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Brad Hargreaves is the cofounder and CEO of Common Living which is a community-driven residential company that brings community, convenience, and flexibility to housing. The company has raised over $100 million from top tier investors including 500 Startups, Norwest Venture Partners, Slow Ventures, Maveron, 8VC, and Lowercase Capital to name a few. Prior to this he cofounded General Assembly which was acquired by The Adecco Group in a deal worth over $400 million. In this episode you will learn: How Common is bringing a new approach to housing Using operations and technology as an advantage Brad’s top advice for new entrepreneurs SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Brad Hargreaves: Brad Hargreaves is the founder and CEO of Common, the leading residential brand and operator that designs, leases, and manages multifamily properties that appeal to today’s renters. Through smart design and tech-enabled property management, Common delivers exceptional experiences across eight cities and 3,000 members in coliving, microunit, and traditional apartments. Previously, Brad Hargreaves co-founded General Assembly, a global education institution with campuses in more than 15 cities worldwide. Most recently, he was a Venture Partner at Maveron, General Assembly’s lead investor. Brad Hargreaves has been named to Vanity Fair’s “The Next Establishment”, Inc Magazine’s “30 Under 30”, and Business Insider’s “Silicon Alley 100”.   Connect with Brad Hargreaves: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have another full-cycle entrepreneur that has done it multiple times, so I think that we’re going to learn quite a bit – many, many lessons learned along the way and many lessons that I think are going to inspire us all that are listening here. So without further ado, let me welcome our guest today. Brad Hargreaves, welcome to the show. Brad Hargreaves: Thank you, Alejandro. Thank you so much for having me here. I’m excited to be here. Alejandro: How was life growing up in rural Arkansas? Brad Hargreaves: It was boring. I wanted out. [Laughter] No better reason. I mean, boredom is the fuel of creativity, and there are not many places to be boring. I think we pack our kids’ lives with too much stuff today – too many activities, too many things to do. But when you’re in the middle of nowhere, it’s about 90 miles south of Little Rock – nothing. There was one red light in the entire county. There was nothing to do, and I think that is a real inspiration for creativity and made me more entrepreneurial. Fortunately, I had parents that were really supportive and supported my education and supported me getting out of there. Boring, and that’s not a bad thing. Alejandro: How did you get that influence in the entrepreneurial bug and that mindset of really putting a solution into whatever problem you have in front of you? Was there anyone in your family, or how did that develop? Brad Hargreaves: My grandfather, my mother’s father, is an entrepreneur, not like a tech or venture entrepreneur. He runs a chain of auto parts stores and auto parts distributors. So I do have that in my blood. I do have that influence and that inspiration. Then, I went to Yale. I got there, and I knew I wanted to do something different. You have a lot of kids there, particularly when I was there, back in 2004, that they want to be bankers; they want to be consultants. These were worlds, the worlds of banking, consulting, private equity were completely foreign to me as a kid from rural Arkansas, but I knew startups; I knew entrepreneurship; I knew that was something I wanted to do. Alejandro: And how did you know that you wanted to study molecular biology and economics? What a combination .  Brad Hargreaves: Well, you know, the economics came later. The way you get out of a place like rural Arkansas is you enter a lot of science competitions and academic competitions, in general. I’m 6’1” and 145 lbs., so I definitely wasn’t playing football. The only pass-out of a place like that, you either play football, or you get into the academic competition circuit. So I traveled all over the place. I went to Australia; I went to a bunch of different places in the U.S. on these competitions and entering every contest I could find. It definitely gave me a lot of exposure and really introduced me to worlds outside the fairly narrow one I grew up in. Because a lot of those were science-related, I got into science, and that was my initial major in college. I think as I spent some summers working in the lab counting microscopic worms and culturing bacteria and doing the things people do in the labs, I realized that is not how I wanted to spend my life. Alejandro: Right. Brad Hargreaves: I was way more interested in the lab materials and the reagents, and I was like, “Somebody makes this stuff. That’s a business. That’s interesting. Alejandro: So, let’s talk about making stuff because, obviously, this led you into doing your own business, your first business, the Game Studio. Brad Hargreaves: Yeah. I’ve always been into games. I’ve built games. Part of being bored and in the middle of nowhere is you do things like that. My very first venture was a game that took a concept out of the college campus, which is this competitive online game, and tried to bring it broader to tap into rivalries and use that as a driver for game planning engagement. So it was super casual games, things that you might play on your mobile phone, but were tapped into a network of rivalries, who you’re playing against a group of people, say, from a rival school. It got a huge amount of play. We ran an annual competition between all the Ivy League Schools, for instance. I think at one point I think we got like 25% of the whole Ivy League, like every student playing simultaneously. This was back in 2006. I never figured out how to make money from it. It wasn’t the kind of game you charged money for, and back then, this was pre-micropayments, pre-endgame items. It was even not just pre-Apple App Store; it was also pre-Facebook games. Facebook was still literally a Facebook for college kids back then. So you didn’t quite have the same platforms and optimization channels. As fun and crazy as that was building game development studio in college, we ended up raising some venture money. Unfortunately, we got crushed in the downturn in 2008 and had to wind that down. Alejandro: What was that process like because on those types of events are where you learn the most? Brad Hargreaves: Yeah. It was an experience I never ever want to repeat, and it was really seared into me, the pain of having to wind that down, let people go. I know I did this when I was 22 when we wound the company down. It was extraordinarily painful, and you know, some lessons, and a lot of lessons you learn as an entrepreneur aren’t necessarily, do this; don’t do that, but rather experiences that inform the decisions you make in the future. I think on the spectrum of entrepreneurs, I’m relatively conservative today because I had that early experience of having the crazy college startup, having it blow up, and saying, “Never again.” That’s not an experience I want to relive. Alejandro: Was there was one specific lesson that you knew that for whatever company you would start next, you would definitely take that with you? Brad Hargreaves: It has to make money is the first thing. The problem with that company is, we set out, and we said, “Oh, we’re going to do x, which is, build popular games.” Then it’s like the old name; it’s like I’m going to do something, and then there are question marks, and then the last step is profit. That was our business model. That was also a business model or lack thereof de jour back then. This was in the days of Facebook, which, at the time, had no business model on growing and never ever higher valuation. I just looked at that and said, “That is not the kind of business I want to build. That’s not a match with who I am. The next business, I’m going to go out, and I’m going to build, we’re going to do A) make money. It’s not A turns to B, and B turns to C, and then maybe that makes money. The unit economics are fundamental. They’re really fundamental, and it was very hard to maintain that discipline through the last ten years. We went through 11 years of uninterrupted bull market from 2009 to the second quarter of 2020. And I can get more into that, but it was tough to maintain good unit economic discipline through that, but I’m glad I have done that, and I have through the businesses I’ve built.  Alejandro: So, this was a major lesson. Then you happened to find yourself in New York City meeting a lot of people, and that was the segue to your next business, so tell us about it. Brad Hargreaves: I found myself without a job, without any money, living in New York with roommates in 2009, and started getting into the tech scene. I did some contract work; I did some consulting, did some analyst work at a venture fund for a little while, and it was clear that there was something percolating in the New York tech scene. People were starting interesting companies. There was a real demand for technical talent, demand for creative talent. We got together with a couple of friends, one of whom I believe, Adam Pritzker has been on your show before. Alejandro: Yeah. Brad Hargreaves: And we decided to start what was initially conceived of as a hub for New York City Tech. There would be a co-working component. I would say at the time, a very high-end co-working component, which co-working back in 2010 pretty much meant either cubicles or IKEA desks on a floor. This was pre-rework, pre-industrious. Co-working was in a nascent phase. So we have some of that for startups. We would have some event space, and we would host hackathons, and we would host big job fairs for tech and things like that, and we’d have a classroom. So we started doing these classes, and they would vary. Every night, we would try something new. One night we would have an introduction to JavaScript and talk about JavaScript technology, not so someone could build in it, but just so they could talk about it. We joke cocktail party level knowledge of JavaScript. The next night, we would have a discussion about accounting for startups. Some of it was startup-oriented. Some of it was just more pure technical knowledge. We would run a digital marketing course, which appealed to people who weren’t even in the startup world. We would get people from digital agencies that would come and say, “We need to think about how we upscale for the new world of social media marketing, which was very nascent at the time back in 2011. So, over time, and by time, I mean like a matter of months, the educational piece became the business. We went from one class a night to two classes a night. We introduced weekend courses. We introduced daytime workshops where people would get their employers to pay. Before we knew it, this 400-square-foot classroom was generating more revenue than the rest of the 16,000-square-foot space combined. It went from zero to over a million in revenue in like four months. That’s when we said, “Wait. We’re onto something here.  Alejandro: Quite onto something because literally in four months, you went from zero to a million in revenues without raising any money. That’s pretty unbelievable! Brad Hargreaves: Yeah. I would say we got the timing perfect. We really had developed this model of tailoring education to a practical outcome. We started thinking about this concept of outcomes very early. It wasn’t whatever the instructor wanted to teach; it wasn’t what got the most clicks; it was like, “What’s actually going to generate a meaningful outcome for the student.” Thinking ontologically about it, like, “What does this student want from this, and how do we fulfill that objective in 90 minutes, in 4 hours, in eventually 12 weeks?” We realized that the real goal that the Holy Grail was to get people jobs was to take someone who had never coded before and say, “You are going to get a junior-level job in web development, UX design, digital marketing, data science.” We started rolling out these 12-week courses, and that became the core of the business. As we grew over the next eight years, we became the largest trade school in the U.S. teaching tech business and design, but also built a significant enterprise business where companies – I mentioned earlier about digital marketing. We had people from agencies coming to us saying, “We need to upscale here. We need to learn and understand the latest technology, the latest trends.” That became a really big part of the business. That was the first part of the business to move online. Consumer stayed brick and mortar for quite a while. Eventually, that was, I think, the single largest piece of enterprise value that we built was our enterprise training and certifications business. Alejandro: What was the process of scaling this because scaling this, I’m sure, was a beast. So what was that like? Brad Hargreaves: Between General Assembly and Common, which I’ll talk about in a bit, I’ve definitely shown myself to have a bit of schlep blindness. I think that’s a Paul Graham term of just doing the hard thing. These are not easy businesses to scale. With General Assembly, obviously, it is a brick and mortar business at the core. You do have physical classrooms with physical seats. It’s a tricky business in some ways because a lot of your costs are fixed. The space is fixed. Once you decide to launch a course, you have to hire the instructors. The product development is pretty fixed. Then, obviously, you try to get as many butts in seats as possible, and every incremental one is just pure contribution, pure margin. So you have to clear a certain threshold to break even on the course, and then you have targets you have to hit. You have to hit those targets every single quarter. So it’s a tough business in that way. It’s very unforgiving. The enterprise business, which we shifted to over time, it’s more forgiving – not that the clients are more forgiving. The clients, if anything, are more demanding. But it’s more forgiving in that you have longer-term contracts. You have subscription revenue. You have more predictability. It’s not like every quarter you have to hit a very specific sales goal. You still have sales goals; you still have to hit them, but the vast majority of your revenue in any given quarter was signed several quarters ago – it’s recurring in that way. So the enterprise business, as we shifted over time, is tougher. It takes longer to grow in some ways, but it’s also more forgiving, and it’s a bit less of a schlep. Alejandro: And the rest is history. For this, the company raised a little bit around 100 million, and then it was acquired by Adecco Group for about 400 million, so pretty good outcome. So, Brad, what happened next for you? Brad Hargreaves: It was a great outcome. It was acquired by Adecco Group for a bit north of 400 million, and for the past five-and-a-half years, I’ve been working on my next venture, which is Common. It seems like a crazy pivot. It’s actually a housing company, and we are focused on innovative forms of housing, things like coliving, micro-apartments, and also the question: how do you apply technology to residential design and management? It seems like a crazy pivot, as I said, going from education to real estate. And, in some ways, it is, but in other ways, it’s not. When you think about what do people spend a lot of money on? A young person moving to a city. What are their biggest areas of consumer spend? It’s education and housing. They’re also both areas that for that level of consumer spend, or the level of importance that we give them, I have not seen a lot of innovation with respect to new products, new brands, technology. They tend to be two areas that ignore best practice from user experience design. So there’s an opportunity to take not kind of totally novel hard technology, but take fairly proven technology, proven strategies, and apply it, and get a meaningful operating lift and create a better consumer experience. And that’s what we did in both companies in General Assembly, creating a brand in basically trade education. And Common, bringing a brand to, or now a family of brands. We have three brands – to residential management. But it’s always backed by the same core principles: community, convenience, and also our residential technology platform. That’s been my focus for the past five years. Today, we have about 4,000 apartment units under management, about 20,000 currently under construction in 30ish cities worldwide.  Alejandro: So how do you guys make money with Common? Brad Hargreaves: It’s really simple. We’re a management business, so we partner with owners and developers, and we do two things. We do design, which is effectively we’re an architecture firm with a little bit more templatization, and we do management. The management is really where the technology and the brands come into play. So when someone hires Common, it’s not like hiring a typical third-party property manager who is going to come in and do the leasing, do the repairs and maintenance. You’re bringing an entire platform. You’re bringing the brand; you’re bringing the marketing technology. We have a centralized operating model where we’re taking a lot of best practices from other industries, and then we’re bringing them into residential in a way that lifts performance in buildings and creates more standardized and consistent customer experience. A lot of this stuff, it’s pretty incredible that hasn’t been brought into residential. When we started this business in 2015, a lot of management companies were still doing pen and paper lease signing. A lot of them were still not taking electronic rent payments. A lot of that has changed over the past five years, but now, you look at the next set of things. Management companies are not doing virtual touring, that are not letting people apply remotely, that are not adding automations to those processes. So, we’re really thinking about how do we apply best-in-class technology to residential management? Alejandro: I know that in the early days, you were told “No” quite a bit, Brad. Obviously, this was your third venture, so you were used to the world no, but how did you go about it? Brad Hargreaves: Yeah. You’ve got to get used to the no. This was interesting because at Common, we’re obviously working with developers and owners, so we have to get them on board with doing things differently. Residential, I would say even more so than education, there’s a lot of resistance to change. There’s a lot of resistance to doing things differently, particularly on the operations side. There’s a big bias, which was way stronger five years ago than it is today, that you can’t add any value through operations, that the only way you can create value as a residential developer is through being better on the acquisitions side, innovative tax and finance strategies like that’s how you create value. The operations, it’s a commodity. We really believe that’s not true. It’s actually an insane thing to believe. You look at the other industry, and obviously, good operations are not just value add; they’re definitive. They determine the winners and losers. In residential, in real estate, in general, particularly in residential, that was just not a thing. So we got told no a lot. One of my favorite stories is walking into one developer’s office talking about some of the things we were doing, coliving micro-apartments, ways to add value to ground-up buildings. This developer looked at me, and he said, “Brad, I don’t build what the tenant wants. I build what the bank wants.” That runs deep. Alejandro: Yeah.  Brad Hargreaves: It took us a while to understand that how we start scaling and how we start winning is to get the banks on board. And to get them to understand, like, “Wow. You’re actually adding a lot of value with what you’re doing. You’re differentiating these assets.” So, that was quite a journey, and it’s taken five years, but we’ve seen a ton of growth over the past 18 months. Alejandro: Talking about supporting that growth and scaling, for that, you need money. How much capital have you guys raised to date? Brad Hargreaves: We’ve raised around 100 million. We have some great investors on board. We raised our first round from a group called Maveron. They’re a Seattle-based venture firm started by Dan Levitan and Howard Schultz. They were actually the first money into General Assembly, so I’ve known them for about a decade – a really founder-friendly group. For Common, we raised back of the envelope, like, “Hey, this is generally what we want to do.” We had no prototype. We had, basically, a deck of like, “This is what we want to go after.” At that stage, the kind of investor – in general, I don’t think you want VCs on your board unless you know them, you have a personal relationship, and you’re aligned, and you know that they’re going to be supportive through the inevitable ups and downs of the journey. Fortunately, I had that faith in Maveron, particularly in Jason Stoffer, who is a partner there. That really got me comfortable with taking that money in those early days, and obviously, they’ve now seen it through three additional financing rounds, including our latest one, which we just announced a couple of months ago led by Sandvik, which is a Stockholm-based growth equity investor. Alejandro: Very nice. Now, how many employees do you guys have? Brad Hargreaves: We’re at about 250 employees. That’s split about 50/50 between our corporate team: our real estate team, our designers and architects, our software engineers, our corporate staff on one side. On the other side is our field staff, our maintenance techs, our porters, our leasing agents, all of whom are full-time employees.  Alejandro: One thing that is interesting here is like where things are heading. I’d love to hear where do you see the space and where do you think that Common is heading? Brad Hargreaves: It’s a really interesting inflection point right now because, obviously, COVID has done all sorts of crazy things to the real estate market. People have left cities in large numbers. I think for some of those cities, such as San Francisco, to a lesser extent, New York, it’s unclear how quickly those cities are going to recover. On the other hand, it’s put a huge premium on quality management, on technology in management. Thank God we had virtual touring as a core capability back in March when COVID hit. About 30% of our tenants were converting through a virtual loan. Then, we just flipped a switch, and it was 100% because we stopped doing in-person tours. For other management companies, that took them months to figure out how to do virtual tours. So we already had that muscle memory, and now, what I said five minutes ago about the real estate industry not believing you could add value through operations, that myth went out the window in March. Suddenly, operations were everything. Operations were the difference between are you going to keep your building, or is the bank going to take it? Suddenly, all this changed, and we’ve seen a huge amount of interest from the market and what we’re doing on the management side and feeling really good about where we’re headed. Alejandro: For you, Brad, it’s been a remarkable entrepreneurial journey, I would say. There’s one of the questions that I typically ask the guests that come on the show that I’d like to ask you here, and it’s given what you’ve gone through with your Studio game company, with General Assembly, and now with Common, you’ve seen the good, the bad, and the ugly of building, scaling, and everything above when it comes to startups. So if you had the opportunity to go back in time and have a chat with your younger self, maybe it was that younger Brad that realized that it was more interesting – the making of the machines rather than using them back in Yale. What would be that one piece of business advice that you would give to your younger self before you launched a company and why given what you know now? Brad Hargreaves: Oh, wow. That’s tough. I wish, in many cases, I had trusted my gut. I think there were a lot of things that I knew to be the case, and probably either took too long to make a decision or doubted where that just burnt a lot of time and burnt a lot of money. Changes we knew back in the game development studio that we needed to come up with a way to make money, but obviously, it was more acceptable back then to not make money. I remember once, we had a couple of angel investors, and they once said, “Don’t try to make money unless you know you’re going to make a lot of money because it’s better to make no money than to make a little bit of money. That kind of struck me as crazy at the time, and now, it still strikes me as crazy. We should have probably just gone ahead and done whatever experiments we were going to do. So, I wish I had trusted my gut in a few more of those instances. Alejandro: Very profound, Brad. Absolutely. I’m right there with you. For the folks that are listening, what is the best way for them to reach out and say hi? Brad Hargreaves: Just email me: brad@common.com or follow me on Twitter @bhargreaves. Alejandro: Amazing. Brad, thank you so much for being on the DealMakers show today. Brad Hargreaves: Great. Thanks so much for having me.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Benjamin Miller is the cofounder and CEO of Fundrise which offers an alternative to investing in stock and bonds, the first low-cost, and direct private market investment built. The company raised initially from Camber Creek, Renren, and Guggenheim Partners. The company later crowdfunded $1.2 billion. In this episode you will learn: Balancing your technical and creative talent Clickbait versus what really resonates with customers Embracing one of the most regulated markets Raising money in China SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Benjamin Miller: Benjamin Miller is the CEO and co-founder of Fundrise, an investment platform on a mission to build a better financial system by empowering the individual. Right now, that means making real estate investing simpler, smarter and more effective for investors of all sizes.Fundrise is the first investment platform to create a simple, low-cost way for anyone to unlock real estate’s historically consistent, exceptional returns. By combining innovative technology with world-class active, opportunistic real estate private equity management, Fundrise delivers access to a level of investment performance that only the wealthiest investors have enjoyed — until now. Founded in 2012, this DC-based startup has now transacted on nearly $5 billion of real estate and manages more than $1 billion in assets for its more than 130,000 investors. Benjamin Miller has nearly 20 years of experience in real estate and finance, spending time as Managing Partner of WestMill Capital Partners and President of Western Development Corporation, prior to founding Fundrise. Benjamin Miller would love to discuss real estate, real estate investing, macroeconomics, private equity, and entrepreneurship.   