Jeffery: Welcome to the Supporters Fund Ask An Angel. I’m your host Jeffery Potvin. today please welcome Julien Smith. How are you today sir?
Smith: Hey, thanks for having me dude. It’s great, having a good day.
Jeffery: Awesome. Well we’re super excited to have you today because there’s a few reasons. But the biggest one is that of all of the investors that I’ve gotten the opportunity to chat with, I’m going to say, you’ve probably raised the most money. So, there’s going to be a lot to talk about and I’m pretty excited to jump in and discuss all this. So, the way we like to start our show off is that we want to hear a bit about your background. So, if you can talk about some of the past experiences, your startups that you’ve built, even from your New York Times, way back YouTubing it, all these great things that you’ve been doing. I’d love to hear a bit of that and then one thing about you that nobody would know.
Smith: Oh man. Well I’ll give you the thing that nobody would know about. I’ll get to that. It will come to me but I’ll give you a sense of my history. a lot of people in startups come from certain schools or whatever, and that doesn’t apply to me. My father was an executive coach. It’s one of the reasons I run a coaching software company today. So, I grew up in an environment where you could do whatever you want with your life because that is what he would tell his clients. And they would be going through a career transition or something like that and he would bring tools to bear to be able to help that. So, one good thing about that is I felt that I could do anything. But the bad thing about it is, I didn’t feel that I had a path that was set for me and sometimes me and my fiancé talk about how envious we are of people that just become doctors, and they just know they’re always going to be doctors because it’s just set for them. And I never had that. So, my path to, let’s call it tech, it’s actually really circuitous and weird. It actually doesn’t begin with me really starting companies. It begins with me starting a podcast which is one of the first podcasts that ever existed and maybe the first of two or something like that Canadian podcast that ever existed and certainly the first hip hop podcast in the world which is a funny thing to say. But that’s in 2004. There were no podcasts and I started one because I had like a weird distinct unique voice. I was younger than most people that were podcasting. I was doing a bunch of things. I got picked up by Syria satellite radio. So, I ended up having that. It was the first time that I ever switched from having a regular office job that had nothing to do with tech like at all to working online and I was the only person that I knew that worked online like this. So, it was transformative for me. All of a sudden, my peers weren’t like people I sat next to in a regular office but they were other podcasters and other media producers. And I hadn’t really learned how to do that and just having a radio voice is what I get told that I used to do in radio commercials. So, someone agreed. So, that maybe was one angle of how I got there and then from there, social media was just coming in to start to exist. And my podcast was starting to pay me like a little bit of money. So, we ended up writing about social media and through writing eBooks about social media there. keep in mind, this is 2008 to 2007 type of thing. someone comes to us or to me and a co-author and goes, you should write a real book about this and we’re like okay. And we think that’s a super exciting opportunity because I’m 25 or 27 or something years old at the time. And I’m like I got to you know. I just want to do this and my co-author likewise we had big audiences. So, in the first week that the book came out, it was called Trust Agents published in 2009. It was considered by Amazon to be one of the best business books of the year and it was a New York Times bestseller. So, there’s a gigantic crazy transformation from being a dude that worked in some random call center really to a media personality that ended up on Sirius to a New York Times best-selling author and speaker. So, that happens in an arc that’s about four years which is a crazy arc now. I’m running internet businesses. Like a little bit at this time, I started a blog and the blog ended up being super popular. It’s about self-development and about a bunch of other things. And after about three books, I’m like maybe I’m done here. not really sure but I had an idea to start a business which ultimately became a business breather that probably most or anybody of the people that know of the things that I’ve done, even though I’ve written a lot of books that have turned out well, breather is probably the thing that is most commonly known by people that I talked to, raised 150 million dollars while I was CEO and raised more after I was no longer CEO. And I ended up at around 250 employees at the height of it with locations in 10 cities and all these things. And it was originally a meeting room business and later it became a commercial real estate tech business where you could slice up spaces using technology and open them using electronic locks with your phone. So, this business is like I had never started a venture business. before I didn’t know how to raise any money at all and I had made some cash a little bit in previous internet businesses. a little that this is the first time that I was like dealing with employees and dealing with a board and dealing with all these things. And in this crazy world, I was able to get that to the size that I got it to tens of millions of revenues so on and so forth. So, after that, I realized I was in the real estate business which is not a business I intended to be in right but a business I ended up as a result then. So, we gave that to another CEO. Meaning, we hired a CEO at the board level to be able to operate the business and that went on. And then I started this company, Practice, that I run today and that has been funded to the tune of 10 million bucks by Andersen Horowitz, Tony Robbins and a few other people and that’s my trajectory as far as tech goes. And oh, something that nobody knows about me, I would say one of the things that not many people know about me is that I have really loud Tinnitus. So, I have super really loud ringing in my ears all the time. people in my life know this. people on the internet typically do not. So, it’s actually a thing that I and lots of lots of people deal with but it’s a thing that I’ve been dealing with for like at least maybe 15 years or something like that.
