VC, MD @Forum (fka Acceleprise) | Founder, Chair @Limelight
Jonah Midanik | VC, MD @Forum (fka Acceleprise) | Founder, Chair @Limelight

"It's just very difficult to get your head around that investment when you're small. But now, if you're not investing in people from the very beginning, you just won't have them."

- Jonah Midanik

Jonah on what background an angel wants to see.

Talk Takeaways

For this week’s episode, (JP) Jeffery Potvin speaks with the impressive Jonah Midanik, Managing Director and GP for Forum Ventures. Jeffery asked about his humble beginnings, his interesting CV, and how he has grown in the VC world.

Jeffery explored the lessons Jonah learned in his journey as a young entrepreneur up to the point of becoming an Angel Investor with high hopes for new aspiring founders in the space. This episode will be helpful for listeners who plan into entering the space as it is packed with different lessons shared in the context of Jonah’s experiences as an entrepreneur as well.

Topics discussed:

  • Jonah’s personal, educational and employment background leading up to his success today.
  • Discussed two of Jonah’s successful endeavors, PokerStars and Limelight Platforms.
  • Jonah’s determination to take risks in business
  • Jonah’s 4R Market Fit
  • Importance of a background in entrepreneurship
  • Reason why Jonah went into esports
  • How Jonah handles competition in the entrepreneurial space
  • The impact of an area’s regulations in the operations of a business
  • Importance of finding the right talent for a job
  • How Jonah builds a team of founders as a VCU at early stage with Training and Up Training
  • Changes in the VC environment
  • Success story of a founder that Jonah had worked with

About

An engineer by trade, Serial Entreprenuer by choice, I support Founders on their journey to building world class companies out of Canada – while occasionally still founding companies of my own.

The full #OPNAskAnAngel talk

Jeffery: Welcome to the Supporters Fund Ask An Angel. I’m your host Jeffery Potvin. and today let’s welcome our investor, Jonah. How are you today?
Midanik: I’m great. Thanks for having me.
Jeffery: awesome. Well Jonah, I know we’ve chatted a few times. I love the work you’re doing. you’ve got an impressive background. we’d love to learn a little bit more about yourself if you could dive into it. The way we like to start is just to go right at it. So, if you could dive into a little bit about your background from the western base, the companies you started to where you are today. and then one thing about you that nobody would know.
Midanik: Yeah, perfect. Thank you again for having me. As mentioned, I did start my career studying Engineering Electrical at Western mostly because I had no idea what to do with myself 25 years ago at the age of 18 and figured, this wireless communications thing is probably going to be big. So, I threw myself into that. I was a lousy engineer But was really interested in all the things that could be done with it. and even in college, I was starting these little what would now be called side hustles. I don’t think we had that terminology then. Whether it was selling t-shirts and shot glasses to starting my first business while I was in college where we sold advertising on pool tables before the age of digital screens everywhere. We found a way to print that wouldn’t affect the rolling of the ball and went national with that. by the time I was 22, we of course had no idea what we were doing and flamed out relatively and spectacularly despite having a client roster of people like Kraft and Altoids, and AT&T. and just it was a festive disaster from there, I had been playing part-time professional poker just as just when the online poker boom started. not because I was good, but because everyone could suddenly play online and it turned out that no one knew how to play yet. So, you could make really good money just by playing basic strategy online from people that didn’t know that. That’s who was on the other side of the screen. So, I was doing that and trying to figure out what to do after college. When some of the folks in the poker scene that I was in realized that they needed marketing help to sell into colleges and they really didn’t know anyone that would take their money, the TSNs and ESPN’s, no one would take their money because they had an all Caribbean regulatory backing. So, they’d come to me and say hey, how do you get into these areas? and we basically threw parties at the time. although we called it experiential marketing, and those little companies were companies like Bet365 and Pokerstars. and because those were so successful, they would give us more and more marketing work. and eventually through no real plan of mine, that blossomed into an agency where we were running a pretty significant amount of poker stars in Bet365 marketing efforts both in Canada and in the US on the experiential side. and we realized that that skill set was transferable, so we picked up other customers. So, I ran that to about five million bucks a year. bootstraps in my 20s. It was lots of fun. But I wasn’t really learning anything and I realized I wasn’t going to be able to scale it. We didn’t have any competitive advantage. This good cash flow in your 20s is not like something to do. So, I exited that to my small win and got poached by the CEO of Pokerstars to run what was the first massively venture-backed esports business which was called Virgin Gaming. We were the betting layer inside EA sports. So, if you wanted to bet on hockey or bet on football or bet on tiger woods golf, Virgin Gaming was it. they’d raise about 100 million bucks and they called me over to run marketing and product. They were a great group of guys. We were way ahead of their time, an absolute flame out of a business. we really didn’t go very far. and in my one year there, I learned a lot including how to acquire a lot of customers. Now, that business model would never fly if our unit economics are upside down. I left that. Ultimate Fighting Championship recruited me to run marketing for the first ever legal online gaming business in the US because of my background. So, I moved down to Las Vegas and took their 1.1 billion viewers and tried to sell them online gaming. and there, we had a really interesting miscalculation, and that we were 10 years early. This is 10 years ago and the only states that have really opened up were Las Vegas and New Jersey. and you just couldn’t build a business on it. and we were set up for a massive