Connect with Benjamin Miller: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we’re going to be talking a lot about real estate, and we have an amazing founder, a founder that I’ve known for quite a bit, and I think that we’re all going to learn a lot. I mean, a lot of really interesting stories here that he’s going to be sharing with us. So, without further ado, let’s welcome our guest today, Benjamin Miller. Welcome to the show. Benjamin Miller: Yeah, thanks for having me. Alejandro: So born and raised in Washington, D.C. How was life growing up there? Benjamin Miller: Yeah. Washington, D.C., everyone thinks it’s a political town, but it’s really a real estate town, and I come from a real estate family, spent a whole life in real estate. What’s interesting about that is that I learned in the late ‘80s and the early ‘90s when the S&L crisis happened, the real estate industry blew up worse than 2008 – way worse. I saw my father have to deal with that, and I just think it gave me a really interesting longer-term perspective like the kind of pattern recognition you get from growing up in something. It’s been really informative to my whole career. Alejandro: So, what did you get from seeing your parents or your family in this field and building the business? What were some of the key lessons that you got? Benjamin Miller: Yeah. I was so lucky that my father is an entrepreneur, and I watched him get ulcers. In early 1991 and 1992, there was no money. The financial industry collapsed. It used to be that lenders could call your loans whenever they wanted. They’re called demand loans. They’re not prominent anymore. So when the crisis happened, they called all the good loans first. We had 800 million dollars of loans called in on one day. He told me his network was negative-hundreds of millions because everything was also personally guaranteed back then. Alejandro: Wow. Benjamin Miller: Which is not that case anymore, and just watching him struggle through that and seeing how much a crisis – basically, the crisis is what determines the success of any financial company, any fintech. The crises are the biggest challenges and opportunities for anybody in the financial industry. Alejandro: Absolutely. Definitely, in those tough moments is when you really learn, and you get to grow as a human being. I’m sure that you had some of those moments that we’ll talk about them as well. But, in your case, right after school and all of that, you went into private equity, and then, right after, you did a little bit of real estate with the family. So what were some of those things that you really experienced being on the investment side and then on the development side when it came to real estate? Benjamin Miller: Yeah. From 2000 to 2010, the first part of my career, the whole idea was if you can work with the big institutions, the big private equity funds, that’s the key to growing the business and scaling. Then, in 2008, they all blew up. We had hundreds of millions of dollars of real estate deals that blew up with our partners, and our lenders went bankrupt. The multi-billion-dollar companies, the companies worth 250 billion dollars, were the ones that went bankrupt. It was the opposite of what you’d think because it was a topsy-turvy world. You think that you’re the little guy, not a big guy, and then it just flips. Dealing with that in 2008 and the stress of it, and having to lay people off and having to go through – we had to buy our projects back out of bankruptcy because the partner’s ownership in them was held by a bankrupt financial institution. That completely changed my opinion of the financial industry, and it ended up very much like The Emperor Has No Clothes view of big finance. Personally, I believe that it’s going to happen again. It happens every seven to ten years. It’s like part of their design, actually, to blow up every seven to ten years. It’s like they’re misconstructed. An interesting lesson, Alejandro, is if you’re going to start a business, pick a really big problem. Don’t find a solution. Once you’ve solved it, it’s over. But if you have a really big problem, probably it will outlast your life. You can keep finding opportunities inside of that. The fundamental problem with finance and the agency middleman dynamics of how they’re constructed in such a multi-trillion-dollar opportunity and, obviously, challenge. That’s what I came out of my first decade of work learning. Alejandro: Obviously, at that point, when everything blew up, it was that moment when you encountered the problem that led to Fundrise. Tell us about what the process was and how you incubated this concept and bringing the company to life. Benjamin Miller: It’s so funny. When you come up with an idea that’s actually novel, which I’m not saying that I came up with some great idea, but the idea of using the internet to change how the financial industry works and basically building it around individuals rather than institutions. I first went to Wall Street or the major players. They thought I was a joke. They were like, “That’s crazy. [7:31]” I got a meeting through a connection to probably the second most powerful offer in the country that represents all the investment banks. Everyone has heard of them. I went to the top of their skyscraper, the [7:49] building in Times Square, and I met with the head of their securities practice and the head of their real estate practice in this conference room overlooking the New York Skyline. I was pitching them on how the system is broken. We have to come up with a new way where people are at the center of it and not like big institutions – all of the things that were wrong with the system. When I finished this impassioned pitch, there was a dead silence. And then, the guy responded with, “Why would you bother with the little guy?” It just didn’t seem like a good idea to them. It seemed like a bad idea to them. I remember thinking and walking out just devastated like, “Oh, my gosh. This idea is not a good idea.” It wasn’t until I got down the 100-story building to the bottom on the elevator that I realized, “This is amazing. They don’t get it. There are people protesting in front of their building by Wall Street, and they think there’s nothing wrong with the system.” This is also about technology. You learn about technology that incumBenjamint businesses can’t help but fold the sector around themselves. So the financial industry is built around them, around them, basically, around the middle man, the agent, and every great technology business is built around the customer. Facebook is built around the customer. They want to own the customer. Amazon wants to own the customer, and that’s not how the financial industry is built at all. So, it’s completely antithetical or unintuitive to them. So, I just didn’t get it. It took me a long time to figure out how to create a system that could scale and actually thread and create an alternative to the status quo financial solution. Alejandro: So, in that regard, Benjamin, what ended up being the business model so that the people that are listening get it? Benjamin Miller: One of the things that I came away with is, my personal mission is to remake the financial industry. This is what I saw from my father in the early ’90s. Every 20 or 30 years, the financial industry actually completely changes itself, completely remakes itself, and I think it’s high time for it to happen. But in order to do it, you have to be independent. You can’t be beholden to it. It’s obvious, but if all the capital comes from that system, you can’t actually be different than that system. So we raise our money directly from individuals, through our mobile apps, through the website. We have, I think, 150,000 investors. I have a million customers. When I talk to real estate private equity funds, they can’t believe it. They can’t believe we’ve raised billions of dollars, and we deployed into real estate. So the model is to give people, individuals, the same sort of product and return profile, like a Blackstone, but to collapse the whole financial supply chain. Like, Charles Schwab, Blackstone, the sponsor, everything clasped into a single service, like a Private Equity as a Service that is on a technology backbone, which allows you to cut the costs to a 10th of it and deliver real estate private equity or private market returns and product to an individual that didn’t previously have access. People have access to stocks, bonds, but not to the private markets, and we’re going to change that. Alejandro: So, obviously, for something like this, you need some capital to develop things, and I know that there’s a really interesting story there, but before we go into this, how much capital have you guys raised to date? Benjamin Miller: We raised 1.5 billion dollars of equity. Our customers actually own the platform, like Vanguard. If you’re an investor in Vanguard, you also get to own part of Vanguard. We’re a different model. It’s differently constructed. We don’t have to go raise venture money, and we’re not beholden to a traditional financial industry. Alejandro: Got it. So then, in this case, one of the first transfers of money that you actually raised for the business – this was early on – included a flight to China, so tell us about this experience. Benjamin Miller: Yeah. We got to this sort of Vanguard model, but in order to get there, we did need seed capital or a Series A. We self-funded it in the beginning, but we got this LinkedIn invite one day from a company I had never heard of called Renren, which turned out to be the Facebook of China. I almost didn’t take the invite. I was like, “What is this?” The CEO comes in. He’s totally nonchalant and wearing a tee shirt and jeans, and he and I had a conversation. It was an hour; we were talking about business and what I think about it. He walks out. I don’t think about it again until I get an email. He said, “What terms would you want to have for us to invest in the company?” I hadn’t really thought about that. So I just sort of named my terms – the amount of money we had, the control we thought we needed to deliver the right product. Everything in an email, like, “We need $35 million, founding shares,” and I went down the list. He wrote back, “Okay.” I was, “Wait a second. What is going on here?” So I said, “I’m going to fly to China and diligence you because I’m not believing this. This is completely dumbfounding me.” So we got on our plane. We flew to China. I land in China. I remember that we got there, and they’re like, “We’re going to take you to the spiciest restaurant place in all of China.” I had been on our plane for like 18 hours, and I was so ill. I was like, “Great.” They just started feeding me very exotic Chinese food.  Alejandro: What was the craziest food? Benjamin Miller: It was this fancy table, and they bring out this dish, and it’s a pancake turtle. The whole turtle, including the shell. They chop it into four pieces, and you eat the feet, and the lucky one gets the head. Yeah. I see their office, and we closed the deal while we were there. They wire the funds. I look at the account, and we got it. Later, they told me that they were just messing with me and feeding us all sorts of ridiculous Chinese food just because they thought it was hilarious. Alejandro: Oh, my gosh. Did you end up getting the head of the turtle? Benjamin Miller: My brother got the head. Alejandro: [Laughter] That’s amazing. Benjamin Miller: You’ve got to eat it. Alejandro: Oh, my. Obviously, you’ve got to eat it. You’ve got to get those funds in. Benjamin Miller: Right. Alejandro: So, really cool. Once you got this, and obviously, you guys were up and running and really executing, there was a really big breakthrough for you guys in terms of how you were approaching and looking at deals, and that involved the World Trade Center. So tell us about that experience. Benjamin Miller: Yeah. The essence of a startup company is making mistakes. There’s no innovation without failure. So we made all these mistakes. Essentially, it’s almost like we got to the right answer through the process of elimination. Winston Churchill has a saying, “Democracy is the worst form of government except for all the rest.” What we initially thought is that the customer wanted really exciting projects. My real estate bias was like, “Let’s go get the most impactful, incredible real estate deals that transform neighborhoods and change the way people live.” On our board is the family that owns the World Trade Center. They were building the World Trade Center, and they got me a piece of the deal. It was huge, a multi-billion dollar fundraise at that moment, and the investment bank running it, which is the biggest, the most successful investment bank. Everybody knows who they are. They may be infamous, if you will. When they found out I had a piece of the deal, they immediately cut me out of it. I kept getting back in the deal, and they kept cutting me out of it, so I ended up having – we’re so lucky. This family office that’s also a billion-dollar family office, 25-billion-dollar family office, bought it for me and then sold it to me at par because the investment bank wouldn’t let us in the deal. I thought that they might actually try to litigate it so that we wouldn’t – if you think about it, they’re selling to their customers this exclusive access to the World Trade Center, which is probably the most famous real estate project in the country if not the world. You can get the exact same product on the internet with no commissions. They did not like that. So we were able to figure it out. We put it on the website. It was so hard to pull off. It was like an incredible undertaking. We launch it; we get all this press, and it turns out to be the worst-selling product on our website. Alejandro: Wow. Benjamin Miller: All the other products are these boring, safe, high-yield real estate deals, like a high-yield multi-family, like 10%, 12%, 14%, and this is a tax-free 5.25%. Investors are like, “The World Trade Center – super safe – 5.25%. I’ll just buy the 12% return.” We came away. Slowly, but surely, we realized that we had to build a product really around the returns and the simplicity and the real estate – even though I thought it was very interesting – the customer was much less – what the customer wanted, the idea of building a product for the customer, not for me, it took me years to unlearn all my real estate and finance bias and learn the product mentality of empathizing to the customer, building for the customer, and not even caring about what I want or what is gratifying from a press point of view. In some ways, everything the press was excited about was like the least successful product. The more the product became successful and boring, the less the press cared and the more we scaled. Alejandro: That’s unbelievable. I think that one of the other interesting areas here is that you guys were literally innovating and creating a completely new thing that hadn’t existed before. I even remember that you and I testified together at the U.S. House of Representatives when they wanted to learn about how you were pulling in money from non-acreds and how all this was going to impact. Obviously, it was more on connecting startups with investors, which is a completely different angle here. But here, not only are you building and scaling a company, which is obviously a challenge of its own, but then also dealing with the regulatory landscape that is opening up. So how was that for you guys? Benjamin Miller: Yeah. That’s true. It’s probably the biggest advantage of being based in Washington, D.C., which is where our company is based, is understanding the regulator, being close to the regulator. The SCC is absolutely integral to our business. Our business is basically product or technology, real estate finance, and regulatory – multiple in-house security councils. Our first deal was down the street from the SEC headquarters, and when we first went in there, I hired the former head of the corporate finance division of SEC, which is all of the public companies that regulate them. He took me in there, and we’re going to raise like $350,000 from on the internet for $100 a share. SEC knew the building was down the street – became like a building where they go and have lunch. The fact that it was so tactile to them changed their view of it, and I think it opened up their willingness to let us do something that they thought was hopeless and crazy. We spent $150,000 on a securities attorney to raise $350,000 to do the first deal. It’s always been understanding to the like Byzantine regulatory system and matching that to the product technology needs and the real estate. It’s a puzzle – constant puzzle. Alejandro: 100%. I remember when you and I were there, I got a question from these guys that I’m never going to forget. I think they asked me, “Do you think the SEC is doing a good job?” [Laughter] I was like, “Oh, my gosh, I don’t know if I want to take that question. Anyhow, that’s definitely something that I’ll tell my grandchildren about. So for the people that are listening to get an idea on how big Fundrise is today, is there anything you can tell us about maybe the number of employees or anything else? Benjamin Miller: Yeah. We really started scaling the last 24 months. In terms of fundraising, the amount of money we deploy in a single year, maybe today, we’re the 45th largest real estate private equity fund in the world. I think next year, we’ll be in the Top 25. The year after that, I think we’ll be in the Top 10. So the amount of money we deploy and the scale of it is like starting to become – I mean, it’s an institutional scale, and when institutions find that out, they still can’t believe it. We have 130 people. We currently have $4 billion in real estate, but we’re doubling every year, so we’ll buy next year, 2021, about $3 billion to $4 billion of real estate in a single year. That’s what I mean by the scale we’re operating is absolutely an institutional scale. People start reconnecting me to that law firm that told me, “Why would you bother with the little guy?” Now, they’re like, “Oh! We should help you with your securities files.” [Laughter] Alejandro: Well, that always happens. Especially when you’re making noise and doing good things, is when not only the people that have perhaps rejected you really want to work with you but then also, you have the larger players being very worried and trying to put you out of business. There’s a story here that was quite interesting that happened where you had this billionaire telling you something. So what was that story about? Benjamin Miller: Yeah. What happens is like – anytime you build a company, at first, you blow the radar, and nobody cares about you. As we started raising hundreds of millions – and next year, I think we’ll be raising a billion-plus a year. All these big players start like, “Oh, that’s interesting.” Pick the top 10 or 20 institutions you’ve heard of, and they’d be with us, and they’d say, “We’ll help you out. We’ll take this capital off your hands. Trust us. We’re a big institution. We’ll do right by your customers.” I met with one of them. At that time, I think they were the third biggest real estate asset manager in the world. He was in New York. You know the suits where they have the blue button-down with a white collar? And the huge, huge gold cufflinks. He’s very New York. He’s telling me that I should just give up and hand it over to him and that if we don’t do that, he literally said that he would destroy us and crush us if we didn’t do that. I remember looking at him like, “Is this real? Is this actually happening?” He’s a billionaire and was telling us he was going to destroy us if we didn’t hand over the company to him.  Alejandro: Wow. That’s ridiculous. How did you come out of that meeting? What were your thoughts? Benjamin Miller: Usually, the institution is way more genteel about it. But that message isn’t delivered to us now. That happened to me enough times, where now, I’m like, “Oh, this is a good sign.” As we transition from being like, “Oh, that’s like blogs.” You look at blogs. Did anybody think that a blog would put newspapers out of business? Newspapers were the most powerful monopoly in media for 100 years, and then they’re basically all bankrupt because of a blog. The financial industry is now transitioning from like, “This was silly to wait a second,” to “What’s happening here?” Over time, they’re so bad a technology that the big companies are just absolutely atrocious at it. It started making me more comfortable competing with them because they just don’t get technology at all. It’s so fundamentally different than how they think the world works that they’re actually not – our thread is like something else, probably. Not like some big company copying us. Alejandro: Yeah. There’s one story here, as we’re thinking about deals and perhaps things going south. There was something that happened with a building that involved stealing money. So what happened there? Benjamin Miller: Yeah. We are fiduciary to our investors. I’ve been in real estate for 20 years, so I’m very, very skeptical of the real estate players. You end up pretty cynical about them. So as we invested with them, I was always worried that one of them might pull some shenanigans. So, yeah. After maybe about 200 deals, low and behold, one of the real estate companies, we invested like mezzanine debt into a building that I got built. Then they sold the building and gave the title company – I learned later, they gave the title company fake documents and stole millions of dollars. I remember getting the phone call and being like, “What?! Where did the money go?” and having my heart drop into my stomach. Then, immediately, dropping a bomb on them with litigation, and they were like – the thing is that everybody underestimates us, which is actually a gift. At first, you think that’s a problem. Being underestimated is a really good strategy. They’re a real estate player, but we’re billions of dollars, so we crushed them, and they gave us all the money back, plus maybe a – I don’t remember now – maybe a 10% return or something. Being able to have that power, that hammer, is part of how you make money in real estate. But for a couple of months, it was so – I mean, I have ulcers from that experience. Alejandro: Wow. I can’t imagine. That sounds definitely stressful. So, Benjamin, this journey has been remarkable. You’ve been at it now for more than a decade, and you’ve had your ups; you’ve had your downs, your successes, your learnings, and all in-between. I’m sure that if you had that opportunity of maybe of going back and having a chat with that younger Benjamin, maybe that younger Benjamin that was seeing things blowing up back in 2008 and thinking about a better way of doing this; if you had that ear of that younger Benjamin to give one piece of advice before launching a business, what would that be and why knowing what you know now? Benjamin Miller: That’s such a tough question. It sounds like an easy answer. When I look back at myself, one of the things you learn as a person and also as a manager is people’s strengths are usually the source of their weaknesses. Somebody might be really good with something technical, but then they get lost in the weeds – somebody super creative and they’re not organized. I came out of Washington in the 2000 financial crisis. I went through the 2001 financial crisis; then, 9/11, and the [30:51] blowing up. I was pretty close to the financial crisis of 1992, so I was obsessed from 2008 on about preparing for the next financial crisis. It put like a governor, like a restrictor on our growth because I was so worried about protecting on that crisis. As it turned out, in March 2020, it happened. Right? It happened again. So the advice to myself would have been: be more aggressive about your macro. Your macro is right. I’m a paranoid person, high-high anxiety, and so I basically I think a lot of times, I have a lot of self-doubt or question myself. Like, “Is that right? How do I know that’s right?” I think I could have been way more aggressive about what we’re doing and taking more risks, hire more people, spend more money, lean in more so that the learning is like you’ve got to be aggressive on the macro, but still be hyper-realistic and maybe even cynical on the micro. And execution – the execution has to be hyper-realistic, but the vision and the macro and the big things need to be extremely and aggressively optimistic and almost idealistic. Alejandro: I love it. I love it, Benjamin, and for the folks that are listening, what is the best way for them to reach out and say hi? Benjamin Miller: I love Twitter. I’m @BenjaminMillerise. You can also write me on LinkedIn. This is a great conversation. Alejandro: Amazing. Well, Benjamin, thank you so much for being on the DealMakers show today. It’s been a pleasure. Benjamin Miller: Yeah, absolutely.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Jonathan Langer is the cofounder and CEO of Medigate which owns and operates a medical device security platform that protects all connected medical devices on health care provider networks. The company has raised $50 million from investors like US Venture Partners, Partech, Blumberg Capital, YL Ventures, and Maor Investments. In this episode you will learn: Company culture and choosing to move to NYC Successful product launches How big Medigate is today SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Jonathan Langer: Jonathan Langer is the Co Founder & CEO at Medigate. Jonathan Langer leads the vision and strategic direction for the company. Jonathan Langer brings nearly two decades of cybersecurity experience to Medigate. Formerly a leader in the Israeli Defense Intelligence Corps, Jonathan Langer commanded a team of technical analysts focused on the research of cyber-related domains.   Connect with Jonathan Langer: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have another founder from Startup Nation, and I think that we’re going to be learning quite a bit. So, without further ado, Jonathan Langer, welcome to the show. Jonathan Langer: Thank you very much. Thanks for having me, Alejandro.  Alejandro: So, originally born and raised in Israel, so how was life there? Jonathan Langer: Life was tremendous. Israel is a fantastic country – lots of sun and lots of good vibes. I learned a lot from growing up there, and I think it was a big part of my turning into an entrepreneur. Alejandro: And talking about turning into an entrepreneur, you had that in the genes in the family. Your father was also in the tech scene. Is that right? Jonathan Langer: That is absolutely correct. I think I’ve been hearing about closing deals, and QVRs, and raising capital since I was probably six years old. So, some of that sunk in, I guess, and forged the way forward. Alejandro: Any particular lessons that you recall from your father as you were growing up and perhaps certain things that you really learned from seeing him? Jonathan Langer: That’s a good question. I think maybe off the top of my head, I would say the biggest lesson is persistence. Not everything works as well as you would want it to work the first time. My father also had to do things a couple of times until he was successful. But that perseverance was a big lesson for me. Alejandro: Nice, and obviously, for you, a really big thing was the army. You were in the army from 18 to 31. That’s a long time, Jonathan. Jonathan Langer: Yeah, that was a very long time, and I owe a whole lot to the army, to my commanders of the army, and instilling a culture of excellence in me and in my surroundings. It was a very, very unique experience. I guess that’s why I stayed there for so long. I really owe a lot to those guys. Alejandro: While you were there, you also studied law. Why did you think that law could be interesting? Jonathan Langer: That’s a good question. During my army service, most of the work was technological. We were working on cybersecurity and other large-scale technological projects. So, with law, I wanted a break from the tech and really wanted to try some other things, and it gave me a different perspective on how to do business, on how to think. I think all-in-all, it was a good selection. Alejandro: On the army, at the end of the day, doing a startup is like going to war, so what kind of lessons did you learn in the army that you think have helped you as now you’re an entrepreneur? Jonathan Langer: I definitely agree that a startup is like going to war. It’s a good question. I think maybe two similarities that I could draw – I think, just like war, just like in a startup, on the one hand, there has to be strategy. Strategy always wins war and always wins the fight. There has to be an overarching strategy, but there also has to be very good technical execution. So looking at both layers without losing sight of the other one is really something that I learned in the army and trying to navigate, as well, and hopefully, successfully as I can. Alejandro: What about being with uncertainty because I’m sure that when you’re in the army and even when you’re doing those trainings and when you have guns involved and people involved, and lives involved, perhaps that taught you, as well, as to how to be with uncertainty. Jonathan Langer: Absolutely. I think there’s a lot of uncertainty involved in what we’re doing as a startup. What I like to do – the exercise that I do with myself and key team members is just assess and reevaluate the situation all the time and to try to limit the level of uncertainty that we see in the market, that we see in our sales cycle, that we see in our competition all the time. It’s all about collecting intelligence, and assessing, and then reassessing, and adapting plans accordingly. It’s probably a loop that we do, I would say, almost on a daily basis. Alejandro: Got it. In your case, at 31, you leave the army. They finally let you go, Jonathan, after all those many years of service. Amazing – right? You really got at it, and you went for it in terms of the startup world. So tell us about that moment when you got discharged, and then you started to think about a world where you could create something, and maybe a problem that you saw and how you went about, “Hey, I’m going to bring this to live.”