Jeffery: Well, the entire story is amazing but I will have to ask. This ringing noise that you hear, does it distract you? Do you notice it or is it now becoming something that just becomes air you’re just plowing?
Smith: Okay. It becomes background noise not for all, not for everybody. But for some people, it becomes background noise. But you hear it all the time. It’s like you can look this up. It’s like a well-known thing.
Jeffery: Well, thank god, it’s background noise. Because I would think that having that gnawing noise bouncing around your mind would eventually either drive you crazy or you would come up with something to fix it. So, somebody’s working on that, I’m sure. But Julien, that’s fantastic. Understanding, but the biggest thing that I want to dive into and you’ve talked about it multiple times is this money and how all of this unfolded. But before we jump into how the money thing started, I’m a huge fan of the podcasting side as you can imagine. Back in the 2005’s, I was working with a creative artist in Toronto and we had this big discussion on how we wanted to jump in and create this podcast and build all the stuff out. And we had more discussions than action. And because you were the first person to put this together, what was the driving force behind it? because this really proves to me that one, you’re an entrepreneur and that you stepped into it. You talked about the hip-hop side but what got you into the space there was a few notables back in the day that were working obviously on the YouTube side. today they’re making millions. they’re doing a lot of fruitful things on the web. What steered you into it and what were the few learnings that you got from this early stage before you got picked up from Sirius?
Smith: Yeah. So, I will say that it really is what taught me about internet marketing more than anything. So, as a first, really foraying into internet marketing was having to market my own podcast. And I will say that as well, it really taught me about the arc of trends over time. So, when you’re podcasting in 2004, there weren’t a lot of us. keep in mind. Really we were like this is going to kill radio, like that’s our view. Okay, keep in mind this is the world of iTunes selling songs for 99 cents which maybe some people here don’t remember, right. And it’s the same world. iTunes is the only mechanism for watching movies. there’s Netflix, watch this for streaming. At the time, I don’t remember but it’s a very different world. So, what it really teaches you is about the arc of change. That’s true for all of tech. For a really meaningful arc of change to occur inside a tech, it needs to take like five plus, ten plus years. Now podcasting is the most mainstream thing ever. But we thought that that would happen within a couple of years, versus 10 to 15. And then the other thing is, it really teaches you. And the reason that I really got into it as I was, just like no. There’s nobody doing this and I was always interested in just building things and having fun with smart people. And it’s still one of the main tenets of what I try to do is, I try to build things with smart people I’m excited to work with and things that will entertain or help a lot of people like that, build things with smart people. It’s a great tagline. I do agree that as you work through things in life, if you find the right people to work with you on those projects, they can turn into some big things. But look for people that also have their own mindset in this and they’re not just the followers, but they’re the leaders in the space as well. And you obviously became a leader right from the get-go by jumping into something that nobody was doing, which creates that anomaly and allows you to go in and start to ruffle feathers. And I don’t think that was a bad dream. say what, let’s do something that no one’s going to do and this is going to take over a radio. It is odd that after all these years that radio still exists the way it does. interestingly that it’s still there but podcasting really surpassed that in the last couple years especially during the pandemic for sure.