scale. and the USC owners just looked at our seven figure burn a month and pulled the plug. I’d quit just before that knowing they were about to and moved back to Canada and thought it’s time to really get into my own tech thing. and there I founded Limelight Platforms which was an experiential software platform that turns all this information that marketing companies were getting from offline events, things, sports sponsorships, test drives and puts it into their core CRM systems. they had no data on this despite spending literally tens of billions of dollars a year. and I was lucky enough to secure venture financing from a number of Canadian and US investors. Hyde Park ventures around 13 igan for ventures. So, I ran that for six years as founder and CEO, and built a real business. COVID-19 came along and Limelight is a live event marketing software platform. and so as you can imagine, that knocked us out at the heels. We actually didn’t lose a single customer but our usage fell off a cliff. At which point, we looked to an outside CEO myself. and the board hired an outside CEO to handle the back end of COVID-19 and rebuild the customer base which is where that’s at today, which left me open to the next chapter. I knew I wasn’t the person to dig back in. and if you scaled the cliff and slid halfway down, when you’re writing an essay, when you’re younger and the computer erased it and you’re staring at the blank screen which didn’t have the effort to redo it, I was looking for my next thing. and foreign ventures, which had been on the cap table of Limelight said, we’re looking for a new partner, how would you feel about moving to the other side of the table and moving into venture. and the unique thing is that because its background comes from an accelerator, it’s extremely hands-on with founders because I didn’t really know how to be an investor. and I’m not 100% sure that I have a full grasp of it now. But I knew how to build early stage businesses. and so I said, provided I can still be in the trenches with these founders day in, day out. at the creation stage, that would be really interesting to me. So, today, I’m our CEO and general partner and I help a lot of our early stage SAS businesses go from zero to their seed round.
Jeffery: amazing. one thing about you that nobody would know.
Midanik: So, I actually almost left it all to become a chef in my 20s. I was not particularly fulfilled in my agency. We were doing reasonably well but I was pretty lost. and so, I was starting to take cooking classes at George Brown and I enrolled in chef school which I did for six months for a year until I realized that the hours were long and I wasn’t created so quickly.
Jeffery: So, what was the determination that you weren’t great at? How did you determine this? you were cracking eggs and thinking man, these guys are way faster than I am.
Midanik: I’m not sure I could n’t get George Brown, and look, you could tell the ones who were going to really make it work. and I watched them. and I’d watch me. and what I realized was someone sitting at your house and going, this is really great. This is very different from 180 people paying 30 bucks a plate for it. So, now, I’ve right sized my expectations with my skill set and I would say I’m a slightly above average home cook.
Jeffery: Hey, that’s alright. you had to take some learning forward. So, you paid for six months of it and it was worth I guess the front row seats to watch some, hopefully some people that came out to be great at it.
Midanik: yeah.
Jeffery: oh, that’s awesome. We’ve all got to have some little stars and bends in the road. And it sounds like there were a couple out there that were pretty good. There are a couple things that really piqued my interest when I was going through your CV. But I think it’s always exciting that when you’re in the VC world, the key is that you’re actually a founder, that you’ve gone through the ringer. you get it, you understand all of these different facets. But you went through the ringer a few times and I know you called it the flaming outside of things. So, what I call it is that you actually took the risk and you did it and I think that that speaks volumes to your personality and your drive because at the end of the day, if you didn’t do those things, you wouldn’t be sitting in the space you are today which is working with founders and being able to connect with them because they would be looking at you going really tony, you haven’t done anything why are you trying to tell me how to run a business, and you’ve got some great stories and being in the trenches makes a really big difference. I feel that in this space, and it’s really needed and when you were in the trenches and flaming out on the pool game, advertising was there. a couple things that stood out onto what major flame mode or what caused that, because I think that’s actually a really cool idea that you found a way to transfer images on the pool table. who knew that today it would be a smaller market than it ever has been but back then it was a pretty popular thing to do.
Midanik: Yeah, I think there were a lot of lessons. I mean for our first one, when we were doing the pool table advertising business, we literally just didn’t know how to run a business. it wasn’t even structural. We didn’t know how to manage people. We didn’t know how to deal with cash flow, like really 101 stuff. we were 22 and of course, well I’ll speak for myself here, I knew everything already. and then at 27, I was amazed at how much I learned in five years. So, that actually wasn’t a structure, it was never going to be a huge market. But we actually could have made a go of that if we really understood and never would have been big if we really understood managing people, managing cash flow operations. we didn’t get any of that. and so we’ve had to learn a lot of that on our own feet. some of the other big errors we had at Virgin had a really experienced CEO, or that CEOs exited once previously pretty significantly. So, part of it was manager market fit which now we would call , “4R founder market fit,” where we brought in a professional CEO. it is great but I really didn’t know the space so I think that was some of it. and some of it was just early for the boom. So, we were exactly right about what was going to happen. and not exactly right about when, and rather than conserve cash and build a leadership position and do all the things that you’d tell someone now, we just went for broke. and I guess in that way, we achieved our goal fairly well.