? fgfddd Jonathan Langer: Yeah. When I finished the army service, my biggest concern is, “How could I do something that would ever compete with the level of excitement and personal fulfillment like I had in the army?” It was really something that didn’t let me sleep at night. The only thing that I could imagine, based on conversations, based on my personal thinking, was startup. I thought that would be the most exciting piece and the most fulfilling. That’s what drew me to it, and that’s why I said, “You know what? The best way to go about this is just to try.” And that’s exactly what I did. Alejandro: That’s amazing. Tell us about how you went about putting the team together and going at it in those early days. Jonathan Langer: Luckily, I had good friends and good connections from my previous role in the army. So, what I did was I got in touch with a couple of friends that I worked with previously in the army. We did a bunch of stuff together. Incidentally, at the same time, they were also discharged, so everyone was kind of free, and we got together, discussed the situations, and you know what? “Let’s try to do something.” What we did next is we tried to think of a good problem that we could solve and try to look at cybersecurity issues, interview people to understand where the gaps are. Finally, we landed on the idea that we’re pursuing right now and went at it. Alejandro: That’s amazing. In terms of going at it, what ended up being the business model, so the people listening get it? Jonathan Langer: The business model that we wanted to go after is, we’re in cybersecurity. What we felt is that there are so many cybersecurity companies out there, and a lot of them coming out of Israel. So we wanted to do something different. Different, for us, meant to take a verticalized approach. For us, that was healthcare. We didn’t know anything about healthcare before. We didn’t have previous experience, and just understanding the complexities in the specific needs, it felt like a really, really good fit for our, I’d say, technological team that we wanted to assemble. So we built a SaaS platform for cybersecurity for healthcare and have been developing this platform ever since. Alejandro: So when you were, for example, putting together this team, what were some of the key hires that you got involved in? Obviously, at the early stages, it’s tough to convince people, so how did you go about convincing them? Jonathan Langer: That’s a good question. You know what? I think so much of our success so far should be attributed to the great people that we were able to get on board, not just the founders but the first employees. This is where the army connections also helped us because we tapped into previous soldiers that worked with us in the army, and we convinced them that it was going to be a great ride, that it is a super-interesting problem that we could solve. Ultimately, that convinced them to jump on the train. Alejandro: Then, as you were executing and trying to get customers, too, what were those first big wins, like when that moment when you finally got your first customer and everything got validated? Jonathan Langer: I think that one of the best decisions that we made early in the game was to engage with customers and prospects as early as possible to get feedback. I remember two moments. I remember the first time that I flew to the U.S. for a business trip, and it was really all about meeting the security professionals from hospitals. I sat down a couple of hours, one of my co-founders and I, and finally understood exactly what the MVP product would be. It was like an a-ha moment in terms of, “We’re going back to Israel, and this is what we’re going to do.” Then, another break-through moment that I remember is – this was back in 2018. We convinced a really big customer to give us a shot at winning their business after they had a competitive bid. Our product wasn’t baked at all. At that point, it was, I would say, half a product baked, but still, this person put his trust in us and let us compete. It was against a couple of other companies that were also a part in the bid. We did a POC maybe for a month. I don’t think anyone in the company slept that entire month, or it was more than a month; it was probably 60 days. And, finally, we won. It was a huge moment that goes back to that tactical win that builds up the strategy later, but that was a huge tactical win for the company. Alejandro: Very cool. Then I want to ask you because, obviously, you guys started the business in Israel, but then, all of a sudden, you find yourself in the concrete jungle of New York City. So how was that transition? Why did you decide that coming to New York was the way to go? Jonathan Langer: What happened was, it was all for positive reasons. Our team in team in the U.S., our sales team, marketing team, customer success team, and so on got bigger and bigger. I found, as a CEO, I just needed to be closer to the troops and to be a bridge between our U.S. operation and our Israeli operation. I felt that the most impactful position for me was to be in the U.S., really. I chose the East Coast because it’s much easier to communicate with Israel, only seven hours, which is a lot, but the West Coast is ten. So, New York seemed like a good selection, and I’ve been here ever since. Alejandro: What do you think for you guys was the toughest part of coming to New York? Jonathan Langer: I really think that the toughest part, and it is a tough part – it’s really a governance change in terms of how the company operates because when you’re in Israel, you see your Israeli executive team, that part of the site all the time, next to the watercooler. All the sudden that becomes Zoom, and it’s much, much harder, and the overlapping hours are limited. It just turns the company into something else; it changes the dynamic. It’s very, very important to adapt before it hurts morale, and that’s exactly what we did, and today, it’s much, much smoother. Alejandro: In terms of culture, when you have different offices, every office has a culture of its own, to a certain degree. So how do you manage that? Jonathan Langer: You know what? It’s really a culture of cultures, I’d say. I think we find values that we believe in at Medigate, passion, entrepreneurship, things that we encourage everyone in the organization to do. But the interpretation of the values really depends on the local culture. So, Israelis are Israelis; Americans are Americans, and it is different. We have some European folks, as well. That’s different, as well, but it’s what makes life interesting. We’re learning a lot from the different cultures, and I certainly am on a personal basis, and it’s a big part of our growth, and my personal growth, honestly. Alejandro: From a fundraising perspective, how much capital have you guys raised to date? Jonathan Langer: We have raised 50 million dollars in total, just about, in three rounds of funding. Alejandro: Very cool. And I know that the most recent one was in the middle of COVID, so talking about uncertainty and going into action, how was this experience for you? Jonathan Langer: Yeah. That was an interesting one. We started fundraising – when was it? Maybe February of this year, when a couple of weeks later, we understood that COVID is really hitting the world and changing things for the long-term. So, all of the sudden, some investors get a little bit more concerned, and there are more questions that are asked about the future of healthcare and the future of some enterprises, in general. Also, I think that a big challenge is how to convince someone to give you 30 million dollars over Zoom. No more dinners and no more getting to know someone. It’s just remote. That was certainly challenging, so we spent a lot of time adapting our pitch, being able to articulate the business value, persuading people that we’re going to be successful despite the pandemic, and ultimately, we’re very, very happy that we were able to do so. Alejandro: That’s quite an accomplishment, and I’m sure that there are a lot of people right now listening to our conversation and that they’re wondering, “Oh, my gosh. I’ve got to fundraise too. How am I going to be able to do this?” Are there any main takeaways that perhaps you can share on how was that process of doing it all online because before, you could see the body language, you could establish that human interaction. Now, there’s none of that, so what were your biggest takeaways on doing this online? Jonathan Langer: That’s a good question. I think there are some simple things, and maybe some more complicated things. I think simple is, use a camera, use good sound, enable yourself to connect with the person on the other side to the best way possible, to the furthest extent. Close your cellular phone – everything; just concentrate on that person. It comes across. Then the other thing, which is a little bit more complicated to do is you really need to prepare the meetings. The message that you’re trying to convey, whether it’s on a presentation or orally, it really, really needs to be sharp because you’ve got 30 minutes of limited attention from someone. You’ve got to be super sharp. That’s what I felt we did, and it worked well. Alejandro: One of the things – it’s interesting how history continues to repeat, and we’re talking about war applied to startups, applied to being in the army. People are talking about, also, the next types of wars that we’re going to be experiencing, they’re more like cyber-type of stuff. Obviously, this is a bit different than what you guys are experiencing with Medigate because it’s more applied to medical device security type of stuff. But I’m wondering here, where do you think your space, and more interestingly, with the cybersecurity aspect of it, where do you think it’s heading as a whole? Jonathan Langer: I think that it’s evidence in every industry: healthcare, retail, finance, or whatever it is that all of our critical assets are beginning to be more and more connected to networks. Even in healthcare, probably a pretty conservative industry, medical devices that are connected to human beings are now connected to networks. I think that this is changing that digital experience and really changing the cybersecurity landscape. The attackers know that this is a soft target, and the defenders know that they need to do better in order to protect these assets, and it’s changing the industry completely. It’s super interesting for me as an entrepreneur to witness this happening just during our lifetime. It’s quite a challenge and very interesting to see this. Alejandro: In your case, how big is the team, especially for the people that are listening, how big is Medigate today to get an idea – anything that you can share. Jonathan Langer: Sure. We’re 90+ people, more or less, right now. It’s very different than the three-man team that we were just a short time ago. We’re scattered across the U.S., Israel, and Europe. Alejandro: I know, as well, that you’ve been doing some product launches, and there are some recent ones that you’ve done. How do you suggest, or what have you learned about doing a successful product launch? Jonathan Langer: I think that this goes back to strategy. The biggest lesson that I’ve had in this case is to listen to the customers, listen to the market, gather bits and pieces of information and insights from multiple stakeholders, bring it back to the team, develop the product, and then when you launch, make sure that you come back to all those customers that you talked to and say, “Hey, we listened to everything that you’ve been telling us, and here’s how we address it.” So, to me, the biggest lesson, like a basic product management capacity, is to listen very carefully to the customer and be very communicative when you come back to them with a product that has been ultra-ultra-successful for us. I can’t stress enough. Alejandro: It seems that, also, when it comes to execution, we’re talking about tactical execution. I think that being in the right time in history is critical. Obviously, we’re coming from a world where it was not the usual to see doctors and nurses on the front covers of newspapers, and now it seems that that’s what we see every day with the craziness that is happening. I’m guessing here, how would you say that this entire COVID and healthcare, as well, exploding, is impacting the execution? Jonathan Langer: You know, it’s interesting. I think there’s a short-term and a long-term here. Obviously, in the short-term, everyone is focused on just getting rid of this pandemic, and the healthcare workers are really on the frontlines. So, the focus is there right now. I think in the mid-term or long-term, we’re going to see a lot of interesting developments coming out of this a whole lot more, I think, remote care or virtual care known as telemedicine, people basically getting virtual care from devices or through video chats with doctors is really going to change the way that healthcare is delivered in the United States and globally, and obviously, that is going to have a huge cybersecurity IT impact as well. So, we’re tracking those trends very closely. Alejandro: Got it. Imagine, Jonathan, today that you go to sleep, and you wake up in a world, let’s say, five years later, so an amazing snooze. You wake up in a world where the vision of Medigate is completely realized. What does that world look like? Jonathan Langer: I think that world, to me, is a fully-digital hospital, everything connected, all patient care is digitized to the furthest extent possible, but at the same time, safe. There’s safety, and there’s confidence in these digital processes, and the attackers are shut out. That’s what we should strive to do. We shouldn’t impede the digital transformation; we should adapt to it and encourage it. But, at the same time, maintain safety. I think it’s possible. I certainly think it’s possible. Alejandro: It’s interesting. You were talking about adapting, and earlier, you were talking about the importance of listening to the customer. So, I see here some really interesting patterns, perhaps that you guys are applying to your own execution, which is listening. What you’re saying, and when you’re thinking about listening to your customers, it’s easier said than done. I’m just wondering here, like, how do you go about listening to your customer to extract the data points that are going to help you in your execution. What does that look like? Jonathan Langer: To me, just like I was saying earlier, I think it’s extracting the data points. To me, it’s all about listening to the people that you respect and that you can learn from. In our case, it’s really our customers. I listen, or our key members listen all the time, and there are multiple data points that come back every day that are quickly inserted into the development cycles. I think that has been key. Alejandro: Got it. So, would you say that the customer service needs to be front lines and be able to have a good communication because, typically, what also happens and that I have seen in many instances is that they are a little bit separated or disjointed, the way that the customer support team is, and the way that the tech team is, and that information and those data points can be lost? So, what are your thoughts on that? Jonathan Langer: I think that’s a very, very valid point. One of the biggest challenges that growing startups have is that the organization becomes disjointed in the sense that the sales team, the front line really isn’t able to understand what the client is [audio difficulty 25:23] from a more of a technological perspective, and they aren’t able to communicate that back to a product team, development team. We’ve created a process where we feel, to the best we can, that those valuable insights do not get lost. But it is a very, very key process that we’ve been focusing a lot on to make sure that we’re doing well. Alejandro: One of the questions that I typically ask, Jonathan, the folks that come on the show is – obviously, you’ve been at it for quite a bit now with Medigate, since 2017, and you’ve done multiple rounds. You’ve seen the ups and the downs that come with building a company. If you had the opportunity to go back in time and have a chat with that younger Jonathan that was coming out of the army and thinking about a world where he could bring an idea to life. What would be that one piece of business advice that you would give to your younger self, and why, given what you know now? Jonathan Langer: You know what? I didn’t think about this before, but off the top of my head, I would say this – I would say, “Make sure you enjoy the ride.” Because you know what? There are a lot of stressful situations, and there are ups and downs, and that’s always going to happen in every startup, but I think if you enjoy the ride, it will be good for you, and you’ll be able to have a clearer mindset to make better decisions instead of being stressed, and that’s also what’s good for the personal fulfillment. So, having fun is a key part of it. Alejandro: Absolutely. You know, I think that sometimes founders get too stuck on the outcome, rather than embracing the journey, and I think that they lose the fun part of it, which is getting there. Jonathan Langer: I could not agree more with you. Alejandro: Jonathan, for the folks that are listening, what is the best way for them to reach out and say hi? Jonathan Langer: I’m here for anyone that wants to reach out: jonathan@medigate.io – I’m happy to talk to any entrepreneurs out there or to anyone that’s interested in this domain, in general – feel free. Alejandro: Amazing. Well, Jonathan, thank you so much for being on the DealMakers show today. Jonathan Langer: Thank you, Alejandro. Thank you for having me.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Ramu Sunkara is the cofounder and CEO of Alan AI which has pioneered Spoken Language Understanding for enterprises to build, deploy, and manage voice experiences in their apps and IoT devices. Prior to this he cofounded Qik which was acquired for $150 million by Microsoft. In this episode you will learn: Building a brilliant founding team Choosing the best investors to fund your startup The ingredients of a successful startup that can weather the storms SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Ramu Sunkara: Ramu Sunkara is the CEO and Co-Founder of Alan. Alan adds voice to any application in the Enterprise. Customers and Employees can talk to the applications and get synchronized voice and visual responses and complete their daily activities using voice. The Voice AI service supports the domain language for any enterprise to improve the speech-2-text accuracy, spoken language understanding to determine the intents and entities and stream the voice and visual elements back to the application. Alan is named after Alan Turing. Before Alan, Ramu Sunkara led the mobile products for Skype, when the company he co-founded, Qik–the leader in the mobile video–was acquired by Skype for $150M in 2011. Ramu Sunkara started Qik in his garage in 2006, engineered its survival during the 2008 financial crisis, and evolved Qik to become the #2 paid application in Apple’s App Store and worked out pre-load agreements for Android devices with 13 operators in the U.S., Japan, South Korea and Taiwan.   Connect with Ramu Sunkara: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a full-cycle entrepreneur, someone that has done it! Has been there, done it, and now he’s doing it again. I think that without further ado, I’d like to welcome our guest, Ramu Sunkara, welcome to the show. Ramu Sunkara: Thank you, Alejandro, for having me on the show. I’m looking forward to sharing my journey with other people on your show. Alejandro: Originally born in Hyderabad, so how was life growing up there, Ramu. Ramu Sunkara: When we went to school in India, it was like growing up in a middle-class family, and most of the time, education was paid by the government. I was lucky enough to get into a good, prestigious school called Indian Institute of Technology, Madras. That’s where I went and completed my undergraduate there. Alejandro: What I’ve heard is that there’s a lot of social pressure around pursuing the best studies, the best education. Why is that the case in India? Ramu Sunkara: In India, when we grew up, there were only two choices when we were good in some kind of science or math. It was either become an engineer or a doctor. So, I didn’t like becoming a doctor, so I chose a path of becoming an engineer, so I went to a school called IIT, Madras. It is a pleasure that society looks at you like successful means in education is that you get into one of these programs. I was lucky enough to get into IIT. That gave me the self-confidence like, yeah, we can do things. Alejandro: And definitely, you did. In this case, you had a big influence from your father. Your father was an engineer, and he was working for the same company for 35 years. What kind of influence or inspiration did you get from his own journey? Ramu Sunkara: My father was one of the motivators for me. He worked hard. That’s the first generation which transitioned from being a farming community to taking a job in the industrial world. He advanced up the ladder in the same company and retired after 35 years. Through his journey, whenever he used to meet with entrepreneurs who were doing things very unique and successful by themselves, he used to take me to them whenever he met them, and that was a big motivation for me seeing how these people had built this self-confidence and wherewithal to go ahead and build a company on their own. That was my dream all the time. I kept nurturing it and kept trying new things. That’s when I realized that you had to be ready for a change. Whenever I had a good opportunity to change, I took it and jumped with both my feet. An example is like when I left India, I was an engineer, but suddenly I realized that computer science and software engineering would be a good field. I had no background in it, but I went ahead and jumped into computer science at the University of Wisconsin-Madison.  Alejandro: Why the U.S., Ramu? Why not stay in India? What made you think that the U.S. was where your next chapter should be? Ramu Sunkara: I think every time you get presented with opportunities in our life, at that time when we’re growing up, the education in the U.S. was the best you could get. Also, the schools in those days were giving you what they call a teaching assistantship, and it’s to fund your grad studies. That’s also, I would say, like a free education, without any paying of money out of my pocket, and my dad didn’t give me much money to study a Master’s, but this gave me a full-rights scholarship. So, I said, “This looks like a good opportunity for me. Not only is the education good, but also, I don’t have to pay anything out of my pocket. That made me jump the ship and go to the University of Wisconsin at Madison. Alejandro: Then, after being here, and I’m sure it was a culture shock for you to see the U.S., and the American Dream, and all that stuff that people talk about. You started going into companies here; you started working at a company called Digital Equipment Corporation, and that was the segue into Oracle. Oracle, for you, was a big pillar. You were there for ten years, so tell us about the experience. Ramu Sunkara: Yeah. I think the first company I worked for, Digital Equipment Corporation, doesn’t exist anymore. That told me that unless you change, you won’t be there in the future. It was very hard for that company. I learned a lot from that, how to be a [6:27] engineer in building products. Then, I worked for Oracle for ten years. I was lucky in trying to pick the problems to solve for that company. Not only that but building three different products for that company. I also learned how Software as a Business needs to mature in the world and change with times. So I could change myself about three times in the company. First, I built the product for them to work on these Linux Clusters. That is a database that goes up and down on a cluster. Then, the second product was trying to look at what business application will come on because of the internet. We built a [7:13] type of products there. Then, my last stay at Oracle was building collaboration products in real-time, like all the Zoom, WhatsApp, those types of messaging products we also built at Oracle. That gave me the impetus to “Okay. I can adapt to change quickly.” That’s when I started to become an entrepreneur and left Oracle in 2006 to start my own journey in building a startup. Alejandro: You were at Oracle for ten years. You had the 9 to 5; you had the nice paycheck. Entrepreneurship was something new. Was it maybe a little bit scary to all of a sudden give you notice and go into the unknown? Ramu Sunkara: In hindsight, I was enamored with the dream of working for myself and becoming entrepreneurial. It was scary. I left Oracle on the day I got married to my wife. I’m going to do this thing sometime in my life, so I just left, and went and parked myself in my garage in my home, and started thinking of what problem to solve. It was a scary experience to start with because, at Oracle, you get a really good office and paychecks. Not only that, the company has been in the business of finding new technology, so you get a lot of respect in the industry. If you go to the present, I’m Sunkara, the person from Oracle. And boom! All of that is gone. Now, here I am as an entrepreneur in my own garage working with this weird idea called video. I worked very hard, and it took me 18 months to regroup myself. Alejandro: I hear you. So, what happened next? Ramu Sunkara: I was ready to look into the future of what could happen next, and video was on the horizon. Then we said, “How about doing video.” At this time, America didn’t have an iPhone. We said, “Let’s do a video on a phone.” The initial team I had with that startup was a little bit hesitant because cellphone and video were not known yet in those days, and cellphone didn’t have any smartphone capability. Nokia was the leader in this cell telephone. We decided, “Okay. Let’s take a plunge. We’ll try to figure out what we can do on a cellphone with video, and that is when we started the company called Qik. I worked in my garage and went ahead and figured out a way to raise funding, got a few rounds done, and got it going. Alejandro: What about the founding team? How did you put the founding team together? Ramu Sunkara: The founding team – we were lucky. The people whom I knew for years joined me. Oscar was heading marketing. Nick was heading technology and engineering, and I was doing both fundraising and strategy and helping us stay on course. The initial team is very important because the startup journey is not a walk in the park. It’s fraught with a lot of unknowns, and at the same time, a lot of changes in the market, but the founding team that I formed Qik, I was lucky to partner with them and get the journey going. Later, we also got lucky when Bhaskar, one of our early investors, also joined the team full-time. That trial really helped to sail the ship to a dry destination.  Alejandro: And quite a good destination with a good outcome. We’ll get to that in just a little bit, but one of the things that definitely happened that really tested the team was right around the Series B when the whole economy was coming to a screeching halt, and your fundraising efforts, too. What happened there? Ramu Sunkara: Yeah. I think when we first pioneered the capability to do a live video from a cellphone, we were the darling in Silicon Valley. We won every single award given to a mobile company in 2008 and 2009. Then, we raised a Series A just in a weekend. We raised Series A of 10 million dollars in a weekend by just showing them the product, and people said, “Wow,” and those people wrote a check for us. Then, with that ease of raising funding, we started expanding the company. In 2009, there was a financial crisis in North America. Here is a company which is flying high, and the product was growing rapidly, and we didn’t have any business model on top of the product. Suddenly, financial markets collapsed, and all the venture funds who were excited to do a Series B quickly for the company, who were giving term sheets, just walked away from us in 2008-2009. One after another, they walked away from their interest in the company. That was very hard for the next nine months. We just barely survived. Barely survived means we were almost bankrupt every month. We begged and borrowed to keep the company going and kept the product mature more and more, and we had to layoff almost two-thirds of the people. But kept the core team together and made progress. That is what got us to the next step. Alejandro: And this for you, I’m sure it was quite a tough part of the journey, but typically, those are the events that lead to the biggest breakthroughs and lessons that one learns. So, I guess what lessons were there for you to learn during those dark nine months? Ramu Sunkara: Two lessons which I learned were: first, I think your founding team gets tested a lot, and that time test of this intense pressure and lack of money and the market looking back at you stood the time of test for us. Then, the second thing is as a business, you need to figure out how to make money. You shouldn’t get carried away by what the world is – be a little bit naïve just to let the growth happen without any monetization on top of it or anything inside. So we’re incurring tons of cost and data centers, and things like that. But we didn’t have any business model, and also, the use case, which we had, was not monetizable. Nowadays, live stream is monetizable. In those days, it was not. We didn’t have an idea how to monetize a service that was given to mobile users. Also, the timing of the cellphone was also not right. In North America, we didn’t have any iPhone or Android kind of devices in those days. The distribution was also very limited. The second lesson is, you should have a good team, but also market-timing should help you to take off and build the right business model. We got one right. We didn’t get the timing part right, but somehow, we weathered the storm for nine months. Alejandro: What would you say was the turning point because nine months, those days, I’m sure could have been like a lifetime, so what would you say was the turning point? Ramu Sunkara: The turning point was in Apple launching iPhone, and Apple created the App Store marketplace. We could launch the Qik series before there were FaceTime and Apple. That became the #2 paid app in a very short while, and boom! Then also, the App Store has a monetization model. We could charge for the app downloads, and that’s when we were getting a few tens of thousands of dollars in revenue immediately. So revenue flying was also spinning in 2010 for us. The turning point was, the market timing was perfect, and the product was there. That’s when I would say we got lucky in terms of getting the revenue flying and spinning for a short while.                              Alejandro: Ramu, before we talk about Skype and the acquisition of Skype, you had great investors. You had raised close to 15 million right before the acquisition happened. Who were some of the investors that you had involved?  Ramu Sunkara: The investors of Qik were early founders of Oracle, as well as people like Ben Horowitz, Marc Andreessen, and Marc Benioff. They did my Series A. Later, we had a few early-stage venture funds who wanted to participate in the journey. We were lucky enough to get them on board in the Series B and Series C timeframe. That’s where we raised 16 million dollars in funding for the company. Alejandro: Very cool. Just to recap this, what ended up being the business model. Now that it was flying with the app store and everything, what ended up being the business model of Qik? Ramu Sunkara: The business of charging for app downloads initially kind of worked from the Apple App Store, but pretty soon, Apple released FaceTime as a free product on their platform, so that business model didn’t fly too long. Then, we realized that the people who benefit from video were the mobile operators and the handset vendors, all the Android-based handset vendors, and the operators. We figured out a plan by which the operator can sell on a [17:38] placed Qik indirectly using per install as well as they used to pay an RA fee to get the service available on their network. Like T-Mobile, Sprint, Verizon, AT&T. These operators were paying us indirectly for having the service launched as part of their broadband initiatives. Alejandro: Very cool. Let’s talk about the acquisition. Tell us about that moment when Skype knocked on the door, and how did you guys go about fulfilling and completing that acquisition? Ramu Sunkara: Skype was the dominant player on PC laptop computers to do peer-to-peer video chat and voice calls. Of course, by the time they realized that mobile is the future, they were looking for the right partner that would round up their strategy for mobile. At that time, Skype was working with some of those mobile operators, which were operating Qik. They immediately realized that “Hey, this company called Qik already has gotten to Sprint, T-Mobile, and soon getting into Verizon, and soon they will have a network effect of all their mobile devices using this series called Qik.” That’s the best way to complement what they had on PCs with mobile. Verizon told them that they saw the Qik product and really liked how it was built, and stuff like that, to Skype. Skype came running to us, and the whole initial term sheet and closure happened in a very short while; in three or four weeks, they acquired the company. Alejandro: Wow. Ramu Sunkara: Initially, we thought Skype is such a big entity, and we probably cannot withstand their competition. So we said it’s a good fit for Qik and the team to bring that technology to the market through the Skype umbrella, as well as, it would complement what Skype already had being mobile and desktop solution would be complete for Skype. Alejandro: What were the terms of the acquisition? How big was the acquisition? Ramu Sunkara: Skype acquired the entire company for $150 million in cash, and we transitioned the entire team over to Skype after that acquisition.  