Jeffery: So, now you jumped into the whole serious thing and it sounds like you went from being just the guy in Montreal hanging out. And I’m not sure if at the time you were in Montreal hanging out, working on this stuff and then all of a sudden it skyrocketed. And now all of a sudden, you become mainstream. you’re really hustling it. you’re starting to better understand, like you said, you’re sitting around the table with more executives. And you start to really build out this whole side of things. And what I loved about your background is that you do writing. You work with the New York Times. And what I find about creative people that do writing or they are writers is that they have a really great way of putting a storyline to anything that they work on, or anything that they’re about to do. And I think that really elevates your game. And now being in this room with executives and working on the media side, that also elevates your game. So, let’s just plow right through it. We get to your breathing company, Breather. How did this all start? and what got you looking for venture capital versus just doing what you did previously which was building something successful and moving forward?
Smith: Yeah. I was very interested. I had more and more people around me on the startup side right. So, I thought that’s really interesting. They’re building things and I was super interested. And because I talked about tech in talks that I did when I was a public speaker, and because I wrote books about tech, but I never operated a business. I had always watched it from the outside and it wasn’t really clear what it was that really shaped things. But I was noticing that things happen in certain times and they happen in certain sequences. It’s not all really obvious to see a line between the first iPhone with a GPS to Uber. That’s not a really clear line but it is actually one that is contingent on the other right. So, it has to happen in sequence. So, similarly, I was looking at some other things like this and I thought it’s really interesting that you can open an electronic lock with your phone. The first Kickstarter was coming out where you could put a lock on a door and that lock you could literally just open it using your phone and nothing else. And I was like, that’s super interesting. I guess you could do it with your house but it’s much more interesting if you do it with spaces that aren’t yours. And I thought, well that’s interesting. how many, how big could this network be. And I knew about network effects and how to build network effects, so on and how the first few spaces would be impossible to deal with. But then over time, you deal with dozens and then hundreds. So, ultimately, that vision, as unusual and implausible as it felt, was viable by some angels and by some VC’s. So, my vision was crazy and typically that’s like how I think about things. I’ll think about how the world will change, how meaningful will the change be in the world should something like this happen. Well that would be crazy if it’s this large. And in this case, it turned out to be a real sort of mini transformation inside of commercial real estate which is actually like a really crazy industry that is massive. It’s probably among the top five GDP industries in the world and gigantic industries. So, that’s a little bit how to think about it is that looking at it and going, wow, this could really happen. And it’s interesting because from my time in media and writing, I often thought about the expression storyteller as a joke. like it’s not a job you’re saying, you don’t have a job like you think you’re a storyteller. what is that, that’s not a thing. But actually, when you’re a CEO of a company, absolutely it’s a thing. And it’s a thing because the power of a story is the power of being able to exert leadership into an organization. It is the ability to exert leadership into people that want to follow you including capital. So, the difference. Actually, because my father was an exec coach and I coach first-time CEO s today, right a few of them, so I watch other companies now as well and I happen to be doing two or three of them literally simultaneously, like right now I’m doing two, like two of my coaching clients have got term sheets on the table right this month. So, I build decks with them and this is not their superpower, but it is mine to a degree right. So, with these people, they’re like I put this shitty deck together and it’s like you are telling a bad version of your story. Another famous thing is like, oh no, I give them the deck but then I don’t talk about it during the meeting. Well what are you doing? It’s like you’re either not the best version of your story. At which point, why isn’t the deck the best version of the story? That’s sort of like what the objective is. And then b, if it is the best version of their story, then why are you deviating from it. So, you are like, this is the cookie, the ability for storytelling as a skill to come together, build a good deck, be able to take that deck and really convey the story in a super clear way to a bunch of investors is in fact a real job. It’s just not a real job for the people who were writing books that I knew of back in the day. That was true but the ability to lead and the ability to get financed and all of that stuff really does have to do with storytelling in a lot of different ways. And I really do believe that my time in media and in radio, going all the way back to my time playing Dungeons and Dragons when I was a kid, was right. like all of that just forms storytelling, that you can sort of flex your muscle at doing time and time and time again. So, when you’re in front of investors, or for that matter when you’re in a podcast, you could actually really clearly convey ideas ideally and be able to transmit emotion which is super powerful.