Jeffery: Yeah, going for broke and actually hitting that’s a big accomplishment, I guess. I mean there’s a parachute exit. But obviously nowhere near what was wanted at that point. not fair enough. and what I liked about this is that you kept going and you learned it in the next one. But you didn’t have to relearn the same problem. you learn it enough that you can keep steering around it and improving and getting better. and that obviously is huge when you’re growing a company or going to be in the next company. But you mentioned the leadership side and a few people that have exited and have done that. how important is that today to you when you’re working with founders that they have a background in entrepreneurship versus being wet behind the ears? if that’s the right saying from when you’re back in your 22 year old versus someone that comes to you with this bright idea and you, right away looking at it, going nope. I don’t want to be like how I did this. So, how much background do you have in this? and how important is that to you?
Midanik: Yeah. So, I think that’s a great question. So, how much background do I really want to see? so there’s two ways I sometimes look at it. The first is obviously, if you’re an experienced entrepreneur, that’s obviously great right. whether you’ve succeeded or failed, because if you’re the type of person that learns from your failures, then you’re not going to make the same mistake twice. So, obviously, in a perfect world, it’s a 2x founder that has done something adjacent in space. I mean that’s the dream. But what I see a lot of people that have market fit either because they’ve been in the space even for a little bit, and they can be really young but I think that they’re going to have the ability to recruit and they have a good knowledge of self-worth, but not ego in the sense that they’ll hire people that are better than them. So, for example, I just was lucky enough to be the first check, very early in like pre-product, pre-revenue with the company and the founder was still in his 20s. But quite bright and really motivated but really self-aware, and I thought if this person got some traction, I would work for them. So what? they don’t know they can then hire out and thus far, that’s been a good outcome. I mean Bessemer just led their next round. So, a really good outcome so far. and he’s gone out of his way to surround himself with experts or weaknesses. So, I think would I invest in a 22 year old me? No. But I would probably invest in a 27 year old me. With that said, I’ve met 22 year olds. many of them that are far more impressive now than I was. and I think the generation coming up is more polished at a younger age than anything we’ve ever seen before. Oh, the learning curve has massively changed today versus it was back in our time. there’s more learning ways to get data and information happens quicker, faster. So, you’re right. There’s a lot of build up that’s allowing students these days to be able to move quicker. But I think also, one thing that really stands out for the young entrepreneur is that they seem to have less fear of engaging and communicating with people around them and getting in front of the right people. I think that really makes a big difference in our day. Maybe it was newspapers and hanging out in classrooms. But today you can find anybody, anywhere quick as possible and you can start to engage, build on that and that goes from investors to entrepreneurs and those things can make a big difference when you’re trying to grow in a platform or a growing business on the sporting side.
Jeffery: when you got into merchant and getting into the esports side of things, how much of the learning that you previously brought into this role fit into the areas of regulations governance and the areas that really would be really big in this space. because it was new. There were a lot of issues early on with 360 and a few of the other gambling sites. So, as you built into all of this, how much of that learning curve drove you to want to be part of this? and the investor side or the corporate side, how much backing did they give you for this? because again, it’s so new. That was a lot of dollars spent on the learning side of it. and did that really change the way you looked at how this business could be successful?
Midanik: Yeah. I think part of the reason why I went into esports was there were so many analogs from the poker boom ten years earlier. it was going to be a lot of the same consumers driven by men. it was going to be skill based or the illusion of skill based. Although obviously esports is far more skill based than poker, they’re both skill driven games and the regulatory requirements around a lot of them was going to be similar because poker had always floated around both the gaming regulations and the skill based game ring regulations. So, I think by putting together a team that had previously scaled true gaming gambling operations gives us a significant leg up in both wanting to do it and knowing how to do it. With that said, I do think both there and interestingly at the ultimate fighting championship as well. We underestimated the regulatory overhead and what that was going to mean for our business both from our cost basis and a scale basis and probably one of the fatal flaws in both places.
Jeffery: It’s interesting that you say that and maybe you can quantify how that would work because we’ve had a few startups in the last couple years that are tackling these types of spaces where you’re going in with almost blinded thinking that we can move through this space quite quickly.
Midanik: We’ve got the right tech. We’ve got the right people and then out of the blue regulations just start slapping down fees and charges and all these things that are coming out of it. and at the end of the day, it ends up killing the business and five years later, the rest of the world opens up to like NFTs and things like that and all of a sudden now, it’s viable. it’s easy when you were trying to do it three or four years ago. and you’re getting regulated and hammered and stopped today. it’s a lot easier. So, you had to have people that had to break ground to get it there.
Jeffery: But what advice can you give because there are a lot of people that try to push the envelope and think that it’s going to be easy and like you mentioned, it may not have been as successful as you expected but can you quantify how that looks? or what that would look like for an entrepreneur?