Alejandro: That’s really unbelievable. I know that you had the opportunity, as well, to do some fun plans with your parents. I’m sure that was very fulfilling for you. Ramu Sunkara: Yeah. I think one of the things which I could do after we got the things done, and we were lucky enough to have some funds. We took our parents on paid trips with us, and they could see some parts of the world with us. It was a good celebration with them. Also, we could show them parts of the world that they hadn’t seen before. It was awesome, and it was also emotional for us. Alejandro: I can imagine. Now, part of the integration and now being in this next chapter with Skype, one of the things that you saw was that there’s no reason to be scared of larger competitors. In this case, it was really clear and apparent to you. Obviously, now, we’ll talk about it in just a little bit, but you’re taking on a bunch of giants once again, but what was that breakthrough moment where you really got, and you were present to the fact that there was no need to be scared of competing against larger players? Ramu Sunkara: I think this is like hindsight. When we got acquired by Skype, we were a small company and focused on solving one problem providing a good video experience on mobile devices to have video conversations. We thought Skype was a huge organization with lots of resources to it and a huge install base of a few hundreds of millions of users, and they can easily move into mobile, and they could just kill us instantly. I was so scared that this could happen quickly and when Skype went to mobile. But what I learned secretly after the acquisition and going inside Skype and working there for some time, we realized that even though the company was so large, much larger than Qik was, the large company usually has lots of problems when a new market opens up. The number one problem is, they have a huge install base; they can’t move there quickly. Number two is, the technology and infrastructure they have is also dated because it has evolved in a different marketplace. Now, we’re getting into a new market segment; it’s nearly impossible for them. That’s the reason why they do acquisitions too. Number three is, the team is not hungry enough to go dominate a new segment. Whereas a startup has all three benefits. That is when I decided, “Okay, I don’t think we should be so scared of the competition. What we should be scared about is what’s the daily work we do by ourselves to help us succeed far more than the competition. I firmly believe that a small team, which is focused and executes daily in a systemic manner end up, of course, with the self-confidence will definitely outdo the competition without worrying too much about the competition. Of course, the market-timing should also help you in bringing this innovation to market. That’s what I’m seeing right now as well. Alejandro: Then, talking about what came after because Skype would end up being acquired by Microsoft, so you would again see the whole acquisition process. Now, you were able to have access to that full cycle of how a company goes from nothing, being literally in your garage, to being under the umbrella of one of the biggest companies in the world. Now that you were exposed to that, and that you knew how to kill it, how to cook it, it was like why would you want to do it for somebody else. Especially once an entrepreneur, always an entrepreneur. Tell us about that moment where you knew that it was time to go at it again. Ramu Sunkara: Yeah. I think once we joined this large organization after we joined Skype, Skype got acquired by Microsoft subsequently, and Microsoft is a fantastic company. But the urge to innovate and create something that in the future you can think of, it’s harder with a bigger company because they have such a huge install base and existing people have to agree to it and things like that. So, it’s much harder. We decided, “We will take a step and figure out what the future is that we can create, and we’ll enjoy creating it.” That led us to leave Microsoft later and start our new venture, which is Alan AI right now. Alejandro: So, tell us about Alan AI. How did you come across the problem, and how did you go about bringing it to life? Ramu Sunkara: A path to Alan AI – what we’re doing at Alan is not a straight line. We were initially building a product for meetings. Then, as we were building a product for meetings, we added voice commands to the product. Our users really liked the voice commands we added to the meeting application we created. We then realized, “We can enable simple voice commands in any application.” Just to give you some perspective, when people use mobile applications today, they need to spend time to get familiar with the functionality of these apps as well as the interface of these apps. And every app is different. Most of us give up using them. Right? Alejandro: Yeah. Ramu Sunkara: That’s why 99.9% of mobile applications end up dead. That’s when we saw that there was an opportunity to make all these parts much simpler with voice. That gave us the vision to build out our platform. Alejandro: Yeah, I know. I was just going to say, tell us about it because we’ve been talking about team and the importance of really putting together a solid team that can weather the storm. In this case, especially based on what you had experienced with your previous company, Qik, what did you do differently, or how did you go about reassembling that initial team? Ramu Sunkara: The initial team, of course, it should be complementary skill sets in the initial team, and also people who can muster the storm, as I described in my journey with Qik. It was not a straight line there too. We just went a couple of times. Very hard. Initially in the talent, this is where I made sure my co-founder, Andrea, and I, we worked together at Qik, and he has the tenacity, pursuance, and the vision to execute, and he’s also a visionary looking to the future. With him, I could pair up. The one thing we did this time was, the entire founding team is in the same office, the same room. That was not the case with my previous startup, Qik. Some of us were in the U.S., and some of us were in Moscow, Russia. This time, we made sure the founding team is all in the U.S. at the same place. Our reason with Alan is like we want to make every application very simple. You should be able to just open any application; ask it what do you want; it understands exactly what you said and does what you’ve asked. This is the fundamental technology we developed, and we’re bringing to the market right now. Alejandro: Very cool. For the people that are listening, what ended up being the business model of Alan? Ramu Sunkara: We are getting good at option right now with Alan in the marketplace. We have several thousands of people signing up and bringing up inapt voices on their applications with themselves. We charge to do this. We plan to offer the service for a number of concurrent users in each application on a paid basis. If you’re an app user concurrently like 100 users, you pay one price; 1,000 users or 10,000 users or 1 million users, we charge them in different price tiers. We’re also learning which monetization model will stick well for us, and we’re going to experiment with that in the next year. That’s where we are. I know we’ll focus more on how did we get an option and get the delightful experience for a few thousands of these applications in the stores. Alejandro: This is your second rodeo, and we’ve talked about team and surrounding yourself by the right people. But from your last journey, I’m sure that you learned quite a bit about surrounding yourself by the right investors. Obviously, in this case, you guys are at an early stage now as you’re thinking about assembling that team, as well, of investors. What have you learned about investors, and, let’s say, for this journey, who do you think are going to be the ones that you are definitely going to want to bring here as part of it? Ramu Sunkara: I think that’s a very good question from a capitalization of the company point of view. It’s not only the company’s founding team. The investors, how to get the interior part of this business to flower up. Investors, from our perspective to the people who are coming in, not just with capital, but also with the right motivation to create this business. Why would the world be better, #1, because of this team? Not just making money. I personally think voice makes computing expand the next 10x because it’s easy for anyone to talk to these software products. That’s one: they should be fully believing their vision. The second thing is, they should also have had experiences of building game-changing companies in the past. There are so many companies that they’re opportunity-inversed in it. But we want to see someone who has taken it all the way from ground zero to the next billion-dollar revenue streams. That’s the kind of trade we want to see with them. Alejandro: Got it. This whole space of being able to use voice, it’s really taken off. You’ve seen the Alexa’s, Google – it’s really unbelievable. But in this case, what you guys are doing is allowing anyone to pull their phone out of their pocket to give a command to the phone, and basically for that application that needs to be giving them what they need, everything right on the spot instead of having to familiarize yourself with the nonsense of apps that sometimes you even give up on. In the scenario in which you were to go to sleep tonight, and you were to wake up in a world five years later where the vision of Alan is fully realized, what would that world look like? Ramu Sunkara: I think that’s a very good question. Just like in the last ten years, we have seen the mobile landscape take off, and all of us are accustomed with the touch and type experiences. Five years from now, touch and type will be the legacy experience. We will be using just voice; just like we’re having this conversation on this broadcast, we’ll be able to converse with intelligent applications. They’ll talk back to you and assist you to complete whatever you’re doing without even touching the application. This will be not only making a lot more people use the software products; it will improve the engagement and improvement of the current products. It will also make the world safer. For example, it’s not safe to use any of these software products when you’re driving. It will make people more productive. When people are going, and they’re picking things, for example, all those delivery systems are helping people pick up things, so they can just use the voice system and pick up things much faster and do probably two to three times more what they can do today. The world will be much more expanded with a lot more people using technology with voice. The world will be safer, productive, and all will be delivered by just having the ability of having a conversational experience with any software that we touch today. Alejandro: That’s amazing. Well, I can’t wait because I’m tired of getting familiarized with new apps that it’s just time-sunk. I’m sure that many of the people that are listening are going to be excited when they see Alan fully realized to its best capabilities, and you guys are well on your way, Ramu. What an incredible journey. I’m sure that now if after all of the lessons and the successes, failures, everything that comes in the ups and downs of building a business, there’s one question that I typically ask the guests that come on the show, and that is if you had the chance, Ramu, to go back in time and perhaps have a chat with your younger self, with that younger Ramu that was about to put in the notice in Oracle before launching the first business. Knowing what you know now, if you could go back in time, what would be the one piece of business advice that you would give to the younger Ramu, and why, before launching a business given what you know now? Ramu Sunkara: Very good question. One piece of advice I would give myself is, make sure you pick the right partners to do the job. It’s not an easy journey. It’s by no means a straight line. This journey has to be done with the right set of people to succeed. And, of course, be prepared. The second thing I would give myself as advice is, one has to be prepared. This is like a marathon. It’s not like a sprint. You need to keep on working toward the end goal, but the stamina you need is much longer than just six months or one year. Those are the two pieces of advice I would give myself: pick the right team and have the stamina to run the long run. Alejandro: I love it. So, Ramu, for the folks that are listening, what is the best way for them to reach out and say hi? Ramu Sunkara: They can send me an email: ramu@alan.app – my social media profile is on LinkedIn and also updated, so they can reach either place to me. Alejandro: Fantastic. What’s the LinkedIn handle. Ramu Sunkara: Yeah. My LinkedIn profile is my first name and last name. They can easily find me. And my Twitter handle is @ramu. I don’t use Twitter that much. LinkedIn is good. Alejandro: Fantastic. Well, Ramu, thank you so much for being on the DealMakers show today. Ramu Sunkara: Thank you, Alejandro, for having me. It was good talking to you.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Daniel Hegarty is the cofounder and CEO of Habito which is a digital mortgage brokerage services company that offers a personal and modernized approach to the home buying experience. The company has raised $80 million Atomico, Ribbit Capital, Mosaic Ventures, SBI Group, Loric Ventures, and Mojo Capital to name a few. In this episode you will learn: Managing through COVID lockdowns The challenges facing mortgage startups who want to deliver better experiences Daniel’s top two pieces of advice for other entrepreneurs SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Daniel Hegarty: Daniel Hegarty founded Habito, the free online mortgage broker in 2015. Daniel Hegarty the opportunity to transform the mortgage market after a frustrating and protracted experience getting his own mortgage and decided to use technology to create a better way. Daniel Hegarty has extensive fintech experience that took an unusual route, having spent the early part of his career as a professional musician. Daniel Hegarty was a songwriter, session musician, composed for TV and film and toured internationally for many years. In 2007, Daniel Hegarty became increasingly interested in the tech and startup scene and joined a fledgling fintech company, Wonga as Head of Product. Daniel Hegarty went on to hold several other positions as the business grew and became global including Head of Decision Science, Head of Strategy & New Ventures and Managing Director of Business Lending & Retail.   Connect with Daniel Hegarty: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder joining us from London, and definitely a very interesting story here that he has to share. We’re going to be talking quite a bit on fintech and building, scaling, you name. So without further ado, Daniel Hegarty, welcome to the show. Daniel Hegarty: Hello. Thank you for having me. Alejandro: So born and raised in London. How was life growing up? Daniel Hegarty: How was life growing up? If you’ve spent any time in London, it’s a lot of rain, a lot of talking about football, a lot of eating bad English food, but yeah, good. I still live here, so it couldn’t have been so bad. Alejandro: And I’m sure a lot of fish and chips, but anyhow, I know that you were partially raised by your grandparents. So, tell us about this. Daniel Hegarty: Yeah. That’s right. Over the years, my parents and grandparents kind of tag-teamed looking after my brother and me, which in the context of an entrepreneurial journey, I think it was quite important. One was Czechoslovakian. My grandmother was from Vienna. I think that sense of otherness and not being pulled in or invested in the sort of British status quo definitely affected my thinking about my career and how I went about building businesses. Alejandro: And they were refugees, so the migrant mindset was pretty much there from the early beginnings. So, how would you say that has influenced who you are today? Daniel Hegarty: They were both Jewish and, obviously, chased out in the Occupation in WWII. I think it was a few things. I think one was like a general sense that whatever you were going to make in the world, you were going to need to make yourself, as well as a sense that anything you had made could be taken away from you at any moment. But, also, yeah. I guess that natural hustle, if you like, of how you’re going to figure out how you’re going to fit in in a foreign country and a foreign context without understanding all of the implicit rules. I think, particularly for me, in my current business – we’re in the mortgage business. I didn’t know anything about mortgages before I started this business. I think that kind of mentality gives you the courage to try those things. Alejandro: Then, at 16, something pretty big-time happened.  Daniel Hegarty: Yeah. I was in this quite bad punk band all the way through school. We got a record deal, so obviously, we were faced with the choice between doing my A-levels in English and math and going out on the road with my band; it was a pretty easy decision. Yeah, that was the beginning of nine or ten years for me as a professional musician both here in the UK and here in the U.S. Alejandro: Were you guys going after the record deal like knocking on doors, or did this just happen like out of the blue? Daniel Hegarty: We got discovered by an agent, a manager who then shopped us around for our first deal. We had this modest radio hit in the UK. That set us up for a good run. That band imploded, as all teenage bands do. Then, I transitioned into doing a lot of session musician work, being in some other bands, doing some work for film and television, and a number of other things. Alejandro: And this was in Los Angeles. How was life there? You dedicated nine or ten years to this, so what were some of those key lessons that you got from that? Daniel Hegarty: Yes. I ended up in Los Angeles in my early 20s with the next big band that I invested a couple of years in, which was like an informative experience for me. It’s my first time out of the UK for a significant period. It was two guys and me who had gone out there together, literally just with our instruments. Actually, the drummer couldn’t even bring a drum kit. I remember on our second day sitting in a café and being like, “We need instruments, somewhere to live, a car, a lead singer because we didn’t have one. Then, we need to find a manager and a record deal, and it began this couple of year journey of us trying to figure that out, which, as you can imagine, sounds a little bit like what a startup is, but instead of record companies, you’ve got VCs, and you don’t stop growing the employee count at three, four, or five people. You just keep on going. Alejandro: Got it. What happened after the nine years that got you thinking, “Maybe it’s time to pack the bags and go to London”? Daniel Hegarty: It was a few things, really. To be frank, I wasn’t so tremendously talented that there was no challenge in it. Most of the music that I wanted to make, it appeared people didn’t really want to listen to. I guess I was faced with – I remember being at the airport, going off on tour and seeing some of the other guys I was playing with who were maybe ten years older than me saying goodbye to their kids for eight, nine, or ten months as they went off on tour. I was conscious of a career like a jobbing session musician was going to be tough, and it was never going to stop. It was always going to be buses and airplanes and being away. In truth, I came back to the UK just for some time out to have a think about options, and I stumbled into my first job in fintech. I didn’t really expect that I would stay. I anticipated after a few months that I would be back making music. It turned out that I was a massive closet geek. As soon as I was let loose in fintech, I never looked back. Alejandro: Tell us about this because it’s interesting. You dropped off from school at 16, so it’s not like you had the curriculum of Oxford and all these crazy universities and titles and things that would dress up the CV, so how do you go to convince someone because this is a massive shift, as well for you, into a completely new industry. First, how do you stumble across fintech, and then how do you convince the right people at the right time to give you a shot? Daniel Hegarty: It’s kind of a funny story. It was actually a very good friend of mine, a corporate lawyer called Tina Baker, who does a lot of angel. She’s now actually retired but did a lot of the angel and Series A rounds in London over the last 10 to 15 years. She also had a second life. Before that, she was a pop star in New York in the ‘80s and then was an opera singer and all sorts of things. So, I actually knew her from music, nothing to do with business. I came back to London, and I was like, “Listen. I’ve got no qualifications. I really need a break, and I want to try something different. How do I get a grown-up job?” She was like, “Oh, that’s funny. I just met this guy who I think might be crazy enough to hire you. He just raised some funding.” She introduced me to the founder of the first company I worked at, a company called Wonga. He and I just hit it off. After 15 minutes, he was like, “I think you’re a smart guy. I think you can add some value.” I started two days later, and it ended up being a six-year journey for me. Alejandro: That’s amazing. And here you were running all types of stuff for them, from credit risk and analytics to new products to you name it. So how was that steep learning curve for you? All of a sudden, here you are. Someone gives you a shot, and you have to learn all of this stuff from the ground up. Daniel Hegarty: Yeah. Honestly, it was incredibly exciting for me at the time. I remember just being like – I laugh now, but I remember putting the first 100 pounds into a Google AdWords account and being given the Web Analytics login and being amazed at all the day’s records I could find. Then, my boss at the time said that I could spend as much money on Amazon on books as I wanted. So I was sitting there reading books on subjects like linear regression and doing the machine learning courses at Stanford in the evenings. Yeah, it was crazy. It was like this whole part of my brain that I had never used before, and I was suddenly surrounded by very, very brilliant people – quite intellectually a combative environment, and I really thrive on it. I actually loved it.  Alejandro: So, in this case, I know that for you, there was quite an event you had to live through with Wonga was having the Church not very happy with you guys. So what was that? Daniel Hegarty: Yeah. Wonga is an interesting story. I was the fourth or fifth or sixth employee, and then over the next few years, it went from nothing to being over 1,000 people in nine countries, lending to consumers, lending to businesses, doing all kinds of things. I would definitely say it was in the high-cost short-term credit space. We were spending – I don’t remember now, but 30 or 40 million pounds a year on marketing, so it was a very famous brand and attracted a lot of attention from politicians, from the media more generally. At one point, the Arch Bishop of Canterbury decided that he didn’t think it was a great thing. He came out in the press and said that the Church was going to compete directly with Wonga to try and serve the same customer segment, which was, honestly, sort of funny in retrospect. But, at the time, it kind of made us feel pretty sick. We’d all invested thousands of hours of our life into building this product that we thought could have a positive impact on the world, and having the Church say that it couldn’t was pretty disturbing. And you couldn’t make it up. The next day, it emerged that the Church was actually an investor in Wonga through a couple of our VCs. Alejandro: Wow. Daniel Hegarty: The newspaper and the Arch Bishop had to walk it back. It was a crazy time. Alejandro: What did you learn about PR crisis management? Daniel Hegarty: I think we learned that ultimately you have to stick to your guns and be clear about what you’re doing in the world. Don’t get me wrong. I don’t want to make this all about Wonga. Wonga’s not a simple story, and not everything that Wonga did was perfect. I think if you’re in usury and money lending, more generally, it is always going to have the complexity of, “What do we do about the people that can’t repay, and how do we treat them in an empathetic and fair way? I think this is the reality: if you’re building a big brand in a space – and we see it in every growth fintech brand. At some point, the media is going to be upset. In the UK, right now, you see it with Monzo, an incredible business. Tom is an incredible founder – every second story in the newspaper is something negative about how they’re dealing with AML or if their new product doesn’t work or if the founding story is problematic. It’s just the nature of things. I think you’ve just got to be tough and tough it out. Alejandro: Daniel, in this case, at one point, you decide it’s time to do your own thing, to build your own baby, so tell us about how the idea of Habito came to mind and how you brought it to life?   Daniel Hegarty: You can probably hear from the way I described it. I loved the first couple of years of Wonga so much. When it was a smaller group, maybe a little bit more familiar to me because it was a bit more like being in a band. So, yeah, I very much wanted to repeat that experience, but there were a couple of things in my mind. One was that I wanted to have control over the culture and to make sure I was building a place I would be excited to work at. Also, I wanted to build a product that was completely aligned with that customer’s outcomes, so there wasn’t any contention and difficulty in figuring out what was the right thing to do in any given situation? I was fortunate, I guess, as founders sometimes are in that I had a really terrible experience. I went to buy my first house, and I had this kind of comic experience in the UK – and I should say that in the UK, mortgage brokers are very prevalent. About 80% of mortgages are arranged by mortgage brokers. You don’t tend to get [13:41] to your bank. My mortgage broker made a horrible mess of me buying my first house. It’s kind of funny. He made the application to the bank, and on the application, he included me, my partner, and my partner. So ten days later, the bank rejected the application on the grounds that I was a polygamist or a bigamist or something. Then he realizes his error. I’m like, “Please, can you fix this. We’re going to lose this house.” He then takes me off the application and just includes my partner and my partner again. Another ten days passed. The application is declined again. In the end, the sellers were going to pull out. It looked like the whole thing was going to fall apart. In the end, we figured it out. For me, it was this incredible insight that the home mortgage industry was essentially like people passing buckets of water to each other with zero technology, zero transparency about process. I guess, even more than that for me, considering that I had already been in financial services for quite a few years at that point. I was struck by how disempowered and confused I was in the process and how little innate knowledge that the typical house purchaser has of all that financing entails. I felt like I had stumbled over this broken thing in the world, so I set about the process of thinking about how to fix it and how to raise funds, and that was the beginning of Habito.  