Jeffery: I like that the idea of being able to create a storyline that can get everybody interested in buying into what you’re doing comes from that initial opportunity that you’ve created. And some of the things that you’re talking about is that these leaders sometimes lack focus and if they’re going to pitch something, they’re talking all over the place except for what they should be focused on which is deliverables. cut back the fluff and get right to the point so that everybody in the room understands exactly what they’re trying to achieve and where they’re trying to go. And what ends up happening maybe nerves whatever it is they end up talking in circles. And it ends up getting them really far off track. And then they wonder why. maybe they have an issue closing rounds. So, now taking your way of observing this which I think is phenomenal. And I’ve never really heard too many entrepreneurs that have really defined how you focused on this. But when you were putting together the idea around the business. You talked about scaling. You talked about how this is going to change the world. And everybody talks about this. They always talk about, oh, my business is going to change the world. But I don’t really think that they analyzed it. Is this really going to have an impact? and you mentioned it made an impact on a 4-billion-dollar industry. So, you really did understand it. You did look at this and say, if I have an application that’s going to unlock doors and open up things in other spaces, this industry is this large. Where is this going to be in five to ten years? Wow, this is something that could be a real opportunity that nobody is doing. Now I think that the reason why you had this conviction when you talked about it now ten years later is that it actually was thought about while you were in this process versus just putting it into a pitch deck and acting like this industry’s three trillion. we’re going to take point one percent. This is how we’re going to win everybody. like yeah, go get them tiger. So, it really felt like you actually really understood what you were trying to achieve using innovation and moving that forward. So, how do you, in your coaching today, get and ground founders so that they actually can understand what the focus really is? Yeah, and knowing where they’re going to be, it’s like Gretzky saying I’m not on the ice going, I’m going to score this goal. I’m going to be in the right spot when the puck goes there so that I can pick up the puck and put it in the net. like there’s no way you can first see this. And you’re like no, when you’re this good, you can foresee the next move. You have to be in focus to see that move. how do you coach people to be able to think this because this is pretty powerful?
Smith: Yeah. So, it’s an age. It’s an age long, I guess, skill that I happen to be reading a book about rhetoric right now right. rhetoric which was I guess to a degree like invented in ancient Greece and has been developed as a skill since then. And they divide it into three things. So, I would say that a good deck similarly is divided into three things. And they’re in ancient Greece. I guess they’re referred to as logos, pathos and ethos. So, pathos is the one that’s most commonly known that is the conveying of emotion. So, I think it is well known in public speaking. It’s true, I mean. It’s true in churches. It’s true everywhere. The most powerful emotion in the room ends up being the emotion that is transmitted to all the participants in the room. So, if I feel it and I convey it strongly enough, I will transmit that emotion to the other person and they’ll begin to feel it and that’s true whether it’s negative or positive or whatever right lack of confidence will transmit lack of confidence, etc. So, in the other two which is ethos and logos, logos is about getting people to say your actual arguments which is that our growth rate is x the industry is y and we will be able to do this in this time. And then ethos is the conveying of, we are good and we know what we’re doing. So, if I could transmit those into different types of decks, they might vaguely map onto different types of pitches and that would be a team pitch where it’s like these people are geniuses and only they can do this. Oh my god, we have to fund these people. It would be an attraction deck which is, oh my god the numbers in this business are really good. It would be a deck that is a product deck. This is the best product and when it goes out, it’ll be amazing or it will be a market deck and often when people are building decks, they do not actually say one