Midanik: Yeah. The way I think about it now is from a risk perspective. It is when you set out to do these things very early that it can work massively in your favor. like you look at the situation with “DraftKings” and “FanDuel” where they use the fantasy based gaming to build this huge base for what ultimately are going to be monster sports books. and they’ve had some regulatory hurdles. their merger was shot down. They’ve had various state organizations take a shot at them but at the end of the day, those are going to be multi-billion dollar outcomes for those founders which is an amazing outcome by the same token the road to what’s ultimately going to be the sportsbook landscape. It is littered with people that start at the same time and due to different regulatory concerns get knocked away. So, as risky as entrepreneurship is, when there’s an unknown regulatory climate that you definitionally can’t control, you are subjecting yourself to even more wild swings, even more variants than the regular entrepreneur journey. and you just have to get comfortable with the fact that both as an investor and as a founder, like if we’re able to thread the needle to have these huge regulatory grants, well we’re going to have this crazy outsize outcome. But we could do everything right and still lose which is basically what happened to us. not that we did everything right, we did many things right at the UFC and still lost.
Jeffery: And was there any downward pressure that you found from your competitors? were they coming in and creating the blocks too from a regulation standpoint? like there’s always outside factors. and were people seeing it as you were encroaching in their space? So does this become again a piece that you’re looking for when you’re making investments? Is this something that you can get around? and if we throw enough money at it, is that the solution? or do you say no way to say we can’t throw money at the solution?
Midanik: we got to throw brains and innovation at it. and that’s the only way we can get through these types of hurdles. Yeah, we thought we thought at the UFC that we could literally just buy the technology. and as long as the technology had never taken a bet in America, we would have the leading technology. and then they allowed technology to take in bets in America to thrive. So, we were way behind because we had made an incorrect regulatory gamble in the first place. So, the thing I’ve learned there is you have to, as much as you can, if you don’t have a voice inside the making of the regulations, then you are quite literally gambling because you’re not in the room when the decisions are made. So, in a perfect world, you’re with the founder that’s got some regulatory pressure or is on the same side. as if I see someone aligning themselves and it’s like yeah, that’s what Amazon or Shopify are going to be doing. It’s like okay, you’ve got some big names or you’ve got some big voices that are going to be in the room when the decisions are made. But if not again, you’re just subjecting yourself as an investor or founder to this crazy variance where it could go your way and then everything breaks right. or you could literally just wake up one morning and there’s a regulatory announcement and that’s the end of your business. and there’s nothing you can do about it either way. So, you just have to bake that into your model because you’ve got a portfolio. But as a founder, I mean people who are doing new and interesting things in regulatory uncertain environments are brave as heck.
Jeffery: It’s crazy so when you’re talking like on the brave side. Is it how they set it up so that there is a better higher potential for success? Is it bringing in the right law firm? Is it bringing in the right co-founder that has a governance background? is it, I don’t know grease in the wheels of government?
Midanik: yeah no so I think that’s a great question. I think the best way to secure it and reduce the variance is all of the above. So, you get the top law firm, you get the top lobbyist, you bring in a head of governance who has deep expertise and a seat at the table and then the last piece as I mentioned is aligning yourself with bigger companies that want the same regulatory thing as you’re publishing the white papers. But you’re supplying them to much larger entities who have a seat at the table so that if there’s a regulatory issue in Canada around fulfillment and Shopify is on your side, Shopify is going to be in the room. So, how do you make sure that you’re aligning with or try to align yourself with public groundswell? It is what we did with gaming, we knew definitively that in 2010 all our data said that public ground swell with the exception of the bible belt had shifted and that Americans and Canadians wanted gaming. and we knew that that was never coming back. So, we were like now is the time and on that, we were correct. we just got how it was going to play out incorrectly. So, it’s a combination of factors. and the most experienced ones are literally just hiring someone who’s in the room.
Jeffery: So, when you guys were going through this throughout time and even with new companies today that you are looking to invest in, are you taking anything like this into consideration stepping away from it? or are you looking at it saying, hey, I think we can get you the right people? or do you look at it totally different and say, maybe this business would work better if you structured it out of the Cayman Islands or maybe in this area the regulations are a lot easier and we could run it this way and maybe this is just a totally isn’t a north American business, this is a Southeast Asia business, and we’ll support you if you do this?
Midanik: Yeah. So, sometimes on certain regulatory elements where we don’t have huge depth, we’ll go to experts and ask and sometimes that is a time where we’ll say to the 28 year old founder that I would work for even though you’ve got founder market fit, you’re just throwing yourself to the wind here because maybe it breaks your way. and maybe it doesn’t but you’re not going to be able to impact that which is why right now example in Canada, you’re seeing places like “The Score” get these outside valuations around sports books because they’ll be in the room as this all happens that these larger more established groups will be there as is much harder for a startup to break in because regulation tends to stifle innovation. So, we basically either say we’re willing to take the risk of this going to zero or we look for the type of people that are industry experts and know how to navigate it. and that’s a great point and it really is clear that the sacrificial lamb at this point can be the startup because they’re kicking it into gear but they don’t have much to lose other than maybe a few years and a few dollars where one of these industry leaders who have sunk billions of dollars over the years into the environment, into the community, into Canada and North America that they have a lot more to gain and a lot more to lose if they don’t from jobs, etc. So, they do need that position at the table and sometimes you need a big player to get out there and regulate and push for you because that’ll open up doors for many ventures to come in and start to compete at that stage. But somebody has to open the door and perhaps that’s the best way to move it forward.