Alejandro: For the people that are listening to really get it, what ended up being the business model of Habito? How do you guys make money? Daniel Hegarty: There are two things that we do primarily. First, we are a digital mortgage broker, so we compete with those guys who made a mess of me buying my house. Essentially, customers come to us on the internet. We provide them with mortgage advice. We find the right mortgage for them, and then we go ahead and make the application on their behalf and process it with the lender. So we’re free to the customer, but we’re paid a portion of the mortgage by the lender. On top of that, we do a couple of other things. One, last year, we became a mortgage lender ourselves, so we have some of our own full stack products where, obviously, we make money in the usual way by charging interest and fees. Also, we have a premium homebuying product called Habito Plus, where we not only arrange the whole financing, but we deal with the legal work; we deal with the appraisal of the house; we orchestrate the whole transaction. For that, we also charge a fee. Alejandro: Very cool. One of the key areas of building a meaningful business is understanding how you get to your customers and an acquisition channel. I know that, for you guys, it was a little bit bumpy, especially when it came to understanding that television is probably not the way to go. Daniel Hegarty: That’s interesting that you say that. Like in most fintechs, maybe fintech companies, in general, we were doing what everyone was doing. We were spending money on Google; we were spending money on Facebook; we liked doing tests with other channels. It was working okay. We were getting enough volume to learn and build. But our customer acquisition goes down. Our cap was just too high. We realized quite early on that if we were going to build a very large business in this space, we were going to have to build a brand, and you can’t really build a brand on Google. So, with that insight in hand, we were like, “Right. Let’s start to make our first TV advert and put our money where our mouth is and go above the line. Looking back, I don’t quite know what we were thinking, but we made an advert trying to explain to people what an algorithm was and how our algorithm would help them find the best mortgage. We spent several hundred pounds all in on this TV campaign – went live. Nothing! We’re watching the web analytics, and not even a bump on our traffic. Alejandro: Wow. Daniel Hegarty: Let alone, like any mortgage is getting sold. So we’re like head-in-our-hands wondering what we had done. We tried re-editing it. We’d do a different media by different channels and still like absolutely nothing. So we go back to the drawing board a little bit despairing. Actually, just at that time, thankfully, we were hiring our first CMO. I had this conversation with her at the time, which was, “Listen. I believe to build a brand in this space, we’re going to have to be on television to build trust and to build notoriety. But what we’re doing isn’t working.” I think the realization we had together was if you want to be noticed on television, particularly in this space, which is conservative and boring, you’re going to need to be brave, like really brave. So my brief to our CMO was, “We’re willing to go away and make a new advert, a new media strategy, and I want you to make me really uncomfortable. I want to feel like deeply scared.” [Laughter] Because otherwise, if I’m not scared, no one’s going to remember it. She did an amazing job. I was really terrified. We made a new set of adverts. The pitch is hell or Habito. So, hell is the old way of doing it, all of those feelings of disempowerment, and confusion, and getting ripped off. Obviously, on the other side is us, Habito, the bright future. The way we dramatized that was essentially like animated cartoons of people being attacked by mortgages, like disemboweled, drowned in vomit, like sweating so much they drown in their own sweat and mortgage puranas come and eat them – I know; it sounds completely crazy. That was the pitch, and that was what we did. We put the first advert out nearly two years ago now, and it was completely transformative for us. So we went from like 0% brand recognition to 10% brand recognition nationally with the most recognized mortgage brand in the country. Our customer acquisition cost came down by like 350%. Alejandro: Wow. Daniel Hegarty: It has become the primary growth engine for us as a business has been this creative platform. So a huge, huge learning experience for us. I think most importantly, I would say is that I was really worried that people would think we were showing off and trying to win marketing awards like what does this have to do with making the best decision about buying a home? I think the reason it worked was because it had a basis in empathy. I think it actually wasn’t just us saying how cool we were. It was like us saying, “We understand that this is an unpleasant process, and you feel like you’re being ripped off or things aren’t being explained properly. Because of the creative or the drama that was based in that, I think that’s why our customers responded to it. Alejandro: Very cool. A business like this is quite different to venture, so why is it different, and what was that process for you like? Daniel Hegarty: So different, too. What did you say? Alejandro: For example, in this case, you had to raise all this money for the lending. So tell us about what was that process like? Daniel Hegarty: Sure. We’ve had to raise a lot of venture capital, as you can imagine, like most high-growth fintech’s, but because we wanted to move into the lending space, as well, we also had to raise a huge amount of debt capital, so we’d have enough dry powder to lend. As you know well, and I’m sure your listeners know well, venture capital is effectively like an iterative process. You define your hypothesis; you get to the early stages of product/market fit, show the right growth numbers, show great unit economics, and you prove your point iteratively over years and raise multiple rounds. When you’re trying to raise, for us, what was 500 million pounds worth of mortgage debt, you don’t get to do any of that. You can’t build a minimum viable product and test it in the world. You have to be 100% ready to take complete ownership and judiciary responsibility for this huge pile of money. So you have to build your whole lending platform in advance. You have to build all of your risk and governance and compliance teams that are going to sit around that and control it in advance. Then, and only then, a couple of years into the process, you get to go out into the market and try to convince institutional investors that they want to bet big on your platforms. That was something we did last summer, and bear in mind that this was also in the middle of Brexit, which has been a pretty challenging sort of episode of Britain engaging in self-harm publicly.  Alejandro: Yeah. Daniel Hegarty: But we got there in the end after about nine months of grueling interrogation of what we’d built. We were incredibly proud to have done it, but also, the level of diligence makes you grow up as a business and makes you realize what it means to be a serious global financial institution. So even though it was painful and wasn’t fun at the time, actually, it was an incredibly positive experience for us as a business. Alejandro: That’s amazing because you’ve raised on the lending site 700 million dollars? Daniel Hegarty: It’s about that. Yeah. It’s 500 million pounds, whatever the exchange rate is. Alejandro: Got it. Then on the equity side from investors, how much have you raised? Daniel Hegarty: It’s about 80 million dollars. Alejandro: Very nice. Very nice. Obviously, you were able to see the incredible growth of Wonga, and Wonga had also raised quite a bit of money, too, over 100 million. The question here is, based on your experience with Wonga when you were at it here, and you knew you needed to raise money, what were some of the aspects that you were looking for from investors because, obviously, money is not everything. It’s who is giving you the money and how you can leverage their networks. Daniel Hegarty: For sure. Yeah. Because Wonga had a tumultuous ending, I also saw some of the downsides of when investor relationships go bad. Yeah, I was incredibly focused, maybe too focused on finding investors who I believed were super high in integrity and were good people who I could trust and would be there in the down scenario. We were incredibly fortunate and raised money from some of the best investors in the world. I was also lucky that for the majority of them, I also had a personal relationship with them that had gone back a few years. They had met my kids. I had met their kids. Yeah, that made a big difference for me, particularly because I’m a solo founder, so I don’t necessarily have that kind of natural person to talk to within the business. I think I was probably more reliant on the trusted relationships with some of our board members early on in Havito’s history. Alejandro: Absolutely. Now, COVID has been as well, quite bumpy for everyone. How has it been for you, the whole COVID experience, and for Habito? Daniel Hegarty: To be honest, it was very tough. We were right in the middle of raising our Series C, and effectively in the lockdown, the housing market in the UK came to a complete stop. Realtors couldn’t show people around houses, surveyors or appraisers couldn’t go around and value houses. Our revenues, which some of it is refined, so that carried on, but dropped by 70% to 80% at the worst point. Obviously, when it happened, none of us had any idea how long that was going to go on for, whether it was going to be three months, six months, or two years. I guess many others and I had our nuclear apocalypse financial projections where we were trying to work out how long we were going to survive at very low revenues. If you have a Series C like [25:08], with a couple of investors getting very nervous. We were lucky on the number front. Firstly, we responded really fast and looked at our cost space, made sure that we were being really realistic about what the rest of the year could hold and how we could protect ourselves. Also, as I said, you find out from your existing investors who are going to be there for you in a down moment. We had a down moment. We were incredibly fortunate that all of our investors showed up both with time and with their checkbooks to help us out. Then, on the other side, the market rebounded much quicker than we’d imagined. Actually, the market was re-shutdown for just under three months, and it came back with a real boom. So we were able to close the Series C. We were back with record-breaking months within just three or four months from that, that real bottom of the curve. And it looks like, God willing, no second waves and further lockdowns. Yeah, the business is going from strength to strength, so the touch with that continues. Alejandro: That’s amazing, and I’m sure that for you, that was pretty nerve-wracking, but I’m sure that you learned quite a bit, too, as a founder. One of the things that I wanted to ask you here is, when you’re dealing with a moment like that, such an impact, it’s hard not to start thinking the what-ifs and to have those voices and going into this toxic-type of rabbit hole, how was that for you? How did you deal with that? Daniel Hegarty: I wish I could say I was impervious to it, but no. I was definitely having the 3:00 am wakeups where I was in all hands explaining to the business that we had run out of money, all the usual horrific nightmare stuff. You know, the one thing that I did, in retrospect, always seems a bit crazy, but it actually showed some wisdom was, I had this moment of realization that – it sounds like a strange thing to say, but it’s a bit like when you break up from your long-term partner, or you lose someone you love, where the floor falls away beneath you, and suddenly every different version of the future seems possible. Alejandro: Yeah. Daniel Hegarty: I kind of felt like COVID was that for us. Actually, what we did a month after lockdown was, we did as a senior leadership team; we all got together and did a really deep strategy exercise. We examined every kind of piece of received wisdom and precept of our strategy, and really stress-tested it and made sure we still believed it because the world had changed. I was super-conscious that if our strategy didn’t change, then perhaps I suggested that we weren’t being mentally agile enough. That process, we did over two or three weeks and made some – not totally earthshattering changes but killed off a couple of product lines that had been stuttering for a while, doubled down on some bets that we really believed on for the future. I think it was incredibly valuable for us, not just in terms of taking the opportunity to rethink the future, but also in finding each other in that process. Because, obviously, we had all been physically dispersed into our houses. But it allowed us to have some really deep and challenging conversations about the true business. In the months that followed, I think it gave us a great platform for growing out of the crisis that we had experienced. Alejandro: Talking about the future, Daniel, imagine you go to sleep tonight, and you wake up five years later, so a tremendous snooze. You wake up in a world where the vision of Habito is fully realized. What does that world look like? Daniel Hegarty: It’s a lovely thought, particularly because I’ve got two kids under three. [Laughter] So, missing a few years of those months would be amazing. No, for us, the vision is the same. We want it to be incredibly easy for people to buy houses. We think homeownership is a huge driver of happiness in the world and of value in the economy. In the moment, when it is still, even with our best efforts, largely brought about by legacy institutions and legacy technology with a bunch of processes and laws, as well, actually that really work against the consumer. So, I think, I would imagine a future would be that we’re at the center of many, many more transactions – let’s say the majority of transactions. The decision to purchase a house is as simple in the UK as finding a house you want and asking us to arrange the purchase with just a few clicks. And by creating that central hub of demand on one side and supply for the mortgage market on the other side, we’re reducing costs for everybody, and therefore, driving our mortgage rates and the cost of homeownership. Alejandro: Very cool. Very cool. For the folks that are listening to get an idea on the size of Habito, is there anything that you can share on the number of employees or anything else? Daniel Hegarty: Sure, yes. We are about 150 people now. I think we’re originating something like 2% of all the mortgages in the UK, so a reasonable scale, like multiple billions, annualized. Yeah. There are some headlines. Alejandro: That’s amazing. Good stuff. Good stuff, Daniel. Now, as you’re looking back and it’s quite a journey that you’ve been through from playing in a band, touring on buses, and all over the world from that to joining fintech, experiencing massive scale, and now even doing it, yet again, now, for you, for your own baby with Habito – as you’re looking back and if you had a chance to speak to your younger self, with that younger Daniel, that perhaps you could give that younger self one piece of business advice before launching a business, a company, what would that be and why knowing what you know now? Daniel Hegarty: That’s a really good question. It’s deep. I think there are two things. I’m going to cheat. I’m going to do two things. First is like the thing that is going to sustain you. Being in a band and founding a business is tough. Like, anything in life worth doing is incredibly tough and is going to require infinite amounts of energy and grit and determination. Make sure you really, deeply give a **** about it. Don’t end up in an industry that you’re like half excited about or selling a product that you’re only half excited about. I think that varies. For some people, that’s like whether it’s making exciting software. For me, it’s really simple. I really care about consumers and the journey that we can go on with them. So, I would be terrible in B2B, for example. I’m 100% a B2C guy. I think trying to get to that level of self-knowledge as early in your career as possible will save you a lot of heartaches. The other thing I would say is just bear in mind your investors, your senior leaders, you’re going to work with co-founders, these are relationships you’re going to be in for years, maybe decades. So focus much more on integrity, people who you can imagine spending 1,000 hours with rather than like who’s got the best CV or who’s the best salesman? For me, certainly, the transformers have affected Habito, not in its growth – it’s been the incredible relationships that I’ve built with the people that I’ve built it with. Alejandro: Got it. That’s very, very profound, Daniel, so thank you for sharing this. For the folks that are listening, what is the best way for them to reach out and say hi? Daniel Hegarty: You can find me on Twitter. It’s @dh_habito – I’m always very happy to help. If you need any help in the UK with buying a house, then come and see us at habito.com.  Alejandro: Amazing. Well, Daniel, thank you so much for being on the DealMakers show today. Daniel Hegarty: It’s a real pleasure. Thank you so much for having me.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Sandeep Akkaraju is the cofounder and CEO of Exo which is a medical device startup which develops handheld ultrasound devices and AI for imaging and therapeutic applications. The company has raised $100 million from top tier investors such as Intel Capital, Applied Ventures, Sony Innovation fund, Rising Tide, Bold Capital Partners, Creative Ventures, Raimagined Ventures, and OSF Ventures to name a few. Prior to this he built and sold IntelliSense for around $750 million. In this episode you will learn: Choosing your investors wisely How big Exo is today Why Sandeep says he would tell his younger self to go even bigger, earlier How to go about an acquisition for your business Alejandro Cremades · EP 269 Sandeep Akkaraju Raised $100 Million To Take Medical Imaging Everywhere SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Sandeep Akkaraju: Sandeep Akkaraju is a Co-Founder and Chief Executive Officer at Exo. Sandeep is a proven entrepreneur with a hands-on managerial background in leading interdisciplinary technology and business teams and a track record of bringing to market complex hardware and software products. Exo is his fourth startup organization.   Connect with Sandeep Akkaraju: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder, and he has quite an interesting story to tell. He’s built several companies. He’d grow them, exited them, and you name it. I think we’re going learn a lot, as well, because he actually got involved as an entrepreneur before even startups were fashionable. So, without further ado, I’d like to welcome our guest today, and I don’t want to make anyone else wait any longer, so let’s welcome our guest today. Sandeep Akkaraju, welcome to the show. Sandeep Akkaraju: Alejandro, thank you so much for having me. I really appreciate this opportunity. Alejandro: Originally, you were born and raised in India, but I know that you grew up there in different spots, so how was life growing up there? Sandeep Akkaraju: India in the ‘70s and ‘80s was definitely a very fascinating place. Back in those times, I wanted to be a musician. My dad was an entrepreneur; my grandfather and grandmother were entrepreneurs, as well. My grandparents are in the health sector rebuilding the country’s infrastructure in the post-colonial era. Similarly, my dad is in the tech space back in the ‘80s. A lot of playing cricket, a lot of playing music, and being in bands, and wearing your hair long, and doing the rebellious thing back in the ‘70s and ‘80s. Alejandro: That’s amazing. From seeing your family, having that entrepreneurial drive, what did you learn? What kind of influence did you get or some insights that you knew one day you would apply? Sandeep Akkaraju: I think, clearly, with my grandparents – this is post-colonial India. The British had left the country in shambles, and there was a big drive to rebuild the country. I think my grandmother was a Freedom Fighter, and both of them were really involved in setting up a hospital. She was a nurse, and he was a doctor. They wanted to help the underserved and the poor, and they dedicated their lives to that cause. My father was involved in the early space programs in India. He actually worked with satellite launchers, and then he went on to do his own company. I think the key takeaway here is about building something that serves people. That was drilled into me – those who had given a lot; there’s a lot expected. That was the ethos that I was brought up with. As a child, I wanted to be a musician. It’s, clearly, that creativity out there and the act of creating was an important aspect of my youth growing up, and I think it still plays an important influence in my life. Alejandro: So, engineering was the influence and the passion that got you into cutting your hair and putting your guitar aside, so how did you develop the love for engineering, Sandeep? Sandeep Akkaraju: You know, I think I was more of an accidental engineer. Part of it is clearly creativity is one thing, but I think lack of talent is sometimes what you need to know when to fold your cards, and I think my background was in engineering and took forefront quite late in my life. I think of myself as an accidental engineer. Alejandro: How do you end up in Boston? Tell us, how do you go all the way from India? You got your MBA later from INSEAD, and you also studied in Louisiana, but how did you land in Boston? Sandeep Akkaraju: I ended up in Louisiana at that point because I wanted to be close to music. It’s the place for Jazz, Blues, and I wanted to be out there. That’s where I ended up with my Master’s. I moved to Boston at that point to join, literally, a garage startup in the early ‘90s. This is as I said, this was before startups were fashionable. Then, this was an MIT startup that I got involved with, and a very big thing and helped grow that company. That’s a little bit about my background. It seemed like an interesting gig. I think I’m one of those guys who is kind of all about pulling the strings and seeing how far the journey goes. It was on a whim that I ended up in Boston. Sometimes, it’s also meeting the right people and making the right connections. So, I haven’t looked back. Alejandro: Let’s talk about your first baby, IntelliSense. All of these experiences, and let’s say this opportunity of working at a startup, I’m sure that it gave you the idea or the roadmap to understand that this is something that you could also do yourself. So tell us about how you came up with the idea of IntelliSense and how you went about bringing it to life. Sandeep Akkaraju: At IntelliSense, I joined up with Farīborz, who is a brilliant guy. He had these really crazy ideas in terms of nanotechnology and microtechnology and doing mechanical objects and engines on a chip and electronics on a chip. I found that fascinating, and in the early days, this was all about writing Doppler proposals and NSF proposals to get funded. This was a bootstrap venture where there was no venture capital in the company in the early ‘90s, and we really had to work at it one step at a time. It’s a lot of hard work that goes into it and a lot of dedication and passion. We ended up building that company step-by-step. One of the pivotal things I remember in ’95 and ’96, digital equipment in the Boston area was going bankrupt, and we ended up buying a lot of equipment of digital at that point and setting up our own foundry to make our circuits and devices. We saw the whole internet thing coming, and we said, “This internet thing is going to be big one day.” That was the viewpoint back in the ‘90s. We focused the company on optical switching and creating devices for the backbone of the internet that allows communications. The company grew from there and was eventually acquired by Corning. Corning, at that point, had a monopoly in all of the optical fiber, and this was the next play for them to get into the switching as well. That was a good exit. IntelliSense was acquired for about $750 million by Corning. I think what was fascinating is the company going from a handful of people to a major acquisition. It happened over a number of years, and we had to methodically build it step-by-step – a lot of patience, a lot of hard work. But there’s one thing, those are both things that I would say are things I am accustomed to. I feel like projects that I end up taking up are not about quick exits or quick turnarounds but focusing on tools that can push humanity forward. That’s what I learned at IntelliSense. Alejandro: The journey at IntelliSense was interesting because, as you were pointing to it, Corning acquired the business with a deal worth $750 million, so quite a great outcome for being the first business that you were building. Something interesting happened there. Literally about a year and so into transitioning into your role with the acquiring company, Corning, then you decide to reacquire IntelliSense. So tell us about this. Sandeep Akkaraju: Sure. It was actually a couple of years later. I have taken some time off. One of my childhood dreams of spending time backpacking, so I spent a couple of years backpacking, and I was looking to do something else. It was an opportunity of reacquiring the business from Corning. We acquired some of the assets, but not all of them. That was in the 2003 timeframe that we reacquired some of the assets of the business from Corning. So I ran that for a few years. I think the interesting part of IntelliSense was that we felt that in anything that you do or at least anything that I felt that I needed to do, you needed to own the fundamental platforms of fundamental technologies behind it, which was something key to that acquisition. But also, I think one of the things that I realize sometimes is – while I ended up buying that business back and running that, I think the energy and the passion that I had disappeared a little bit in doing the same thing all over again. Sometimes, you have to realize that – someone pointed out to me – trying that same playbook all over again didn’t make sense. I personally need novelty, and I need that excitement. I ended up putting other ideas in parallel with IntelliSense and doing other things out there. It was a fun and interesting detour to the journey out there. Alejandro: In terms of the journey, you did a bunch of tests, you see what could be the next chapter. Eventually, the next chapter became Jyve, so tell us about Jyve. Sandeep Akkaraju: Sure. Prior to Jyve, I had tried to do another company, but after a year, we realized that the fundamental technology was flawed. It’s an important lesson to know when to, as an entrepreneur, it’s not all about hits, and you also need to know when not to play your cards. The ideas around Jyve were clear. We saw the whole mobile phone revolution coming down the pipeline. This was before the original iPhone had come down. You had these early devices like Nintendo Wii, which had come out, which was using motion-sensing to play games. You had early GPS devices that had come out at that point and devices from Nokia and BlackBerry. I’m dating myself a little bit. But it became clear that motion was going to be a fundamental part of the digital experiences that we were going to have. Jyve was about creating the fundamental sense of technologies around motion and motion capture. What was interesting out there about that is if you look at the early gyroscopes and accelerometers and all these motion-sensing devices back in the early 2000s, these were all several thousand dollars and would weigh a few pounds. What we were able to achieve was miniaturizing all of that and putting it into chipsets that go into everything from watches to augmented reality devices that those chips are now going into. The idea was, how do you take motion and make that widely available to billions of people? Everything from exercising or augmenting experiences for the disabled. The application space now in terms of where motion-sensing is going is incredible. I think that entire set of technology has now become a fundamental civilizational layer – think twice about it. When you got your first iPhone, it was novel that it could switch between a portrait mode and a landscape mode. Now, you don’t even think about those kinds of things. Or things that you had on Wii are now on every iPad and every phone. That’s what I think about as technology disappearing and becoming a civilizational layer. That’s what we are also intending to do. Alejandro: In this case, with Jyve, what ended up happening because this is a business that you were with for about a couple of years, but then it ended up getting acquired. So why did you guys push for an acquisition here? Sandeep Akkaraju: What became clear for us is to, at least in the mobile space, it’s really difficult for smaller players to get large design wins. Supplying for a Samsung or an Android – you need a huge amount of manufacturing infrastructure to be able to enable that. In this particular case, we felt that it was better to merge with a well-known semiconductor entity rather than going all the way alone. We were at a point where the key technology itself was fundamentally de-risked to some degree, and we wanted to make sure that we had the right vehicle to get this out into the world. Alejandro: Got it. This deal was worth $60 million, so good stuff. After this, you started your most recent company, Exo. How did you come across this idea, and what happened? How did you go about executing on it? Sandeep Akkaraju: The fundamental impetus behind Exo (pronounced “Echo”) was really the fact that 75% of the world had no access to any medical engine. It was a world health organization report that came out in ’14, which pointed out that ultrasound could actually become a modality to provide medical imaging to the rest of the world. Here was a modality that was non-ionizing and non-radiating. The challenge, at that point, was and still is to be able to get good quality medical imaging. The devices are tens of thousands and hundreds of thousands of dollars. The key thing for us was we had the skillsets and background to be able to focus on miniaturizing these systems. I think my background in nanotechnology and semiconductor software pointed out that there may be a path forward out here to change the economic paradigm. The idea was quite simple. It’s how do you take the high-priced equipment and provide the same image quality in a device that would actually be in your pocket. If you also look at ultrasound today, they have hundreds of buttons, a lot of knobs, really complicated devices to even use. The idea was how do you a) change the economic paradigm by making this a few hundred dollars to make and maybe a few thousand dollars at the price of a laptop, but also to fundamentally use the same technologies that allowed people to take what used to be a single-lens reflex camera with a lot of buttons and knobs, and also make that into a chip that’s now part of your smartphone. That is the fundamental modality that everybody uses to take it worldwide – billions of people use these devices without even thinking about how to operate the devices. It was the same thing. How do we fundamentally change? If you could fundamentally change the economic value proposition and the ability value proposition, you could now start putting medical imaging into the pockets of caregivers. What’s interesting is these are large substantiated markets, and you’re talking about over 100 million professionals who could use these devices. Ultimately, we continued to push this. This could be something that could get into every home, just like you use devices in your home to scan your forehead to take your temperature, we believe these kinds of devices are going to be part of your kitchen cabinet in the future. That was the original idea, and it seemed very powerful to be able to provide an on-demand window into the human body. When you look at what we’re competing against, you’ve got 150-year-old technology that allows you to listen to what’s happening inside of the human body. Why not just take a look and see what’s happening? It’s one of those visceral ideas, so a foundation for Exo. Alejandro: For something like this, I assume that a little capital is needed, so how much capital have you guys raised to date? Sandeep Akkaraju: Sure. It is a big idea, and we’ve raised about $100 million to date. Alejandro: For this, you had done it a few times already, so you knew the people that you wanted to surround yourself with, so why did you end up choosing the investors that you chose for this journey? Sandeep Akkaraju: I think what’s important to me is quality of the dollars. I think everybody talks about smart dollars, but really, for us, it was about the ecosystem to be able to build a device like this. We knew we could not build a device like this or a technology like this alone. So we needed fundamental technology from everything from fundamental material science to the compute side of things to the manufacturing side of things. Where we’ve been really lucky is having early