of these stories coherently. They divide what they’re saying among all of these different things. So, I’ll give an example. Because solopreneurship is a gigantic industry in the United States already and is growing by insane amounts, it’s got a keger of 15 per year currently and by 2026 to 2027, there should be about 90 million people that are solopreneurs at least on a side hustle level. not talking about Uber drivers, but more like coaches and freelancers in the United States. So, it’s a gigantic industry. So, in our pitch for practice, we talk about how it’s a gigantic industry and how important that is, then we talk about how we have raised 150 million before in previous businesses and we’ve executed businesses at scale. These departments know how to do these things. So, that’s the team part of the deck. But often, if a few of them are weaker than others, people don’t really understand that they just need to tell one story well which is like, we’re amazing. take a look at this stuff. We know it. Nobody else can do this. That’s if that’s the strongest one, or if the market is super strong. then work on the market, but this is a set of examples of how you tell stories using a framework to convey what you are doing in the strongest possible manner. And I think that is often considered like an afterthought, a deck when it’s properly worked on should be refined like 20 to 25 to 30 times, not like two times right. And I believe it’s, what’s his name Delian on Twitter who now runs the company Varda, and he’s a founder and a principal for Founders Fund. He talked about how the deck is the difference for his space manufacturing company that he started a few years ago. And it’s the difference between like a 5 million raise and 50 million if you could really tell the story well. That’s how powerful a good deck and a good story are.
Jeffery: Absolutely brilliant. And what I really enjoy is the fact that you’ve broken this down from Lego. I think those are brilliant ways to summarize how you can approach a different positioning and get people more interested. But that’s also learning who your audience is and I think again, a lot of times we don’t always go into a pitch thinking. oh, I’m just going to load up my deck and I’m going to go out there and pitch everybody again, not knowing that you’re pitching a completely different audience today or you’re in front of investors or you’re in front of your parents or in front of granny. Whatever the difference is, you have to start to look at it. everything is specific to the audience you’re going after. And I think what really resonated with me is that I love the idea of we are the only team that can accomplish this. We have built this team everybody. Every investor that we interview, everybody always goes around this. It’s about the team. Well, when you’re early on, there’s not much of a team there. But if you can put together this really compelling argument that these are the people that have this mindset, they’re going to crush this. I think that can change the entire way that you raise funds. This person does this, this person does this, and there’s nobody better out in the market. I try to get you to find someone that will be better and I think that that just tweaks your mind to think, wow, there’s something here that I didn’t think of. or the product side, same thing. like when you guys were putting this product together, there was that tweak of nobody else building this type of product. And this product has the potential, which is just for the rest of the audience understanding compounded annual growth rate. So, there is a lot of meaning to the numbers and I think a lot of founders really need to take this from what you’re saying, learn a bit more about the numbers and be able to really exploit those details when they are talking into a pitch. Because again, that’s what’s going to get the investor on the other end a little more excited and a little bit further into what you’re doing. And I think one of the things I saw in one of your other podcasts was, it’s ‘fall in love with the first meeting and then figure out how to get the person to stay in love with you after that.’ And this really does summarize that quite well because you are working on this amazing pitch. It was one of the videos where you were breaking down your tweets. I thought it was fantastic and that was awesome. Thank you. thank you really. I really enjoyed that you were breaking it down. I’m like this is good. I wouldn’t have known. I love this. Everybody should do this. So, brilliant. It’s actually a long job. And then yeah. Yeah, go ahead.