Jeffery: Yeah, I think so when you mentioned a few things around finding the right talent and we were chatting to this a little bit before talent seems to be. and maybe that’s the whole reason why it’s called talent, is that it’s the toughest thing. it’s like a unicorn these days to find how you are finding this. this world is working for the ventures that you guys are working with on obtaining talent. It is pretty straightforward, pretty easy, everybody’s game to jump in and roll their sleeves up. or are you finding that the environment has really changed during COVID and it’s a lot tougher to find people that want to dive into either the startups? so that people just want to work in a startup environment compared to jumping into the corporate world and taking a big paycheck.
Midanik: I think talent’s always been hard. I think that there’s probably more people willing to dive into startups now than ever in the sense that I think more and more, especially younger people who are optimizing for either mission, vision, values or quality of life. and I think having an impact is really important, particularly the gen z coming up and millennials. So, we’re not seeing as much of a problem diving into startups. I think there’s two twin problems. one as a Canadian, there’s a lot of US companies hiring here. So, wages have gone up which I think is a good thing but isn’t a good thing if you’re a startup founder. and so it’s difficult to get people to take monster pay cuts. not so much, because I think a lot of these people care about paychecks. But there’s just a floor if you want to live in a city like Toronto or even Waterloo at this point below which, if you’re not making X, it’s just very difficult for a person to do that. So, there’s definitely a floor and then I just think there’s more startups and innovation jobs than there are people that have demonstrated experience of being successful at them. So, there aren’t enough seats to go around and I think as always the founders that are successful are ones that can clearly articulate emission of vision and the impact that the person will have in that seat and can show a clear ghost growth trajectory. those ones are still spending an inordinate amount of time on it but I think they’re doing okay if you can’t really explain to someone the growth trajectory. we’re not approaching Silicon Valley of 15 years ago where the joke was, you better raise your necks around a year or everyone’s just going to pick up their laptop and move across the street. But we’re not all that far off from it.
Jeffery: So, I think the growing startups and the great founders are doing well. I think the people that are good at articulating mission and impact are doing well. I think it’s really difficult for a startup that’s not on a clear growth trajectory to compete with the startups that are or just with the ever expanding footprint of US tech companies in Canada. Now that everything’s remote and the solution here is if you can’t make the dollars to be able to offer the dollars to the people coming into the business, do you start to offer different value propositions to get people to take that big paycheck cut? Is it equity? Is it the value?
Midanik: Yeah. I think to your point it’s value prop right. So, like if you’re getting someone and they’re competing against a Shopify where you’re not going to be able to offer what they’re offering, so it’s going to be about impact and potential upside right. So, whether that’s in the form of equity but also what’s your day-to-day experience. and then the other thing we’re being on right now is like cross-training, up training, all that good stuff. So, if someone had a customer service job for say Canadian attire, well there’s a pretty reasonably good chance you can teach them how to do a customer success job. if they’re good with people and they’re smart and they’re hard working, and we’ve got a number of startups that are doing this, but the economy is being turned over to technology. and so you’re going to have to take risks on people just like they’re taking risks on you and if you’re good at it then it’ll work out. and if not, you definitely have to take risks like we see a lot of startups of CTOs. none of them have really raised five million dollars out of the gate. Those aren’t second time CTOs.
Jeffery: But you’re probably a first time founder so you’re going to have to take a shot on and that’s the partnership. and is there positive upside that you see with startups growing internally bringing in people in that maybe for the first year to grooming? and like you said training and up training to build that team, is there a lot of value in that in supporting a startup or is it just scale focused? and just go find the talent figure out ways to keep them on board, drive it, make the changes you need because this is the only way you’re going to survive as a startup.
Midanik: I think it needs to be a little bit of both. I mean the unfortunate reality is that at every major stage, probably 50% of your management team is going to turn one way or the other, and that’s an unfortunate reality. But it’s probably true. So, how do you support while also continuing to recruit at all times for anyone on a decent growth trajectory? I would say most of our CEOs are spending 30 to 50 percent of their time recruiting [Music] which I think is usually the case in a scale-up. So, yeah. So, I think you need to be training. I think you need to invest in people and you need to understand it is a portfolio perspective for them, for the founders too. So, not all of your talent’s going to work out, not all your investments are going to hit. you just need to be right on balance and that justifies the investment. it’s just very difficult to get your head around that investment when you’re small. But now, if you’re not investing in people from the very beginning you just won’t have them. [Music] Jeffery: That’s a good point. and what a lot of talent or what makes your business go forward and strive and thrive. If you don’t focus on them, you’re going to have a tough time getting to that scale-up stage. and how much of this structure and setup really backs into what you’re doing today with form VC, you said, you’re really hands-on, so are you working with a lot of the founders to support a lot of this? and is that really key to helping these early stage founders really understand the landscape better, being able to maneuver through this and not take the stress home of losing three people or not finding developers or my CTO not understanding where we’re going and how we’re doing this and the strategy is not aligning? you guys spend a lot of time really trying to hone in on those little things. or are you more big picture style set up for them?