investors like Bull Capital and Rising Tide, who took the original risk on the company that is attracted to big, bold ideas and on the deep technology side of things. Also, we’ve surrounded ourselves with other investors like Intel Capital, Applied Materials, Sony, TDK, GlaxoSmithKline. They’re all part of an ecosystem because to fundamentally change and influence medicine at large. We really believe it takes an entire ecosystem as opposed to just dollars. I think we’ve been very fortunate to have some of the biggest leaders in terms of consumer electronics, material science that are around the table helping us out. Alejandro: One thing that is for sure is that this whole COVID thing has definitely changed the way the hype was and the way the interest and the focus of many investors of how they were going about things because before, you did not have doctors and nurses on the covers and the front pages of newspapers, and now it seems that’s the daily norm. So would you say that COVID has pushed, quite a bit, the whole segment that you’re in? Sandeep Akkaraju: I think, absolutely. It has changed everybody’s perspective in terms of what being on the frontlines means. Today, the frontline heroes are the doctors, the emergency docs and nurses, and the critical care people. Our goal is to provide these frontline heroes with tools that can allow them to look at the lungs and pneumonia, whether it’s an admit or discharge and make those decisions on the spot. That has clearly helped and will help the adoption of these technologies as well. Fundamentally, everybody is having to get used to new ways of doing things. We look at this from a company morale standpoint, and it has helped us significantly to stay focused on the end goal, which is about providing these advanced tools. Alejandro: As we are thinking about impact, future, and trends, imagine you go to sleep tonight, Sandeep, and you wake up five years later. Imagine – a tremendous snooze. And you wake up in a world where the vision of Exo is fully realized. What does that vision or that world look like? Sandeep Akkaraju: That’s a really interesting question. Our north star is pretty clear. We want every caregiver and every clinician worldwide to have one of our devices in their pockets. This is a replacement for the stethoscope at large. I think in the future, we want to make sure that every patient has one, and every parent has one in their kitchen cabinet. I think the world that is transformed is the world that looks at stethoscopes as being antiquated. When you think, Alejandro, today of what a doctor looks like – you look at a doctor on your phone, it’s somebody with a stethoscope. Hopefully, that picture is going to be everybody with a device that allows them to look into the human body. I think that’s coming on where we’d like to be able to take that. That is fundamentally giving people tools that give you an unprecedented detail into what’s happening inside the body. Alejandro: That’s very cool. In this case, with Exo, as we’re thinking now about, for example, the future that we’re living into and being able to do this, what are your thoughts, for example, if you had the opportunity to go back in time and ask yourself or perhaps give yourself one piece of business advice, especially knowing what you know now and having done all these different businesses, what would be that one piece of business advice that you would give to your younger self before launching a business and why? Sandeep Akkaraju: Wow, Alejandro. You’re beginning to time travel, huh? I think it would be simple. For me, it’s about having the courage to go after big ideas. I think as I get older I realize life’s shot, and we have a limited number of hours on this planet. It’s about going after big ideas that really push humanity forward, not in a small way. I think we shouldn’t be afraid of taking these big leaps. It was Steve Jobs who wrote the ad copy for the Think Different ad where they say, “Those who are crazy enough to think they can change the world are the ones who do.” I think part of it is about going after big ideas and being patient while pursuing those ideas. Startups, to me, are places where you can’t necessarily pursue incrementalism. That’s what big companies are for. If you want to do things incrementally, go work for a big company. Startups, to me, have to pursue big ideas. That’s what they’re for is to push yourself. For me, if somebody had told me 20 years ago that we’d be working on devices that allow you to see into the human body and put it into people’s pockets, I would have said it would be crazy, but here I am doing that. I think you make your own luck. I think that would be the big takeaway for me is, go work on big things and go after big ideas that push mankind forward. Alejandro: I love it. Very profound. Lastly, Sandeep, for getting a sense on how big Exo is, anything you can share on the number of employees or anything else that you think is relevant? Sandeep Akkaraju: Sure. We’re closer to the 100-mark in terms of how many full-time people. We’re at a point where there’s significant wind behind our sales, and we are commencing on the next part of the journey where we can’t wait to get these devices into the pockets starting next year. Alejandro: That’s amazing. I look forward to continuing to track your progress, Sandeep. I will be rooting for you all, and thank you so, so much for being on the DealMakers show today. Sandeep Akkaraju: Hey, Alejandro, thank you so much for taking time, and thank you to all the listeners. I really appreciate this opportunity.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Keith Richman is a serial entrepreneur and currently the cofounder of Boosted Commerce. The company has raised $87 million from investors such as Crosscut Ventures, Spencer Rascoff, Torch Capital, and Elie Seidman to name a few. Prior to this he has also cofounded VOI Technology, Break Media, and OnePage. In this episode you will learn: What Boosted Commerce is doing How he found his business ideas His top advice for aspiring founders SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Keith Richman: Keith is a successful entrepreneur, investor, and board member. He co-founded Boosted Commerce because he is passionate about taking products that successful sellers have developed and helping scale those products on a global level. Previously, he was a co-founder of Voi Technology, a leading European based mobility company with operations in 34 cities across 11 countries. From 2005 until October 2013, he served as the co-founder and CEO of Break Media, where he developed an expertise in digital marketing across multiple brands and vertical. Prior to Break Media, he was the co-founder and vice president of OnePage, which was acquired by Sybase in 2002, and co-founder of Billpoint Inc., which was acquired by eBay in 1999. Keith currently serves on the board of directors of GrubHub (Nasdaq: GRUB), The Meet Group (Nasdaq: Meet) and Vostok New Ventures (Nasdaq: VNVSDB:SS). Keith received a B.A. in International Relations and M.A. in International Policy from Stanford University.   Connect with Keith Richman: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Definitely an exciting guest today. He’s done it multiple, multiple times. We’re going to be learning quite a bit – building, scaling, financing, exiting, and everything in-between. So without further ado, Keith Richman, welcome to the show. Keith Richman: Thank you. Thank you so much for having me. I really appreciate you taking the time to talk about it. Alejandro: So, born in Chicago and raised in LA. Tell us about life growing up. Keith Richman: Life in Chicago was great. I left when I was seven because my parents quickly realized there was cold in winter, and we moved out to LA. Growing up in LA, I think comes in and of itself with a lot of commutations. I found it to be a wonderful way to learn about a broad range of industries, and to me, a very diverse group of people from a professional basis. I was fortunate enough to go to a private high school called Harvard High School, now called Harvard-Westlake, which gave a wonderful groundwork in terms of education and ability to think critically, which I think has served me very well. Alejandro: Growing up, was anyone in your family building businesses or was an entrepreneur as well, or how did you get this crazy drive to build businesses? Keith Richman: My dad was in real estate. He had developed a couple of buildings. The reality is – my mom will tell people that I always, from early-on, was always trying to find an angle because there was always something I wanted. And in order to pay for it, I had to earn the money myself, so I think a large part of the entrepreneurial came from wanting to have a video game or wanting to get a pair of shoes or something of the sort. You can’t really work in many places until you’re 13, so what do you do? You find ways to make money before that through various tasks around either helping in the neighborhood or, in certain cases, selling things. I always did those things or found whatever angle I could, some of which were completely awesome and aboveboard, and sometimes a little less so. Probably my favorite, which is – it’s funny. When you look back, and I don’t know if you have kids. I have three kids. If I heard that one of them was doing this, I think I would be both proud and shocked. My friend’s dad owned an arcade. I’m assuming people still know what arcades are when you go and put the coins in, the tokens in to play video games, and the arcade went out of business. They had tens of thousands of tokens that they had from the machines and the games. My friend and I, at age 11, realized that you could use those tokens in the arcade that was still around in our neighborhood. So, at first, we went and started playing video games until our eyes kind of burnt. Back then, it was Dungeons & Dragons. I don’t know if you remember – King’s Lair and those sorts of games. We then realized that it would be more advantageous for us to sell the tokens. So, we would stand outside the arcade and sell tokens instead of four for a dollar, six or eight for a dollar, and it was great. It funded most everything we wanted to do for a very long time until one day, as we were sitting outside the arcade, we felt hands on our shoulders. They brought us to the back. I don’t even know if they did it legally or not, but they confiscated our money and threatened to call the police on us. As 11-year-olds, we ran out, and that was the end of, I guess, my first true entrepreneurial venture. Alejandro: Wow. Definitely an alternative to selling lemonade, so good stuff. Keith Richman: Yeah. Alejandro: In your case, you went to Stanford and International Relations and International Policy. What got you into all this international stuff? Keith Richman: It’s a great question. I graduated from high school in 1991. I think from ’88 to ’91 was really when there was all the talk about how Japan was going to dominate the world and how their infrastructure and their systems and their manufacturing were so much better than the United States and other economies. It was all around me, this learning about other countries and the way they do things. That manifested itself in a great interest, overall, in foreign affairs. I think even in high school, I wrote for our little foreign affairs magazine that we had. So, I became genuinely interested in it. Once I was at Stanford, that enabled me to meet so many interesting people who had a really broad and diverse range of experiences from people who had come from overseas who wanted to study in the undergraduate to – I did my Master’s in International Policy. I was sitting there talking about what was going on in Bosnia, but I was in class with someone who had served in the military in Bosnia. So, I was naturally less impactful in class as he was, but I got a great education out of learning what happens in the world and how things are interrelated, which, I think, has been a driver of my decision-making since then. Alejandro: That’s amazing. Obviously, that got you into Disney, which was your first job, so what did you get out of Disney? What were the biggest lessons? Keith Richman: My whole goal was to join the State Department, actually, until I talked to someone who had graduated a couple of years before me, and I think was in the State Department in some terrible country, essentially managing people who stamped passports. I realized that maybe I didn’t understand the career path too well in having a Master’s in International Policy. So, I basically went to talk to a couple of friends, and I went to the Career Fair, and I learned about Disney, which, at the time, had just gone through this amazing turnaround thanks to Michael Eisner, who had created all of these wonderfully structured programs for people graduating from university. To be honest, it’s a wonderfully easy sell, I think, in a lot of ways, or at least it was back then because you have this great brand; you have all these wonderful assets. Even today, when you say to people that you worked at Disney, people just have a fond memory of it, and that was a really big driver of why I thought it would be a good place to start a career. There’s a lot of EQ value in just saying you get to work at this company alongside all these wonderful things. Back then, it was where a lot of extraordinarily talented people were being incubated career-wise because of the infrastructure they had set up. Alejandro: During this time, eventually, you got a call from a friend of yours, and you went to pay this friend a visit, and that changed everything. Keith Richman: Yeah. I had a great first year at Disney learning and getting a great education, but I went to visit a friend of mine back up near Stanford, and he was at a startup, and he was pretty clear that being in this amazingly engaging environment of 40-some-odd people was a great way to get more responsibility and have a lot more control over your impact that you could have. That company was called Classifieds 2000. This was 2006. I joined in the business development role. I think maybe four months later, no thanks to anything I had actually done, but they were acquired by a company called Excite, which was, at the time, a large search engine and a strong public company.  Alejandro: Very cool, and it was the segue into your actual first baby. So, tell us about Billpoint. Keith Richman: We were at Excite, and one of my colleagues and close friends at the time approached me and said that he and his wife were starting a business, and did I want to come along? That company became Billpoint, which was early-on in the payments industry. We raised money from Sequoia, and then not too long after, that company was acquired by eBay, which was a thrill and a great lesson in what you can do to build a company, build some momentum around it, and exit. I think what we learned was that there are times you want to sell, and there are times when you want to hold because that was so early in the evolution of how the world was going to change. I think if we had held on, it would have been an even greater outcome. You should never feel bad when you make money, but it was a very fast pathway from idea, product, execution, momentum to exit.  Alejandro: Yeah. Keith Richman: But, in reality, I think patience would have been a real virtue for us back then. Alejandro: Yeah, because we’re talking here about an acquisition that was north of 150 million, and it literally took from founding the company to the acquisition, and we’re talking about literally a year. Is that right? Keith Richman: Yeah, basically. Alejandro: That’s crazy. How come in such a short period of time is that possible? Keith Richman: You know it’s really fascinating when you think of it from a product’s standpoint how much faster you could do it today. Back then, there was no base of technology that people were building off of. I think the reality is, 1) There was a period of time when everybody was excited about everything. 2) What we were doing got a lot of traction very quickly, and it was super strategic to eBay at the time. So there were a lot of reasons why it was the right idea, right time, right place. To eBay’s credit, they were very thoughtful and quick to pull the trigger on things that they believed strategic. Alejandro: That’s amazing. And after you did the vesting and resting, as they say, once an entrepreneur, always an entrepreneur. And then, OnePage came knocking. What about OnePage? Keith Richman: So the same sort of founding group left. We started a business. It’s funny when you think about how technology evolves over the years, but essentially, what it did, which served zero purpose today in the sense that it helped extract information from databases and make it easier to manipulate. It was another great lesson in the sense that we had a wonderful tool that became a wonderful product, but it was not necessarily easy to turn that into a big company because to sell tools at that time, in particular in the software space, was very regimented. This is for people who go way back. You would go to Gartner Conferences, you would set up booths, you would hire an enterprise sales team, and it wasn’t as much today where people are more sophisticated about how to think through IT and software. Ultimately, the pathway of doing all that became complicated, and we set up a number of OEM relationships, where we had established reseller partners. When it became clear that the company would only be so big, we ended up putting the company up for sale, and we were acquired by one of our OEM partners. Alejandro: After this, it took about two years to go at it again. It was two years filled with poker and with traveling. Why did you decide it was the right time to take some time off? What pushed you through that? Keith Richman: Back then, this was 2001 and 2002, and the dot-com bubble had burst. The last year had been rough in terms of selling software and trying to figure out the strategy around the company. So when the company sold, we didn’t stick around. It wasn’t a big enough opportunity to do that. I moved back down to LA partially because I thought maybe there would be something more fun there. Once I got to LA, I realized that there was a lot of the world that I still hadn’t seen, and I began to travel. I met my now wife. We went to a lot of wonderful places. Along the same time, because I had free time, as you said, I started playing a lot of online poker first and then real poker. I did really, really well for about a year and a half, and then if you remember, poker began to get televised. All these young people started playing, and they could play a lot more than I could, even though I wasn’t even doing much. Eventually, most of the money I had won, I lost pretty quickly. Then, I decided it was time to see about doing something again with my life. Alejandro: And that was the time when you bought a website. Tell us about that moment when you bought the website, which eventually became Break Media. Keith Richman: I had basically not been paying that much attention, frankly for about a year to a year and a half, and I went online to go see a video I had missed, a moment in pop-culture media. It was actually the Janet Jackson nipple slip at the Super Bowl, for those who remember. I hadn’t watched it. I was in the bath or something. It was amazingly easy to me how easy it was to find and how great the streaming quality was. The last time I had focused on watching a video had been two years before. The video player popped up, and it was slow and clunky. Here, not only did I watch that video, I watched ten other funny clips or interesting things that had happened. I started thinking about how that would change the way people consumed media. I found a website that I really ended up liking to go to and bought it along with a friend, and that became the genesis for Break Media. Looking back, obviously, starting YouTube would have been a good idea – with the same insight, it would have been a good outcome, but I wasn’t a deeply experienced product person, I guess. So, we built that company into an entertainment brand that provided video, at some point financial information, some things related, and then a bunch of entertainment-related news and information over the course of the next six years. Alejandro: Whatever happened with the company? Keith Richman: In 2013, we merged that business into a company called Alloy Digital. Alloy, at the time, was a public company that had just gone private and was investing into the digital ecosystem quite heavily. We became one of the leading players in the online video space and had a lot of success even until the world of media became quite challenging as Google, and Facebook, and the big platforms continue to take more of the ad dollars out of the market. But along the way – actually, I should mention that I had joined a couple of boards and had been relying a lot on my love for international to learn about what was going on in the rest of the world and had started spending more time thinking about what I could do that was combined to see more of the world and maybe start something new. Alejandro: And you’ve joined great boards of great companies. Especially for the folks that are listening, as they’re thinking about putting together their board of directors, what do you think makes a board of directors be effective? Keith Richman: It’s a really great question, and I guess it kind of depends on the scale and the stage of the company. I’ve been really fortunate, I think, in the bigger companies I’ve served on the boards that have had a couple of very seasoned board members that I won’t mention by name, but what they did for companies when they were going well was provide a guiding light and be a sounding board. When things became more challenged, I think what they did was really help the company focus and narrow and make sure that the board was paying attention to the things that would truly drive value and help see beyond the chaos. When I reflect on now, particularly now with Boosted and looking at what this company looks like or with VOI, what we’ve tried to do is come up with board members who are supportive but not overly supportive. You need to be challenged, and you want people to come at you with hard questions and make sure what is the true north of the company is the one that should be the true north of the company. You want people who have a diverse range of experiences because everyone who comes from your background and your point of view will likely be less able to provide those challenges. Fortunately, some of the board members that I have interacted with have just been phenomenal and have helped shape some of the directions of the companies in a positive way. Alejandro: That’s amazing. And part of your next phase in your career was around investing, as well, and incubating ideas. I wonder, what do you think makes an idea great? What really makes an idea go from an idea to something magical? What is that transition that needs to happen? Keith Richman: That’s a great question. I think a lot of times, it’s just force of will. You talk to a lot of people, and it’s easy to have a great idea. What’s that famous saying: ideas are easy; execution is everything. Alejandro: Yeah. Keith Richman: That’s very true, but I think the interim stuff there is taking the idea from “I have an idea” to “Where do I even start?” There’s a lot of talk about Silicon Valley and what happened in leaving, probably all warranted in reality. But Silicon Valley really does enable an ecosystem that teaches you that. And now, there are other places which do as well, I’m sure. Certainly, Los Angeles is one, and I spend a lot of time in Stockholm, and that’s one. The ability to say, “I’ve got a really good idea. What are the questions I need to ask myself? What are the questions I need to ask of others, and subsequently, who are the partners I need to find to take that idea into a reality?” Most people lose, actually not in the execution. The biggest filter actually happens, in my experience, in that first step where you know market, you know and have conviction on a space because you have experience, but you literally don’t know where to go. You don’t know where to go for engineering help; you don’t know where to go for funding, and that’s why these ecosystems that get created have done a great job of fueling more and more innovation. Alejandro: Very cool. Keith Richman: In my experience, just as a part of that was when it came to Boosted, which is our current company, I had a thought, and I believed strongly in the thesis I had, but my background was not in retail or selling products in any meaningful way. But I was fortunate enough because of the network in Los Angeles to have met a guy named Charlie, who had just run a 500-million-dollar retail chain that he founded called Charlie’s. It was because of my ability to form a connection with Charlie, talk through this overall thesis with him, get his ideas and background and how to improve it and make it better, that we were able to both have the confidence together to say, “This is a great idea that we have strong conviction in, and now, let’s take it to the next level. Alejandro: Got it. Now, you’re involved with two companies, so that is VOI in Sweden and also Boosted Commerce. Why don’t we talk about these? And we’ll start with VOI, and then we’ll go into Boosted. VOI – how did VOI come about? Keith Richman: Again, I live in Los Angeles, and I had come out of my home one day – I live right next to UCLA. If anyone is familiar with living near a big college campus, there are amazing qualities about it, but one problem with it is that it’s hard to get through a campus. Most of the roads are closed. I had dropped one of my children off at soccer at the intramural fields, and usually, that meant taking a 15-minute car ride just around UCLA if you wanted to go get a cup of coffee or just go sit down somewhere. Then, I saw this scooter, and all credit to Bird, I said this is going to revolutionize how one gets around my neighborhood. That was my first thought, and I took it, and I loved it. My second thought was this is something that would be really amazing to have in Stockholm, where I had been spending a bunch of time. I called up a friend of mine and somebody who runs one of the companies I’m involved with, and I said, “Who else is thinking about this? Who else has seen this?” They introduced me to the CEO, Fredrik, who two days later was on a plane to see me. He flew out to LA, and we spent the whole weekend looking at the ecosystem. I basically sent him back, and I said, “Look. We should go do this. It’s a European company. You’re amazing. I can tell already after two days. You should go run this thing, and I’m going to help you raise some money and be involved as I can.” What ended up happening was as I had more free time, and he built this out, it became very clear that one, he was a special individual and had the ability to do things that not a lot of other entrepreneurs can, and that the market was even bigger than we both had thought, which led to me getting more involved on a day-to-day basis than I ever had expected to, but really driven by the fact that he had created a culture and a brand that were so special to be around, much like I remember Disney just feeling great being associated with something, which is a great motivator for anybody in a company including investors and myself at that time. Alejandro: Absolutely. How much capital has VOI raised to date that is publicly available or disclosed? Keith Richman: I actually don’t know offhand, but we certainly raised over 125 million. Alejandro: I think I see here on Crunchbase; it says 197 million, but I don’t know if that’s accurate. Keith Richman: That very well could be accurate. It’s a capital-intensive business. But it’s also one of those businesses now incredibly well-positioned because of COVID. There are winners and losers thanks to COVID. It’s had an unbelievable six months and profitable most of the time with technology adapting, so that scooter lifetime has been increasingly growing, and so not only do they last longer, they’re more efficient during the day; they’re more environmentally friendly. Alejandro: Yeah. Keith Richman: Now, there’s an emerging resell market, so I think VOI is well-positioned for success. It’s really thanks to the team that Fredrik put together. Frankly, finding early fundraisers who believed in it knowing it would be a capital-intensive business and still wanting to put money in to be along for the ride, which we were lucky to find early on. Alejandro: Amazing. So, let’s talk about Boosted Commerce, which is your other baby, like the one you’re dedicating probably the most amount of time now to. So, tell us about Boosted. Keith Richman: Boosted is an amalgamator of eCommerce businesses. Primarily our time right now is spent looking at Amazon third-party sellers, but we’re also looking at the ecosystem, in general, including companies that sell on Shopify or other platforms. Essentially, our a-ha moment was as I was going back-and-forth to Europe, I kept being sick, and I started taking a bunch of immunity supplements. Because they’re ingestible, I got interested in what I was taking and looking at what I was buying at Amazon. I quickly recognized that these were brands I had never heard of, and I reached out to one of the vendors I had been buying from and was surprised to find out it wasn’t a big nutrition company, but it was a 24, 25-year-old kid from Iowa who had created this brand, understood that you could create third-party businesses on Amazon, and not only built it to something like 7 million in revenue, and 2 million in profit, but had just sold it. That was eye-opening to me. As I dug more and I talked to a lot more sellers, that was when I called Charlie; we realized that there was this unbelievable opportunity to basically as a whole world be your product development group. The hardest part of starting anything is product/market fit. Amazon and the tools and ecosystem around it have evolved such that suddenly anybody and be an R&D person, and they can do research as to what their problems are, what’s the need in the marketplace. Some are big; some are niche. They could do the really hard work of creating the prototype, selling it, developing an audience, making sure people like it. We knew that with our backgrounds, we could take those products that they were selling and make them better. We could either source them cheaper, potentially. We can improve the marketing. We could kind of knowledge arbitrage. The idea behind Boosted was to identify those products, find brands and products that are proven product/market fit that people love and buy them, and apply a bigger infrastructure to grow the businesses around them.  