Smith: The thing with this particular thing that you’re mentioning just to give you a sense it was told to me by a GP at a venture capital fund that I work with and he said was, there are in venture capital funds as well I think a lot of people know. Anyway, there’s usually one man or woman, one person who is the major fundraiser at venture capital funds. It’s not like when they’re out raising 400 million or 500 million funds. It’s not everybody equally performing that skill. there’s typically one, maybe two people. So, I’m talking in this case to this exact person who raises the majority of these venture capital funds. Again, 500 million or whatever funds and that’s what he said his advice was. I’ll give you another thing that he said. every 24 hours they do not respond to the likelihood of a deal cut in half. So, the first day, if they respond, that’s 100. second day, 50, third day 25, fourth day 12, so he has these ways. Because when you’ve raised enough money, you just know these patterns a little bit. But this pattern of falling in love but then making sure you don’t fall out of love is an incredible one because it really conveys the importance of the first meeting and trying to get your story super tight. And I think from the second and third meeting, what really resonated with me is that you’re working on a relationship and that relationship comes with two things. you’re looking for money and they’re looking for an output. So, you both have to mutually continually agree upon and move those forward in order for the success to happen. And if one of those becomes disconnected or cheapened or reduced, then either someone decides to walk away or they become disgruntled. And if they’ve already made the investment, then it becomes even more odd that you don’t have that same connection with that person who is now separated from that conversation and that can be also very impactful. So, I think a lot of relationship building starts from day one, from that initial pitch and then you continue to work it and hopefully it will gain ground and build up as you said. instead of building down and every time they’re not talking to you, you’re losing ground. But hopefully they’re able to keep that person interested just like in a relationship. So, to take a step a little bit to the side here, I really do want to learn a little bit more about your investment strategies and how you approach this race because I think for the audience, they’re really eager. they’re probably young into their startup phase. They may have raised their first family and friends’ rounds and now they’re working on that next one. And like you said, there’s a lot of meaning that comes into that first pitch. And then carrying that relationship or that love all the way through every time you meet with that vendor.
Jeffery: But you’ve done it quite successfully in multiple rounds. Are there a couple of tips that you could share on how you approach the market to go after investors while running your company? Because that’s obviously got to be pretty tough to do. And then maintaining that cycle, being able to keep investing and when do I go after money? There’s a million questions that we can tailor off of this. But I think to start, what are those few things that allowed you the success of raising your first round and continuing to build your company while raising?
Smith: Yeah. It is interesting. You bring up this idea of how you run the company. At the same time, I’ve always had the good fortune to work with really good co-founders and really good first teams of employees. So, sometimes, the co-founder and sometimes with the team of employees, the initial team, I have always been blessed that when I look at them and I say I’m out I’m going to raise funding. And you’re not going to see them for like a while. So, you’re going to keep up with regards to the numbers. Let’s say on a set of dashboards or with some calls one-on-ones or something, but by and large the answer is I have had formidable or strong enough founder and early team relationships that I was able to be like Sia. And I think that that is a part of the success that you needed for success because you have to be able to focus completely on the fundraise to succeed. You should never do it ideally with under six months of runway because fast deals literally take days. like I just watched a couple of them happen over here and when they take days, that’s always like wow, great. But even then, it takes days. we’re going to talk about five days. we’re talking about 20 days as VC funds. like line up appropriately, but on the long side fundraising takes forever and is endless. Now all of this is made worse if your decks are bad. if you’re not lined up, if you’re not appropriately networked, etc. But those are sort of like the structures of what you need to set up the right frame for yourself to succeed. You get your team to manage the business as much as possible. keep in mind, as a CEO, I understand during a friends and family stage, it’s a bit harder. But as CEO, you should never