Midanik: no. I actually think right now, for helping founders as a VC at an early stage, almost all of it is a small picture because we’re never really going to know the market as well as they do. and yes there’s big strategic things. But at the end of the day, for an early stage startup, it’s really about execution. Can you get the right people? Can you build the right product and get customers using it? and so most of my time, I spend with each founder. I will sit and rewrite your job description. I will interview your candidates with you. Once you’re at the final two, I really think that hands-on stuff is what really matters at an early stage. Once you’ve got a table of execs, you can turn to your CEO and tell her to run the day-to-day, awesome. But right now, there’s five people in the company. The strategy is just really small tactical decisions. there aren’t big strategies like which new market we should attack. you’re literally like how do we sell this one guy. So, it’s literally like let’s build a sales deck like I’m in day to day. and I’d like to think that I help my founders sleep at night. But I’m not so sure how well any of them are, but I’m doing my best.
Jeffery: no. that’s awesome. and hats off. kudos to you man and the team! I think that’s brilliant what you guys are doing there. It is a very tough space especially early on and I think founders really do need a guiding hand. But they also need to lean on someone and I’m sure you can go back to when you first started and think what if I would have had one person that I could have chatted with that could have helped me through this. maybe that would have changed the landscape for you or what you did. But you learned the hard way and now today, you can really provide a lot of that feedback and strategy. I guess if you want to call that moving these companies of five or two forward so that they do have a better chance of success.
Midanik: Yeah. I was lucky enough to have a couple people. and one of my mentors told me “ look I can’t tell you what to do, but I can tell you some of the things not to do, and definitely don’t do that. So, like only the founder is really going to know what they should do because again they’ve got founder market fit. they’re in it all day every day. But lots of times you’ll get the call and you’ll be like yeah, but have you thought about these other solution sets? and that’s really how I think about my role and then some of it is just literally like these job descriptions convert 75 more. we’ve got data on it, use this as a template. and then they don’t need to think about it. So, those are the two ways I think we’re most helpful because being a founder is still so hard.
Jeffery: So, you haven’t found that in years. it’s gotten easier for founders. or do you think there’s just way more noise and there’s just so many more things that they have to tackle than they did 10, 15 or 20 years ago?
Midanik: well, like some stuff’s easier right. It’s like when you and I started out. If you want to build a software product, you just buy a server like turning three knobs on AWS and standing a thing and throwing it into a kite. like yeah, like some are definitively way easier. it’s much easier to stand a product. There’s no question about that. there’s more information on how to do all this stuff. But to your point, there’s also so much more competition for mind share. you read some of those old what we used to call bibles on revenue like Aaron Ross, predictable revenue which is basically just like why don’t you email people. and if you try that now, you just get smoked. So, I think a lot of this stuff has gotten much easier from a product development standpoint. You can have a decent SAS product in four months but I think the go to market and the competition for consumer customer mindshare is way harder than it’s ever been. the competition for talent’s harder than it’s ever been. So, I think on balance, it’s always really hard, just different hard.
Jeffery: I agree with that. and you’re the noise that is not only suffered by founders and by teams, it’s suffered by the person buying your product because there’s a lot of noise around everything. So, the thing is that how do you engage someone fast enough and put enough value behind it that they see what you’re doing, focus on it and decide they’re in? and how many times, how many touch points does it take to actually get that to happen first. probably before, there was less noise and maybe that touch was three or four versus 16 to 20. So, there is a hell of a lot more effort going into convincing somebody that you’ve got the right solution today than there was before. So, I think there’s a lot of extra costs and a lot of other actions that do really make a lot of noise in your space. So, you do have to have a really strong founder and founding team that can really cut their way through all of that. Yeah, and I’m going to guess that with the help you guys provide them, I’m going to say and I like this red, green button pushing the buttons but what every piece of help that a founder can get from an investor investment group runs with it. I’m not sure why I don’t see founders, like is it okay if I book you every Monday, wednesday and friday for an hour? and that they the first question when they’re getting investments? because I think that that would be the most valuable help and free help because you’re paying to help them. So, that would be a really good outcome for them.
Midanik: Yeah, I agree. and actually, I find that the smaller the fun, the more likely it is for them to be hands-on because they just have more time and they’re more set up for it. and they need to differentiate in that way. So, yes, I agree. I found that in my journey really helpful and I hope my founders say the same at this point.
