain way that we approach things.

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It is not.

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Too similar is not very similar to the way that people do things on

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the west coast, which is why today, most of our investors are on the

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east coast, uh, for that reason.

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And so it's just the somewhat of a cultural and cultural difference as well.

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So it's about finding the right fit, not just from, you know, a partnership

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perspective on the money side, but also on, on just the relationship side.

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That's really, really.

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Are you meeting with the people that are actually technically competent

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from somebody investors' team that understands exactly the problem you're

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solving or is this more of a business type person that gets it theoretically?

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So if the business type person gets it, um, then they will typically invite ex.

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Though, either advisors to them or work with them directly to start

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that what you're saying from a, yeah.

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Try to poke holes in your technology.

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Basically.

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I was wondering, yeah.

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Well, what's the, what's the thing.

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If you can explain it to a five-year-old or something like that.

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Yeah.

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Like primary they're also trying to understand, like how easy

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is this thing to reproduce?

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Right.

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If I invest in it or they're going to be 10 people who are doing

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it tomorrow with little to zero effort, you mean like on Amazon,

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Awesome.

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I appreciate the time and the, and the deeper dive in this.

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I think there's a lot of people that find that fascinating because you see

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this stuff all the time and, you know, in the news that, Hey, this company

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they're going through multiple rounds, or again, like the company I saw.

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Yeah, I don't really, I don't really know him, but I'm aware of, you know,

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that when IPO yesterday or rang the bell, they were actually on the New

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York stock exchange and rang the bell.

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And it's like, what is, what are those early phases to, you know,

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to start getting you on that path?

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Where the next thing I know I'm going to see you on the New York

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stock exchange, you know, ringing the bell or NASDAQ or whatever the,

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the future, the future, the path is.

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And I'm gonna go.

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Yeah, I'm looking forward to that day.

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Yeah, no, that'd be awesome.

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The best place to still reach out for you is like LinkedIn.

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Yeah, absolutely.

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I'm on there sometimes too much, but yes, I, I I'm guilty of that.

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The event as well.

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Again, appreciate the time.

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This is, this has been awesome.

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And I'll make sure to have all the links in the, in the show notes for everyone.

About the Podcast

Show artwork for The Business Samurai
The Business Samurai
Skills and Stories to be a Well-Rounded Leader in Business & Technology

About your host

Profile picture for John Barker

John Barker

20+ years of technology, cybersecurity, and project management experience. Improving business operations to create a culture of better cybersecurity and technology practices. John is the Founder of Barker Management Consulting and the creator of the Business Samurai Program.

MBA, PMP, CISSP