be doing a job yourself like that’s failing a little bit. As CEO now, if you have no money I get it, you have to do a set of jobs like customer service. an important thing that I did when early on in both my companies, I did marketing. I did early on in both my company’s products and so on. But ideally, during a fundraising, you’re like you have to keep this going. here it is right. And they have a playbook for doing so. In addition to having six months, in addition to having a good deck ideally with people that have fundraised before that are able to guide you as to what a good deck is, then you have to be networked enough before that ideally, it isn’t your first call with people now. your ideal situation, people like to say this different way by the way investors tend to say. Oh, I invest a lot in lines, not dots. What they mean is, in a relationship in which there are multiple touch points so that they can perceive progress over time. I mean they say that but in reality, when a hot deal or an exciting thing comes across their lap, it’s not like they’re not going to pay attention to it. if it’s not the first, if it’s the first meeting. So, the reality is, ideally you have not given numbers in between fundraisers, that’s my point of view. you’ve mentioned your numbers in the fundraising prior to this and now you’re talking about the progress that you’ve made in the 18 months since that time. And in between those 18 months, your head’s down and you’re working ideally for me. I have always liked taking little calls with funds a little bit here and there and meeting angels and all these other things in between financings. And the reason that I do that is because I’d like the relationship to be there. But I try to control the narrative by not being like yeah, here’s our old deck with all our old numbers. yeah here’s our numbers today. I try to tell the story in a certain way at a certain time. And then the other thing is, when I am networked enough and I have a spreadsheet that I have that includes for example, a fun name for a partner, how I prioritize them, how hot the last meeting was from an a to an f, how I got to meet them, what their fund is interested in a big spreadsheet. And I happened to be at my spreadsheet like last week. It’s got 250 names inside of it right now. So, that’s the level of contacts you were ideally looking for. And actually, I could probably find more if I wanted to. But to give you a sense. like that’s a really good set to base your thing off of and then your job at that point is to run all those conversations in parallel in what I would call an in venture capital. They tend to call a process and what a process means is you’re having all your conversations at the same time so that they exert pressure on each other. And the reason for that is I think it’s pretty obvious. But there’s something the capital is actually rivaling to one another. like someone who I’m coaching today is raising about a 25-million-dollar round. So, for them, they can’t take two 10 million-dollar checks because they’ve got too much pro rata so that whoever is putting in the 10 million dollars, the other person can’t put it in. It’s just not possible. So, that rivalry that exists inside of a process means that venture funds will in ideal situations. They will feel afraid that they can’t put the money in which means that it will cause them to move faster and cause them to arrive at a decision at a more rapid rate the natural state of a VC fund is. I’m going to wait for more data. That’s always the natural state of a VC fund. It’s not you. It’s literally the whole industry. So, your job is to minimize the amount of time that they have and the way that you do that is by honestly having other options right. So, that gives you a sense as to how I think about fundraising. And then you go out and you see what the market ends up being. you see what the appetite for your deal is. So, if you’re an early company, you’re trying to go out and raise 15 million dollars. And you just started, you better have the best team in the world, the best market in the world and the best timing in the world right. So, you look out and a deal can go from a good example as the one that I just mentioned where if the last fund fundraising for this company that I happen to be coaching the CEO of was a 10 million dollar fundraising six months ago. So, in that time, the appetite for that company has gone from a 10 million deal at x valuation to a 25 million deal at y value in six months. So, when things are managed properly, you can see how the outcome, all these people end up wanting to be in. But then the opposite happens. If there’s less and less appetite for it now, it’s like you have to be really relentless about your process and keep searching and keep having conversations until you find someone to bite. And I’ve been in both situations like that. So, while you’re working through this seed, series a series b and you were building up your company and making these types of races and working with your teams to do this.