Alejandro: For example, for the people that are listening, what ended up being the business model of Boosted? Keith Richman: Very practically, we are going out, and we’ve now acquired, I think, seven businesses. They’re all cash flow producing businesses. Our goal is to grow the profit of those businesses. We sell on Amazon; our products are sold on Amazon. We have some products that are sold on Shopify, but we’re basically an eCommerce company that currently sells everything. We sell thank you cards; we sell skin care products; we sell some supplements. By the time this podcast is live, we will be selling non-slip tape, bath mats, some other products in the home goods space that we can’t talk about necessarily, but it’s all things that are top sellers in their respective categories on Amazon. Most are things that we think have a brand that can carry far beyond Amazon if and when we choose to invest in that. What we’re really doing is building an infrastructure to be able to quickly identify, acquire, and scale businesses within the eCommerce ecosystem. Alejandro: Apparently, for a business like this, you don’t have to raise a whole lot of money. Is that right? Keith Richman: Yeah. It’s funny because it’s almost the exact opposite of VOI, which is super capital-intensive upfront. Here, we’re putting out money for the businesses, but the businesses are actually cash flow. So raising money becomes something that you have to be, and you have the ability to be pretty strategic about. I think we’ve been fortunate enough to find people that want to invest with us who bring a lot of knowledge and brainpower to what we call the Boosted Brain. We closed around, not too long ago, we brought in Torch Capital, where John has been a leading investor in a lot of eCommerce and B2C companies. We brought in a company here called Crosscut Ventures in LA. They’ve just seen a tremendous amount of success. We’re helping companies think through how to scale. We brought in a lot of people we know from the LA and other ecosystems who have ability thinking throughout a scale and finance business, because unlike a lot of the other things that we’ve done, we have clear visibility in the multiple hundred million of revenue because we’re buying it. We know we have the infrastructure to be able to enhance it quickly, the stuff that we are buying. It’s an exciting time because we think we’re getting in early on these next generations of consumer staples and brands. Alejandro: Got it. Imagine if you go to sleep tonight, and you wake up in a world five years later – a tremendous snooze – in a world where the vision of Boosted is fully realized. What does that world look like? Keith Richman: It’s a great question. I think in a perfect world, what would make us most happy, and what we do think about as our guiding light is that we will have brands that people like and love to some extent when possible, and that have super-high NPS value and that we are generally recognized as the company that is the best operator of at scale, Amazon-related, and Shopify-related, and other long-tail brand-related businesses. That all comes with being marketplace experts and also being brand-building experts that we have the skillsets to do.  Alejandro: One of the questions I typically ask the guests that come on the show is – in this case, in your career, and your entrepreneurial journeys are remarkable. You’ve done so many things; you’ve seen so many things, and you’ve also invested in different companies. So if you had the possibility to go back in time and have a chat with your younger self, perhaps that younger Keith that was willing to listen, and that younger Keith that was thinking about starting a first company coming out after the acquisition of Excite, perhaps. What would be that one piece of business advice that you would give to yourself knowing what you know now, and why, before launching a company? Keith Richman: Yeah, it’s a great question. My answer is going to be a little clique in the sense that I think the best advice I could have gotten back then is: be more patient. Building businesses, when you read in the news, everything seems like it happens overnight. You quickly realize that true value is built over a period of time and long-term, and there are going to be a lot of bumps in the road. The reality is that those bumps are incredibly intimidating when you’re in the moment. I remember the first company, one of the reasons we were excited to sell to eBay was that we were running into a lot of those bumps at that exact moment. The reality is patience, a solid group of people around you, and that can include investors can be wonderful in terms of leading to the ability to see through that and create vast opportunities for yourself and the company. Alejandro: Very profound. For the folks that are listening, Keith, what is the best way for them to reach out and say hi? Keith Richman: I’m actually super easy to reach. Just keith@boostedcommerce.com – feel free to shoot me an email. Alejandro: Amazing. Well, Keith, thank you so much for being on the DealMakers show today. Keith Richman: Thank you so much for having me.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Felix Reinshagen is the cofounder and CEO of NavVis which is a global provider of indoor spatial intelligence solutions for enterprises. The company has raised over $60 million from top tier investors such as European Investment BAnk, Target Partners, BayBG, MIG, Digital+ Partners, Cumulus Ventures, and Kozo Keikaku Engineering to name a few. In this episode you will learn: Applying knowledge from past experiences Expanding into China How to get in touch with Felix How they’ve grown the business SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Felix Reinshagen: Felix is a co-founder and the CEO of NavVis, a Munich based high-tech start up in the field of indoor digitalization, indoor navigation and location based services. After gaining degrees in computer science and economics from KIT he added a PhD in economics in St. Gallen. Always a nerd at heart Felix has developed software since high school. Before co-founding NavVis he spend 6 years at McKinsey advising large corporates in tech strategy while living in Hamburg, NY, Palo Alto and Munich.   Connect with Felix Reinshagen: Linkedin Crunchbase Twitter * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder joining us, and it’s a German founder doing great things in Europe. So without further ado, Felix Reinshagen, welcome to the show. Felix Reinshagen: Thanks a lot, Alejandro. It’s my pleasure. Alejandro: Born and raised close to Hamburg. How was life growing up? Felix Reinshagen: Actually, very cozy and nice. I come from a family with a lot of entrepreneurs and people with a lot of technical backgrounds. Actually, I always had the idea of founding something in my life, even if it was very unspecific. My dad is a civil engineer, and it was clear for me that I don’t want to build houses. So when I started to look into software at age 13 or 14, I thought that could be an interesting thing for me, but it should actually take many, many years before I came back to that calling. Alejandro: In this case, you were mentioning your family. Many of the founders that I speak with have this influence from seeing their parents or from seeing their grandparents, so what did you see that got you, “One day, it’s going to be me.” Felix Reinshagen: First, my dad built his own business. Even though it was smaller scale, he was building his dream, so to say, and following his own vision at a time when what he did was actually not what people thought would be a good business. But it was his personal dream, and he thought there would be a lot of value in doing that. It turned out much later in his life that it was actually a great place to be. On a small local space, what he built had transformative impact. I, as well, admired a lot how much it meant to him and how happy he was in doing so, even though in the early years, he easily could have made a lot more money somewhere else. It was inspirational in terms of he followed his dream. Much, much later in his life, he, as well, profited a lot from that. I still see the legacy, and it’s amazing. If I just walk the streets of my hometown, seeing the houses he built and how whole neighborhoods have been influenced by his work over all the years. Alejandro: In your case, you ended up going and studying computer science and economics. That’s quite an interesting combination. Why did you combine those? Felix Reinshagen: First, I was a very quick learner in school. I really loved going to school, and I was very good in school as well – perhaps because I was curious. I felt at the end of high school that I was not pushed to my limits. It was clear to me that I wanted to do computer science, but I never wanted to work as a coder. It seemed to be a natural thing to not give up on computer science, but as well to pick a second thing. I was going through many things there. I was looking at physics, but then it would have been a really [4:33] career, and I wanted to keep my options open because, bluntly, at age 18, 19, I had no real plan of what I wanted to do and in which field would be good for me. So combining computer science and economics seemed to open a lot of options for me. Then I looked at universities where I could do a full – at that time, we still had a diploma in Germany, which is a combination of Bachelor’s and Master’s where you could approach a full diploma with two majors at the same time, and there were very few cities that would allow that and have a nice campus where you could easily study both of these things along at the same time. I ended up in the tiny town of Passau in Southern Germany, which came as a surprise to my parents, friends, and me. But it turned out to be a really good starting point because it was a really tiny place, and I made good friends there, and as well there was not that much distraction compared to had I been going to Munich or perhaps a big city like Berlin at the beginning. Alejandro: Then, after university, why did you decide to go and do consulting?  Felix Reinshagen: I think it’s the same repeating thing. Consulting seemed to offer a lot of options, and I thought if I joined the big consulting company, I would see many different companies and industries, and I could form a more informed opinion on where I would actually like to play. I never thought about staying long, like many young people who join a consulting company, “I’m going to do this for a few years. I’m going to see the world and meet different industries, and then I’m going to find my profession in one of these places.” Then, on top of that, McKinsey had this awesome program back in the days when you could work for two years in Germany, and then they would actually fund your Ph.D. or an MBA. I think with the combination of these two things that I found attractive back in the day. Alejandro: It’s interesting here what you said and what you ended up doing because it seemed that you really had that drive for business and for economics, so why a Ph.D. over an MBA? Felix Reinshagen: First, I think it was a stupid idea, but I thought – I have a Master’s Degree in economics, so why doing another Master’s in economics, so to say.  Alejandro: Yeah. Felix Reinshagen: I had really, really good experience in the last years of my Master’s Degree, so to say, with doing academic research. We published the first paper together with a post-doc, and I really liked that. I thought, “Perhaps even an academic career is interesting for me.” That’s why I went for the Ph.D. I very quickly learned doing my Ph.D. that career was not the right thing for me. [Laughter] That was a thing I really had to push through because I liked it a lot less than I thought. But, usually, if I start something, I really feel bad about giving up. It was actually one of the things where I thought more about giving up than almost any other thing in my life because it became clear after six months, and it took me a little bit more than two years to get my Ph.D. Making it through these one-and-a-half years when you already know you don’t want an academic career was a tough thing to do, and it was more, perhaps, a thing of pride than anything else to go through this. Alejandro: So, when you finalized this, and you returned to having your full devoted attention to McKinsey, which was a big pillar in your professional career, where you spent close to a decade, you went to the U.S., and you went to Palo Alto. I’m sure that you now had the exposure to the hypergrowth companies and to startups going from nothing to something big. I’m pretty sure that pushed you over the edge to think, “I’m getting closer to actually thinking about doing my own thing here.” Felix Reinshagen: Absolutely. Of course, I was looking at some things. During my time in New York, it was more financial industry. There were really interesting things going on, as well, at the interplay of tech and the financial system there – automatic trading systems and interesting hedge funds. That was something I was interested in, but I really wanted to see the West Coast. Perhaps, as well, none of these opportunities seemed perfectly right. Then, I spent close to a year in Palo Alto. Of course, there were all these super-cool companies out there. It was very tempting either to join one of the more mature tech companies to use it as well as a starting point to get to know the system better. Actually, I was really unhappy with myself. McKinsey had made me a really attractive offer to get back to Germany on a partnership track. I thought when I was actually accepting that offer that I had failed a little bit on my ambition to start my own company because you feel like you’re leaving Silicon Valley a year of, so to say, a little bit goodbye to that option of finding your place in the ecosystem and start your own company. One thing I was adamant about was I didn’t want to go and join or do the 125th eCommerce vertical and now sell – I don’t know – cutlery over the internet, or something because that was what I saw a lot, and where McKinsey, as well, had exposure to. I really wanted to do something that is unique and strong from the technology side. I had this whole background in computer science and had spent many years earning my pocket money in coding, and I wanted to do something as well, perhaps coming back to the influence of my family that I could pursue a dream, something that would be much more forward-looking compared to just executing on something that had been done many times before. Unfortunately, I didn’t come across something, but perhaps, as well, luckily, during my time in Silicon Valley. It really took me coming back to Germany and reconnecting with some friends here that were doing some outstanding academic work where I felt that could be something that I would be willing to dedicate many years of my life to, and then many long nights and weekends and everything that I learned as well from my family and my dad as part of starting something and then pursuing your dream on something that, at that time, no one else or very few people see as a promising topic. Alejandro: And this ended up becoming NavVis. It ended up being a spinoff of the technical university there in Munich. I’m wondering here because I went through it, as well, the comfortable corporate job, 9 to 5. I was an attorney making a good, decent amount of money in New York City. At McKinsey, you also get paid very well, and here you were close to being for ten years there, so I’m sure that you had a really nice income. So was it scary to give your notice and go into something completely unknown? Felix Reinshagen: Yes, absolutely, and you learn a lot about yourself and how much you really like to take a risk if you have to make that call because as a junior partner at that point in time – of course, as a junior partner, you already have a really nice income and a lot of additional perks. I knew if you would be doing the thing, and we would be starting this just the four of us founders, and we wouldn’t pay ourselves a salary, at least not in the first year. So that was a huge financial risk. On the other hand, the thing tipping me over was I would always be very unhappy with myself for not taking the opportunity. If you look back and you didn’t have an interesting career, and you didn’t build your dreams, then you have to look back to these moments where you had the choice, and if you did always go for the conservative riskless option, you must not at all be surprised if you end up having a boring career. I saw, as well, many senior partners at McKinsey that were unhappy with their careers even though they were making a lot of money. Then, finally, they came to a point that I said, “Look. The worst thing that can happen is that we’re really unsuccessful, and I’m still going to go back to consulting, and I would have had an interesting learning opportunity, and just make that leap of faith. It was harder than I had expected it to be, I have to say. Alejandro: Here you are. You connect with your friends, and they were working on this interesting stuff, and then all of a sudden, you guys make the decision that this may have legs as a business. How did that spinoff end up happening, and how did you bring this to life? Felix Reinshagen: We spent almost one-and-a-half years, on weekends and evenings tossing around ideas on how this technology could be put to work in a business context. It was fundamental research. It was mainly about imagery cognition, scenery cognition, and it was absolutely unclear where this could actually have a market. It was still clear that it would be some years away from bringing something to the market where it would be a well-rounded product. Actually, it came along even better than we thought. And we knew that. I think one of the most important things was that we were honest about this likely being a tough rollercoaster ride with a lot of tough moments ahead of us. When we started thinking, “Oh, this is going to be a super-easy ride with this amazing research. We just do a little bit of development around it, and this is going to fly.” We knew it would be a long and hard way to come up with the product, and we knew that the first product, very likely, would not be anything the customer would like because we had such an academic background, so to say. It was so unclear where the technology could fit in. Any business and any advice I got was telling us, “Whatever you’re going to try first, very likely, it’s not going to immediately be a big hit – very likely when you iterate a lot and learn and zone in on a certain market.” I think that was one of the most helpful things because, in all these often-awkward moments, they were none of that. We could come back to that moment and tell ourselves, “That was exactly what we were expecting. Things are going along according to plan here.” I think that helped me, at least, through some of the darker hours that you definitely have on the way of building something with such a strong tech focus and such an unknown place in the market and with the customer. Alejandro: What ended up being the business model for the people that are listening to get it?  Felix Reinshagen: To give you the quick idea on where we started, we thought after the GPS and Maps, everyone uses Google Maps every day – earlier, there was this TomTom thing in the Current, and we thought, “Wow! This you should have endorsed” because we spent 85% of our time building, that’s where most of our GPS is created, but if you enter a building, there is no map, and there’s no GPS. The technology that the team has built was the capability to use images to pinpoint your location like you do as a human being. You know, you look around; you have memorized your environment. Then, by matching your knowledge of the environment with what you see, you know where you are. It’s pretty simple. That is what we wanted to rebuild. Our first idea was to have something like a Google Maps app for the indoors, where you would enter a university on the campus, and you would enter, perhaps, [17:39], and then it would show you which room the lecture is and guide you turn-by-turn through the building to your lecture room. It turned out that this was a great vision, and we are still somehow working on that vision. What the main problem was, was that there was actually no map. So the positioning was not the first problem to solve. The first problem was indoor mapping. Then, unfortunately, it turned out to be a hardware problem because we looked at all of the hardware, and it turned out either it was far too slow, cumbersome, or expensive. What we realized was that we would need to be a hardware company, or at least have a hardware arm. That was, perhaps, one of the things that we absolutely underestimated – I absolutely underestimated because we were all software guys, and we had no idea how hard and difficult it would be to develop and bring to market the hardware with all the long development cycles and more difficult iteration at the customer, that, of course, comes with building some hardware. Alejandro: There was a really interesting foundation there that you guys did, but one of the things that also was interesting was that you were one of the first companies to be involved in this deep tech. So tell us essentially what deep tech is about and why was it so hard for you guys to be one of the first ones? Felix Reinshagen: I think now, everyone in the venture capital scene knows the term deep tech, which means nothing less than that you’re bringing or developing a technology or a product out of the fundamentally new and complicated technology. It’s a bit opposite to developing a new eCommerce vertical, where you take a product that is not distributed over the internet, and then you build a webshop around it. Or perhaps taking an existing piece of software and just developing it into a Software as a Service model. Deep tech usually means that it’s perhaps a robotics topic, something around artificial intelligence, quantum computing. Or in our case, we started with 3D laser scanning and computer-based scenery cognition. At that point in time, the German venture capital scene knew eCommerce models very well, and they had proliferated in Germany in the 2010 years. Then, when we hit the market, of course, there were already successful deep tech examples from the U.S. But in Germany, venture capitalists would work around eCommerce metrics or social media metrics, and they didn’t even understand how to measure us – which KPIs to put up against an idea like NavVis. So it was really tough for us to do the fundraising. We were, as well, surprised because we all had lived and worked in Silicon Valley in the U.S., and they were, of course, some of the coolest and most well-known iconic deep tech companies. Even though there was a time in Silicon Valley where everyone wanted to do eCommerce and social media stuff, but there were always constant fundraising around more fundamental technologies going on. But that was definitely not the case in Germany. So we had to knock on many doors. We were thinking it would be required for us to move the company over to the U.S. to get funding. But finally, we convinced some venture capitalists in German. I think this started while we had been part of starting a much broader wave there, and I think some of the bloody noses that we got, in the beginning, have helped now in a new wave of more technology-infused companies in Germany. I think over the last year, there were many, many of them. Munich has become the center, but there are a couple of other cities where this has established and served as the new wave of startup companies in Germany, so there’s a real ecosystem around robotics, artificial intelligence, system automation that are thriving now in Germany. It’s good to now be a mentor and see how some of the groundwork that we did in that space is now helpful for the next generation of companies that are being founded these days or have been founded over the last few years. Alejandro: In your case, obviously, an operation like this requires some financing, so how much capital have you guys raised to date? Felix Reinshagen: Around 40 million in equity, and another 20 million from the European Investment Bank in a very special form of enter-debt, which is almost somewhere in the middle between equity and debt. Alejandro: For the folks that are listening to understand this, how do you differentiate that equity from debt? How does that typically work? What’s the difference? Read More: Patrick Burns On Raising $50 Million To Enable In Real Estate More Than $3.5 Billion In Transaction Volume Felix Reinshagen: Equity, at the end, is very simple. Someone gives you money and gets a stake in the company. Then, you have a lot of freedom to do with the money because you never have to pay it back, so to say, either until you do an IPO and you allow your shareholders to sell their shares, or until a big corporate perhaps acquires you, and then you can pay off your shareholders. Debt, of course, is a very different animal. Someone gives you the money but expects you to pay it back. Of course, then, on debt, there is always the question of when do you need to pay it back and how much interest do you need to pay. Of course, there are very different models. In the European Bank, there’s an interesting model where you don’t need to pay the money back for five years. They have a very low-interest rate, but instead, they take a small amount of equity. Again, the timelines we’re working against, there’s money very much [23:56] like equity, but it leads to less dilution of the existing shareholders and the founders, which is the beauty of the thing.  Alejandro: Understood. So, in your case, was it tough when you were thinking about the overseas and other markets, for example, China, how tough was the entry into China? Felix Reinshagen: Surprisingly, the entry was ridiculously easy, and that led us to vastly underestimate the challenge. When we had the first prototype versions of our hardware ready, we called it the M3 because we had two other models of the Model 1 and the Model 2 that were so scrappy that we didn’t ever give it to a customer. So the Model 3, the M3, was the first one that we thought we somehow could give a customer to experiment with. We did show it at some trade shows. Germany is the country of trade shows. We have some of the biggest in the world there. There was always [24:57], for example, where information technology across all different areas was displaying. There, we showed our technology. There were a couple of Chinese people scouting for interesting new technology that spot-on found us and were immediately willing to buy a device. We were flabbergasted because in Germany or Europe, in general, it took months usually of negotiation and explaining until we could sell a device because it was not really ready at that point in time. These guys were just coming in and immediately writing us a check. So, we thought, “Oh, wow! China! That’s a cool market for us.” We had no idea how to sell it in China, so the simplest thing for us seemed to be hiring someone who could speak Chinese. So we were looking at the University of Munich, and we hired a colleague who was of Chinese origin and fluently spoke the language. We were asking him and tasking him, “Can’t you just call a couple of similarly-looking Chinese companies and see if they would be interested in buying some of our machines?” That was, as well, ridiculously successful. He earned his first year’s salary back in two or three months. We thought, “Wow! We are really up for something big here.” We hired more Chinese-speaking people, and then, unfortunately, we had to find out the there was a really strong tech [26:36] and early adopter base in China, as well as fueled by some state subsidies, and there was not some lasting demand. That, of course, was a conflict because we already had big dreams about how fast the Chinese market would be growing, and this could be our first anchor market, perhaps even before we were scaling in Europe. We had to go all the way back and understand the Chinese market and the customer, and we built a small subsidiary in Shanghai and hired local people. We had to go through a couple of flat years, and only then could we start to slowly scale the Chinese market. But we were really, really mistaken by the strong initial willingness to try out new things and to even by expensive machinery to check it out and understand it, and we were really mistaking that for a much broader systematic use of the technology, which is only now is starting to kick in when things are a lot more mature. Alejandro: That’s amazing. Now, just for everyone that is listening to get a sense on how big NavVis is today, any numbers in terms of the number of employees or offices, or anything that you can share? Felix Reinshagen: We’re around 200 heads. We’re mainly located in Munich. We’re still all R&D suites. It’s a rough indication. Half of the guys are engineers, and in product development, and by now, the other half is customer-facing. I don’t like to call a bunch in overhead, but, of course, we need strong recruiting; we need a finance team; we have a lot of international shipping and logistics to do. We have two smaller offices. One in New York City, and one in Shanghai, but these are mainly focusing on sales and service in the local markets, doing some marketing. Very likely, we’ll have an office on the U.S. West Coast. Yes, we had a very different experience in China, who is really, really difficult to sell the first one or two devices. In general, the market was much more skeptic toward this strange German technology that we were offering. But once we got rolling, we really saw some much more sustainable and constant growth. So, China and the U.S. couldn’t have been more different in the way they developed for us. Today, the U.S. market is clearly ahead in terms of size and maturity compared to the Chinese market. If you had asked me three years ago, I would have said exactly the opposite. Alejandro: That’s incredible. One of the typical questions that I ask the guests that come on the show is – you’ve been at it now for quite a bit. There have been a lot of lessons, a lot of good, bad, ugly, and you name it. So, if you had the opportunity to go back in time and perhaps you’re going back right before when you were in McKinsey thinking about what’s going to be next and what am I going to be building – if you had the opportunity to perhaps have a chat with your younger self and go back to 2013, right before NavVis was going to be launching, what would be that one piece of business advice that you would give to yourself before launching a business and why knowing what you know now? Felix Reinshagen: If I have to pick just one, I would strongly advise hiring more experienced people earlier. At McKinsey, we always had the saying, “Talent and experience for breakfast.” That might be absolutely true in consulting, but it’s absolutely not true in a startup. Specifically, not in a startup where you have to do things you have absolutely no clue about. Of course, you can try figuring it all out yourself, but you’re so much faster if you just hire a few people who know how to do that stuff. Alejandro: Makes total sense. Very profound, Felix. For the folks that are listening, what is the best way for them to reach out and say hi? Felix Reinshagen: Connect with me on LinkedIn. Please write something meaningful there. I get so much stupid context there with absolutely no idea what these people want and why I should connect to them. But if you approach me, and you want my help on a specific business question, or you’re considering starting your own business, or you’re generally active in the field where we are active with NavVis, I would be very happy to connect with you. That’s the easiest way to reach out. Alejandro: Amazing. Well, Felix, thank you so much for being on the DealMakers show today. Felix Reinshagen: Thank you very much for having me. It was a pleasure.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