Jeffery: I’m sure they do. they will after this video. they’re going to be in there writing and saying 100%, yes let’s book this meeting right now. well brilliant. and I loved all the things he shared. It’s brilliant. I think there’s a lot of valuable things there that really help the founder and we’re going to transition a bit more into a story. and what we like to do is get a good grasp of what it takes to be an entrepreneur. and you’ve been through yourself, you’ve got a lot of founders that have been through it, is there a story that really stands out in your mind that just blows you away that you just I don’t know you just couldn’t believe it happened, it’s triggering your mind right now and you’re like yeah, I got the story. she did this or he did this whatever it might be. or I did this. I just love to get something that you feel really exemplifies what it takes to be an entrepreneur.
Midanik: Yeah. So, I remember I had one founder and it was still pretty early. He was building his product and had a CTO who had a decent pedigree. But it was pretty clear for whatever reason and obviously, I’ll keep the name of the founder and the company private. It’s pretty clear that the CTO couldn’t figure out how to architect the full platform and was much better in an individual contributor role primarily on the front end. and the founder was pushing and pushing because they had sold to a whole bunch of customers and they were running out of money and the CTO kept promising the code would be committed and eventually the CTO just kept missing the date and just didn’t show up one day. and so the founder walks into my office. This is what I do. I said, well you got to get whatever code’s there first and foremost. So, we need to send it to an advisor to find out what you actually have because this is a non-technical founder. and so the CTO isn’t answering the phone. So, the guy, literally the founder, calls the CTO’s dad to go to the CTO’s house with the USB key and drop off the code base and we get the code at six o’clock at night. and we get on the phone and we drop it into git and we’re doing the whole thing and an advisor is telling him what he’s finding which isn’t great. and again CTO is an honorable guy, just couldn’t do it. and he looks at me and looks at the one employee he had. it was his buddy and goes, you doing anything tonight. He’s like, awesome, we’ll buy toothbrushes. get in the car, we’re driving to Waterloo. we’re in Toronto. he starts calling everyone. I want to be meeting people in Waterloo by nine o’clock to see who can save us and for the hour and a half they’re just dialing people until they can get a group together and they basically crowdsource the build of this MVP so that they could get it out to customers. and this guy ended up raising a pretty significant amount of money. I mean he’s at 10 million and counting and growing really fast. But he went for six weeks before I had a capital. no CTO, no code to drive to Waterloo. like slept in a motel six or like a buddy’s couch and then drove back and like crowd sourced the build. and I don’t think he left my office for six straight weeks quarterbacking this thing. So, you need to be a little nuts.
Jeffery: brilliant. That’s a great story. I love that and I love the fact that you said you got to be a bit nuts. I like to share that. I used to say you got to look for founders that are psychotic and I was told that that’s not the right way to phrase it. So, I came up with I look for founders that have a fifth gear so that extra gear they can kick it into and that is the same thing as saying a little nuts and I think that that’s an amazing story to share that what you you’re at the last legs you got to do whatever it takes to win. and that’s an amazing story of sharing what it takes to be an entrepreneur. Thank you. So, we’re going to transition now into our rapid fire questions. Are you ready for this?
Midanik: Yes sir.
Jeffery: pick one or the other. founder or co-founder?
Midanik: co-founder.
Jeffery: unicorn or year 10x exit?
Midanik: as a venture, unicorn. as an angel, 10x.
Jeffery: Okay, tech or cpg?
Midanik: tech.
Jeffery: brand or tech?
Midanik: tech.
Jeffery: aI or blockchain?
Midanik: blockchain.
Jeffery: first time founder or second or third time founder?
Midanik: first time [Music] Jeffery: first money in or series a?
Midanik: first money in.
Jeffery: angel or VC?
Midanik: both.
Jeffery: right. board seat or observer?
Midanik: I prefer observers.
Jeffery: safe or convertible note?
Midanik: safe.
Jeffery: lead or follow?
Midanik: follow
Jeffery: equity or interest payments?
Midanik: equity.
Jeffery: favorite part of investing?
Midanik: working with founders.
Jeffery: number of companies invested per year?
Midanik: 80.
Jeffery: You guys are blowing the top off the norm here. That’s amazing.
Midanik: Yeah, we do volume. yeah 80 a year.
Jeffery: brilliant. any preferred terms?
Midanik: nope, safe fluorite pre-seed seed and seed pluses. [Music] Jeffery: okay. verticals of focus? B2B SAS? or like blink and B2B SAS?
Midanik: So, specified marketplaces. If you can convince us you’re selling to a business, we’re probably in love.
Jeffery: two things that stand out for you when you’re making an investment into a startup or that you need to see in order to make that investment?
Midanik: It’s really at our stage of founder and market. everything else is a detail especially in the early. we’re first checking 60 rounds a year. it’s founder and market, the rest is all made up and if you’ve got a good founder, a good market, they’ll figure it out.
Jeffery: okay. Alright. we’re going to go to the personal side. Superman or batman?
Midanik: batman.
Jeffery: pizza pop or ice cream bar?
Midanik: cream bar but it’s close. [Music] Jeffery: five minutes with Bezos or Oprah?
Midanik: Yeah, Oprah.