Lynn Seely started Myovant Sciences which delivers innovative women’s health and prostate cancer solutions by efficiently advancing new medicines to market. The company has raised $1 billion from investors such as Danippon Sumitomo Pharma. Myovant Sciences was one of the largest biopharma IPOs in 2016. In this episode you will learn: Myovant’s new medical breakthroughs How Lynn built Myovant’s company culture Top advice for new founders Her top tips for female founders and businesswomen SUBSCRIBE ON: For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below. About Lynn Seely: Lynn Seely is the Chief Executive Officer of Myovant Sciences, a company focused on redefining care for women’s health and prostate cancer. Lynn Seely is an endocrinologist with over 20 years of drug development and biopharmaceutical company leadership experience. At Medivation, Lynn Seely served as Chief Medical Officer from 2005-2015 and led the development of XTANDI® (enzalutamide) for the treatment of metastatic castration-resistant prostate cancer from IND-enabling studies through to NDA approval and post-approval clinical studies. Lynn Seely currently serves on the Board of Directors of Blueprint Medicines. Lynn Seely completed her residency in internal medicine at Yale-New Haven Hospital and a basic science and clinical fellowship in endocrinology and metabolism at the University of California, San Diego.   Connect with Lynn Seely: Linkedin Crunchbase * * * FULL TRANSCRIPTION OF THE INTERVIEW: Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder that I’m super excited to have. I think that we’re going to be learning quite a bit. She’s been involved with many, many different companies, from employee #3 to being the first person that starts the business. I think the journey is remarkable, but I don’t want to wait any longer, and I don’t want to make any of you wait any longer, so let’s welcome our next guest today, Lynn Seely. Welcome to the show. Lynn Seely: Thank you so much for having me. I’m delighted to be here. Alejandro: Raised in Oklahoma. How was life growing up in Oklahoma? Lynn Seely: It was all I knew for a significant part of my early life and into adulthood, and I loved it. It’s a very family-oriented community where people take care of one another – very close-knit. I will say that it’s very conservative, which is interesting to me as somebody growing up there. I always had a desire to see and know more about the world, but I think in Oklahoma, people love Oklahoma. They like to stay there, and they’re very focused on Oklahoma as opposed to their not as generally thinking about the big picture or about the big world because they really love Oklahoma. Alejandro: What do you think that in your case triggered that drive, that curiosity to explore? If you did not have that, you would probably still be in Oklahoma today. Lynn Seely: Again, Oklahoma is great, but I love being steep on the learning curve, and I always want to know more, and I always want to know not only what’s going on here, but what’s going on over there. I’ve always been very interested in learning everything I can. It’s what motivates me and is what’s fun to me, which is to learn new things. It was very interesting. When I wanted to go to college, my parents would only let me go to the University of Oklahoma because it was 30 minutes from my home. They wanted me to get a college education. Their goal for me was for me to get married and have children. My father told me that there was more to learn at that university than you could possibly learn, and that should be great, which was absolutely true. I had a phenomenal experience at the University of Oklahoma. I was a journalism major. I was very interested in investigative reporting and telling stories, and figuring out what was happening. Along the way, I became interested in medicine and what you could do as a physician. I loved the thought of taking care of people. While I was getting my journalism degree, I also took my pre-med requirement. I remember going to my parents to tell them that I was going to medical school, and they were not happy. They said, “You’re going to ruin your life; you’re never going to get married; you should be a nurse. You have tons of opportunities as a nurse.” But, fortunately, again, I wanted to learn as much as possible, and I went ahead and went to medical school. Alejandro: That’s amazing, and here, you have two very powerful things coming together. One is medicine, which is a bit more technical, but then you have the journalism, which gives you that edge of being able to master storytelling. Do you think that gave you an advantage? Lynn Seely: I believe absolutely, it did. In journalism, not only is it storytelling, but you have to do it very quickly. I had to learn how to write and express my ideas in a very rapid timeframe. It’s been a skill that I have used consistently throughout my career. I have always been grateful for that. Alejandro: Tell us what happened next once you decide that medicine is the way to go. Lynn Seely: I was in medical school at the University of Oklahoma, as well. My mother died while I was in medical school, and I really wanted to get out and see the world. I had been in Oklahoma for so long. I found a little tiny ad in a journal that talked about a medical student internship at the National Institutes of Health. I convinced a faculty member to recommend me, and I got it. It was my first chance to go to Bethesda, Maryland, to the National Institutes of Health, to get out of Oklahoma. It was a huge opportunity. Fortunately for me, I met an amazing mentor there who helped me make some connections and get some internships at some other medical schools and see the world. I was very fortunate, I think, a lot because of that experience to get accepted to the internal medicine program at Yale, in New Haven, Connecticut. I remember being called into the Chief Resident’s office, and they told me that they had never had anyone from the University of Oklahoma before and to let us know if you needed any extra help. I was so intimidated. I knew nobody. I was way out of my league. I just continued to learn everything I could and relied on the people around me to help me and learn from them as much as I could. I had an absolutely amazing experience there and ended up becoming Chief Resident myself, which is today, one of my proudest accomplishments because I think it took the most courage and the most risk to pack up, leave, and move cross-country by yourself and do something that you weren’t sure you could actually be successful at because you were sort of in over your head. But I did it, and I think, to this day, it’s given me tremendous confidence. I had a phenomenal experience there. But one thing I realized was that I really respected most the physician-scientists, these people who understood medicine bench to bedside. I had been a journalism major, so my science wasn’t that strong. I made a decision to go back in the lab after being clinically very skilled. I went back as a basic scientist and did a clinical and basic science scholarship in endocrinology at the University of California, San Diego, where I really had to go back and learn basic science. I had a tremendous time there and then stayed on faculty at the University of California, San Diego, in their division of endocrinology.  Alejandro: And then you got an invitation to give a talk that changed everything for you. Lynn Seely: Yes. Shocked myself and shocked everybody who knew me, but I got invited to give a basic science talk in a biotech company in the San Francisco Bay Area in the Chiron Corporation at the time. I knew nothing about biotech, and I thought, “That will be good experience for me, so I guess I’ll go.” I was blown away by what I found there – amazing scientists and physicians who were working together with lots of other people, as well – manufacturing experts and financial and legal experts to develop new medicines. They started recruiting me, and I suddenly became really intrigued by this concept that instead of seeing one patient at a time or doing one experiment at a time, you could work collaboratively with this cross-functional team to maybe, if you’re successful, develop a new medicine, which can benefit hundreds or thousands, or even millions of patients. I love patient care, and I love academic medicine, and I thought this would be something where I could learn a phenomenal amount and maybe add some great value to patients. So, I shocked everybody and joined Chiron. Alejandro: And Chiron was your immediate step before looking into the world of scaling from the ground up, but definitely, your segue into ProDuct Health and there in Chiron, too, you met someone that gave you that mindset or the influence or inspiration into the entrepreneurial spirit, David Hung. Is that right? Lynn Seely: That’s right. I have to give two people great credit for that: David Hung and Pat Machado, who were both also relatively young in their careers at the time. The three of us met together at Chiron. There was immediate synergy. David was a very big thinker and was very much into being entrepreneurial. It would never have occurred to me. I grew up in a very conservative environment, as you might imagine, and typically went along with the flow and trying to learn more and do new things, but this idea of starting a company on your own or building something from scratch was very new to me. David left to do this startup, ProDuct Health and started recruiting. Pat went with him, and then he started to recruit me. I was pretty afraid; I have to confess. It was like, “Wow! That’s a big risk. I don’t know.” I think, at the end of the day, it was very motivating to me; it was very inspiring what they were trying to do to develop a device to identify women at high risk for breast cancer. While I was very afraid of my ability to contribute in a small environment, I thought, “You know what? This is really motivating and could be so important.” I made a decision not to let fear control me. It was smart people doing important things that motivated me, so I took the risk, and I jumped in. That’s the first of multiple companies now that I’ve been a part of as building from very early phases. I was in clinical development there. We got our device approved with very little investment and ultimately sold the company to a high-tech corporation. I think the total investment was maybe 22 million dollars, and it sold for $167 million. So, it was a great outcome financially in many ways. We loved working together and loved what we were doing. After that company, we said, “We’re going to get the gang back together and try and do this again. I had done devices; I had done early-phase development and clinical development Phase 1 and Phase 2, but I didn’t have any Phase 3 clinical trial experience. So I took a job at a company known as Corgentech that was developing a drug device combination, so took advantage of everything I had learned to date but was running large Phase 3 trials. I went in as Vice President of Clinical Development there and got phenomenal experience and very great CEO. I would say on the positive side, we took the company public while I was there, so I was part of that team. We also did a big pharma deal with Bristol Myers Squibb, so we had a lot of great experience there. Ultimately, the clinical trials were not successful, but that was just at the time that my prior team with David Hung and Pat Machado were starting. They had started Medivation, which is a really interesting company that did a reverse merger into a public shell and started to build from there. I joined them, at that time as the third employee. We had not much, but we had an Alzheimer’s program and subsequently, a breast-duct cancer program. I had the amazing experience of being the Chief Medical Officer there for a decade, and I got to oversee the development of a very successful breast-duct cancer drug known as Xtandi. We developed that from the very first pre-clinical experiment all the way through to approval. It was an amazing experience. Alejandro: And, obviously, a good outcome: 14 billion dollars of an acquisition. Not bad at all, and it’s incredible. You joined there as a #3, and you were all along in the journey. This is wild: starting #3 and then seeing this thing being acquired for 14 billion. What were your major three biggest takeaways from that journey? Lynn Seely: I think the first thing is you have to be very agile and very resilient, and you have to be very committed to the effort. We had many ups and downs. Any entrepreneur is going to tell you that you have to believe in what you’re doing and stay with it up and down because this company initially did a big deal with Pfizer for an Alzheimer’s drug. We were in large Phase 3 clinical trials, and all the early data had looked spectacular, but the initial Phase 3 program in Alzheimer’s disease failed, and it was devastating. But we had an amazing team and incredible people. We had end-licensed this breast-duct cancer drug along the way, and we said, “All right. We’re not going to have a successful Alzheimer’s program, but we’ve got this breast-duct cancer drug. We retooled ourselves and kept all of our employees. The team stayed together, and we were able to successfully develop that and get approval for the blockbuster prostate cancer drug. There were dark days, but we did not give up. We stayed together. We collaborated, and we figured out a way. I think the #1 take-home is, great people are what makes for a successful company. Alejandro: That’s very interesting because I’m sure that there are a lot of entrepreneurs that are listening right now that are probably trying to get their product or service to that adoption to product/market fit, and I’m sure that they’re going through some dark days. Saying that we did stick together as a team – it’s easier said than done. What do you think made you all stick together? Lynn Seely: I think 1) We believed in what we were doing and that it was important. 2) We had enormous respect and confidence in one another. 3) We realized that nothing worthwhile is ever easy, and you’ve got to be willing to work through the tough times. I will tell you that when you’re doing the startup world, it is crazy, and everything can be a little bit tenuous because if it was all set, it wouldn’t be a startup. There is some risk involved, and you have to rely on collaborative decision-making. I think one thing we had at Medivation, and I’m very proud to say that we also have at Myovant is this ability to synergize, to work very closely and collaboratively in a cross-functional way to solve problems. When you’ve got the right team together, that can collaboratively solve problems and synergize. That’s when you’ve got something very special, and I think we had that at Medivation, and I’m very proud to say we also have that at Myovant. Alejandro: Once you were ready to turn the page and move on to the next chapter, which ended up becoming your next baby, the company that you started, during that time, you were dealing with recruiters, too, and they were very surprised when you told them that you were ready to take on a Chief Executive role. Why was that the case? Lynn Seely: Yeah, it’s a very interesting story. One of the things that I became very aware of during my time at Medivation – I would go to the JP Morgan Healthcare Conference, which was the biggest Life Sciences Conference. As a woman, I would feel like I stood out like a sore thumb. There was this sea of men in suits. So even though the workforce in biotech in the life sciences industry is 50% women, when you go to the leadership roles in the C-suite, there are very few women and very few women as CEO. I thought a lot about how Medivation was a big success, and certainly, I could have sailed off into the sunset, but I felt like there was an opportunity to help change the face of what leadership looks like, and maybe as a way that I could help diversity from my seat was to actually take on a leadership role because when people start to see women in leadership becomes much more commonplace. From my own case, I will tell you I got so many offers to be Chief Medical Officer, but I’d been Chief Medical Officer for a decade. I did not get a single offer to be CEO. No recruiter came to me and said, “I’ve got this Chief Executive Officer role for you” until I’m talking to a recruiter; he’s bringing me yet another Chief Medical Officer role, and I said, “Look. I’ve got another operating role in me, but only if it’s going to be a CEO.” He was like, “Whoa!” He was very surprised. I give him huge credit because while he was very surprised, then he started asking me questions, and once he understood the breadth of my experience, he said, “Let me see what I can do.” And then, I had no problem. I got multiple offers because I had the courage, I guess, to self-declare. If I had one piece of advice for women, in particular, we have a tendency to wait for things to come to us as opposed to go out and ask for them. I think even at that senior place in my career, I still had to learn that lesson again. But once I self-declared that I was interested in the CEO position, I then did get opportunity. I have to say the opportunity at Myovant came completely by serendipity, as many great things do. There were a couple of investors in Medivation who knew me and knew that I was an endocrinologist. These two people happened to be one on the board and the other the founder and CEO of Roivant Sciences, Vivek Ramaswamy. They asked me to help them do due diligence on a deal they were thinking about doing with Takeda. Takeda had developed an oral generator receptor antagonist, which was potential medicine they were developing for men with prostate cancer, which was something I knew a lot about because I had just overseen the development of a very successful prostate cancer drug. But also, they were thinking about developing the same medicine for women suffering from endometriosis and uterine fibroids. What’s so interesting is, here, I am a woman. I’m a physician, and I knew nothing about uterine fibroids and endometriosis because these are largely cared for by gynecologists, and interestingly, rarely talked about. It turns out that they’re both period diseases. They’re disruptions in the menstrual cycle. In uterine fibroids, women have tumors in their uterus that cause them to have very heavy menstrual bleeding. And in endometriosis, it’s a disease that can cause extreme pain during periods and anytime during the month, but because women don’t talk about things like their periods, it’s these two very common diseases that are shadowed in stigma and embarrassment. I had to learn about them. But as I started reading and learning more and more about these diseases, I realized there were millions of women suffering. That’s not an exaggeration. Millions of women, and they’re getting lots and lots of surgical procedures: hysterectomies. There are 350,000 hysterectomies performed each year for uterine fibroids and endometriosis, which is a huge and major operation. I got this opportunity to potentially develop a medicine that women could use as an alternative to some of the surgical procedures they’re currently undergoing, and I thought, “Wow! That’s just fantastic!” With that, the end-license of this drug [22:34] from Takata was complete. It was a very interesting deal that was led by Roivant Sciences as the major shareholder, but there were two drug candidates that were put into Myovant. Money didn’t change hands. Takata got 12% of Myovant, and the goal was to take the company public. So we formed a company. I became the first employee in June of 2016. In October of that same year, we took the company public and raised 220 million dollars, the biggest biotech IPO of 2016, which was so fantastic because it was built on women’s health and prostate cancer. But the women’s health indications got a lot of investor attention, and that’s something that is not common in the world of investing where the focus is so often on oncology or rare disease. It was great to get this funding that we needed to develop this new medicine. Alejandro: Got it. So this Myovant, you started out of your dining room. It’s remarkable that you were in a position to take the company public months after literally forming it. How were you able to do that? Lynn Seely: It was a wild time when you think about that. I was interviewing people at restaurants close to my house or in my home, and we worked in my dining room for quite some time. When you think about it, suddenly you have to do all sorts of things from finding commercial real estate and negotiating that to working with the FDA to get your regulatory plan done to figuring out how to raise money and write the S-1 to take the company public. So it was an enormous effort. I did get support from our major shareholder, Roivant Sciences. They were very helpful in the early stages of lifting this company and then began recruiting and bringing in favors from everybody I had known in my career. Again, the most important ingredient for a successful company is people and relationships because they are the ones who help you when you’re facing problems that you don’t know how to solve or need connections to the right answers or bringing in those people that you know you’ll be highly synergistic with and can build a company with. It was a huge lift and has continued to be a huge lift. After we took the company public, we had the money we needed to launch five global Phase 3 clinical trials. I don’t know of another company that popped up as a Phase 3 development company. These were all large trials run globally. We did one large trial of 900 men with advanced prostate cancer and two trials, each with 600 women with endometriosis, and then two trials each with just about 400 women with heavy menstrual bleeding and uterine fibroids. All of that got going in 2017. We enrolled them. Then in 2019, we started rolling out the results. I’m very proud to say that all of those five Phase 3 clinical trials have now been reported out with very positive results. We find ourselves in a position where we are seeking FDA approval for the prostate cancer drug, which is a once-a-day oral therapy for men with prostate cancer, where right now, they’re having to go into the clinic to get injections to lower their testosterone, which is the driver of prostate cancer growth. Now, we have an oral medicine so they can stay at home. That has an FDA action day approval date of December of this year, so we’re busy getting ready for commercialization there. Then we have a second drug candidate, which is for women with uterine fibroids, and we have that under review by the FDA also and expect an approval action date on June 1st of 2021. We’re busy now building out the commercial arm of our company, and we’re well on our way to preparing for two commercial launches in the next few months. Alejandro: That’s fantastic, and just to close up on the IPO, it was the biggest biotech IPO in 2016. So, you raised 220 million for that IPO. Now that it’s public, how much capital has the company raised to date? Must read: Kara Goldin On Building A Business Worth Hundreds Of Millions That Is Taking On The World’s Biggest Brands Lynn Seely: We’ve been, needless to say, with these large Phase 3 clinical trials and preparing for commercialization, we’ve raised a lot of capital, almost close to a billion dollars. We’ve got two drugs that are each potentially blockbusters. What’s great for us is that we now have a major shareholder who is a Japanese company, Sumitomo Dainippon Pharma and their U.S. subsidiary, Sumitovant, who are helping and have been very generous and giving us tremendous low-interest capital in a financial commitment. We’re very fortunate to be very well-funded. Alejandro: That’s amazing. Very, very well done, Lynn. In terms of the culture, what would you say that the culture of Myovant is so unusual? Lynn Seely: It’s one of the most fun and exciting parts about getting to start a company because you have a white piece of paper, and the very first person I hired was a head of HR who helped me build the culture. We wanted a very specific kind of company, and we wanted a company that was patient-centric. So often in this business, we talk about if you’ve got a sales team, they talk about the customers, the doctor. Or if you’ve got a medical affairs team, they talk about educating the doctor. But we really wanted to be about the patient. So, from day one, our culture has been patient-centric. We have three pillars. We have purpose-driven science. We have developed empowering medicines, but we also have transformative advocacy. These three pillars have been in place from day one, where we really want to engage with the patient communities that we serve. We do that in a cross-sector way, in a way in which we’re working with the community to help solve their problems. We try to be patient-centric, not in words but in action. I can give you a few examples of that where we form these cross-sector coalitions. We have one that we call Female Forward Together. We have brought together groups that have worked in different ways. I’ll highlight one, which is an innovative digital relationship that we forged with a company called Flow. Flow has an app that they use for women to help track their periods, and their reproductive health, and even through menopause. Because women get so little information and education about their periods, and women don’t even know what’s normal pain during their period and what’s abnormal, or what’s normal bleeding during their period or what might be abnormal and imply a disease that needs to be evaluated. We partnered with them. They have a period tracker app with millions of users. Flow  now has 36 million users, and we’ve developed a tool for women to track their period on. Now they can have information about their period, and also have language to use to talk to their doctors about it. So helping to solve a problem gives women more of an empowering voice so that they can now have a language and an education with which to go and talk to their doctors about. That’s one example of some of the programs that we do for advocacy that we think is an important part of our business. Alejandro: Absolutely. In terms of the employees, how many employees do you have now? Lynn Seely: We have over 250. We’re rapidly growing because, as I said, we’re preparing for a commercial launch. We’re primarily based in Brisbane, California, just south of San Francisco, but we also have an office in Switzerland and now field representatives, which are coming on across the U.S. Alejandro: What a ride, Lynn. One of the questions that I typically ask the guests that come on the show is if you had the opportunity to go back in time and have a chat with your younger self – perhaps, that younger Lynn that was thinking about going and being part of a founding team or starting something. What would be that one piece of business advice that you would give to your younger self knowing what you know now and why before launching a business? Lynn Seely: I think it would be: think big and don’t be afraid of taking risks. You never know how everything is going to work out or all the answers. If something is important, it’s interesting, and it motivates you, don’t limit yourself based upon fear or the fact that maybe you don’t know all the answers or how everything is going to work. I think that’s the most important thing: don’t let fear make decisions for you. The number two thing I would also have to say is, it’s not about the project; it’s about the people. So often, early in my career, it was very much about driving forward the project, and then I realized, “Wow! It’s actually the people that are the most important.” So, hiring and developing and surrounding yourself with the best people possible is the secret to success. Alejandro: Also, any words that you would have for the female founders that are right now listening to us?  Lynn Seely: Be resilient, ask for help from everybody that you know because you’d be amazed how many people are willing to help you with those things that you’re not sure about if you’ll ask. And don’t be afraid to ask for what you want. You’ve got to speak up and be accounted for. I think it is very much being confident and asking for what you need, and you’ll be amazed at the people that will come out to support you. But you’ve got to stay with it and persevere. Alejandro: I love it. So, Lynn, for the people that are listening, what is the best way for them to reach out and say hi? Lynn Seely: I think LinkedIn: lynnseely@ myovantsciences.com Alejandro: Amazing. Lynn, thank you so much for being on the DealMakers who today. Lynn Seely: It’s my pleasure. Thank you for having me.   * * * If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.  

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