Jeffery: Arsenal or Manchester United?
Midanik: I mean neither. I’m a Tottenham fan.
Jeffery: Yeah. Alright. fair enough. I’ve only found two Arsenal fans. So, this has been good. It’s been good practice. Bike or rollerblades?
Midanik: bike.
Jeffery: Big Mac or Chicken mcnuggets?
Midanik: Yeah, mcnuggets.
Jeffery: trophy or money?
Midanik: I guess money.
Jeffery: beer or wine?
Midanik: wine.
Jeffery: alarm clock or mobile phone?
Midanik: neither. Child. [Laughter] two-year-olds.
Jeffery: alright. that can wake you up for sure. hotel or hostel?
Midanik: Ah, my hostel days are behind me. Hotel.
Jeffery: king or rich?
Midanik: oh, I aspire to neither of those things particularly. I guess I’ll say rich because at least it implies some merit.
Jeffery: concert or amusement park?
Midanik: concert.
Jeffery: fortune cookie or birthday cake?
Midanik: birthday cake.
Jeffery: Look, has life been boring without Trump?
Midanik: no god. No.
Jeffery: perfect. alright we’re getting down to the last two here. favorite sports team which you just mentioned?
Midanik: no, my favorite sports team is the Oilers or Raptors.
Jeffery: ah, nice. Alright. favorite movie and what character would you play?
Midanik: favorite movie, ‘Usual Suspects’. and probably none of them. they all seem terrible. good movie though.
Jeffery: alright. I like that favorite book.
Midanik: ooh it’s a tough one. You can say my favorite book I read recently was Ministry for the Future. sorry Alexa decided to turn on and tell me about a favorite book that she had so I thought I would turn that off.
Jeffery: right. Yeah. So, I’ll get you to repeat that again just because The Future by Kim Stanley Robertson is a story for the future. and was it by Kim Robinson Robertson or Stanley Kim? That’s a question.
Midanik: The problem with Kindles is you don’t look at the cover anymore. So, you see the author’s name like never, ah, yes, yes. It’s a great book. it’s about a potential out for the incoming climate disaster science fiction. But interesting, yeah, Kim Stanley Robinson.
Jeffery: done. Alright. What is the first brand that pops into your mind?
Midanik: the first brand, Brat Tricks. But that’s just because my kid was yelling about it this morning.
Jeffery: alright. the most famous person that pops into your mind?
Midanik: Richard Branson. [Music] Jeffery: nice. Well, so we’re all new. So, this is good. Everything to me is a science project. So, I’m always trying to learn and understand how people think. So, this is good. That tops all of our questions. So, we have one last question for you. What is your superpower?
Midanik: I would think my superpower is probably empathy, especially in this role as you pointed out. I spent a couple decades on the other side of the table. and what a lot of founders especially at early stage forget is it’s not so much the what, is the who. and like what they’re going through and what they have to do, that’s really important. and so really being able to get there with them is probably the superpower because that unlocks everything else.
Jeffery: Well, empathy is a great skill and I totally agree that bouncing from the one side of being an entrepreneur into being a VC, there’s a lot of strengths that you take over and a lot of them are what you give back to the community. and it’s amazing what you guys are doing and what you guys have accomplished and what you’ve done with all these great founders and taking them from one person to big teams of growing scaling startups. So, congratulations again on all of the things you’ve done. fantastic career. I’m glad you’re able to join us today and share all this Jonah. It’s been incredible. as I always do, I took lots of notes and I’m old school that way. But I want to thank you again for joining us. It was fantastic. lots of great things here to share but again thank you very much for your time. and the way we like to end it is, we like to give you the last word. So, anything that you want to share to the investment community or to a start to the startups, I turn it over to you. But again thank you for your time today.
Midanik: Yeah, thanks for having me. and a message to the founders? As always, I know how hard it is and if you ever need anything, please give me a call, portfolio or otherwise, here to help. I know how hard it is.
Jeffery: I love Jonah. you’re a good man. Thank you very much for all of this. and we’re going to get you back on again soon. there’s going to be lots of updates I’m sure but thank you for your time today. Thank you. Perfect. That was awesome with Jonah Midanik for VC. and awesome. So much great detail there. what I really enjoyed him diving into the past of all the things that they’ve accomplished, but really what they look for today and how they’re working with really early stage founders and putting the time in to help them solve problems and taking that past background that he had from being in startups and working for the big business and the gaming regulations governance side. All of those things are pretty valuable when it’s a startup and trying to figure out how to navigate your way through the landmines that you’re going to face as a founder. and it’s great that Jonah and team are there to help support that. Fantastic. But again lots of great experience and the cross training, up training, doing all the things you can to find the right talent lots of great things in there to unfold. But again Jonah, thank you very much for all of that. fantastic insights. Thank you. Thank you everybody for joining us today. If you enjoyed the conversation, please subscribe to our YouTube channel or follow us on Spotify, Apple podcast and or Stitcher. You can also check us out at supportersfund.com or for startup events, visit opn.ninja. have a great week.
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