Jeffery: It sounds like you’ve really built out a great process, a great focus that allows you to keep bouncing in and out of this raise mode while strategizing and helping your team grow then jump back into the race. Is there anything that you would say? don’t do these two things when you’re raising funds. do these two things in order to compensate for these other two because this is what’s going to help you win. And yeah, right now it sounds like everything is focused. like I love how dedicated and focused you are to this. sounds like if there’s anything I’m going to say focus everywhere is just if you’re raising funds, focus. like you wouldn’t believe you’ll raise them. And then here’s two other great scenarios that you need to think about. So, I will say that one of the great dangers of fundraising is inconsistency in the numbers. So, one of the reasons that obliterated a lot of financings during the early days is because people were like, I don’t know what the future looks like. So, giving predictability to the business, I actually learned this from the CEO, now the president of Shopify, Harley Finkelstein. he said we don’t try 3x every year. We always do it 2x every year, not 3x. And that is to bake in a certain predictability into the business so that every year at this scale there are huge amounts of GMV and huge amounts of revenue. they’re still able to consistently do it 2x so that consistency creates trust in the team and the product and all these other things. So, that’s one of the things that is certainly very critical. It’s like do not miss numbers right. I know it’s obvious but it’s like don’t miss numbers. The second I would say is try to fundraise during a time of the year where your numbers are actually excellent if you can. So, some people see the time where it goes from September to December because September to December means going back to school. And then it means Christmas and then Black Friday. So, all these numbers tend to blow out of proportion right. So, the result of that is oh my god, this business is super exciting for example right. So, those examples are like how to make sure that the numbers are going in the right direction as what you’re doing is in process and in terms of not doing what you’re doing. I would say don’t do these things. Certainly, one of them would be if someone’s not interested or they’re in-between yes or no, which means they’re probably a no, like they don’t like randomly keeping up with them. What you are looking for is the magic of fundraising. Actually, you just need one yes. you have one lead and that one lead can lead your deal and that’s all that you really need to drive towards. So, wasting time on maybes and no’s is actually incredibly useless. And I will say it’s actually worse than useless because the venture capital industry is really small. Especially inside of Silicon Valley in New York, everybody knows one another and everybody knows when a deal has been passed around a bunch of times and been like, yeah, they’ve been fundraising for a while. It’s not going anywhere because everybody knows this is true except when a deal is hot. At which point, nobody knows because nobody wants to talk about it. They just want to keep it to themselves right. But that’s out of the ordinary. So, definitely to make sure to stick with the yeses is important. And then I would say, you must absolutely stick to a consistent regular sequence. It really should be treated like a CRM and a CRM is typically handled, really managed like for sales right. The objective is to produce sales and similarly here you do not see it like they’re giving me money really. I see it as I am selling a portion of the business. So, your process should be handled like a sales process. Often the CEOs that are good at sales out there are selling to customers. First of all their numbers are better because they can sell to customers. But second of all, they also tend to be good at fundraising. When I’ve been on boards or I’ve coached people or what have you, it’s always the people who are good on the sales side who are good on the fundraising side. So, ultimately that’s really what this is about is becoming good at sales and not ignoring that as a skill set, not ignoring to market it as a skill set.
Jeffery: Julien, those four points are gold. So, I’m hitting the red button, the green button and the screens are lightened up. But that’s fantastic. I totally enjoyed that. I love the breakdown of the numbers. I think that speaks so highly too. So, many times we see this where the investors are sitting there trying to calculate the numbers off the screen and the founder doesn’t know where the numbers came from. He’s trying to make up a reason for why this is the right number versus why he produced the wrong numbers so on and so forth. So, I think that those really make a big difference especially when you’re fundraising. And of course, the things that you say don’t chase a dud, learn what a dud is. I’m paraphrasing for you on a dud but really it comes down to people that are interested. So, don’t chase when you don’t need to look for those. And I love that when you find that right sequence, process it out, be clean about everything, data, CRM, close the deal, figure out that process. It sounds like everybody needs to get a Julien in their life to help coach them through this process because the process is pretty daunting. And I love it. So, you’ve done a fantastic job on lining that up. So, Julien, we really appreciate that. So, now we’re going to transition into one of the things that we like to learn about and I’m sure you’ve got a million stories because you have not only written them but you’re part of this mix every day through the journey and through your investment journey. has there come across an entrepreneur, she or he, that really blew your mind, that you wanted to build a case study around it because you’re just blown away on how amazing these people were on how they were able to turn their business into something completely successful, but the underlying pieces it really tells you or shows us what it’s like to be an entrepreneur anything that I would say the qualities that they are about are actually the qualities of learning incredibly fast.
Smith: So, some people, because I coach people that are in YC, I coach people outside of YC. So, really the qualities that are most valuable are the qualities of people that will learn incredibly quickly and that means that they’re reading a lot. It means they’re absorbing a lot of information on Twitter. It means when you tell them something, you only have to tell them one time and they’re like okay got it. And they just become good at improving themselves because the job is interesting, like I was talking to Coach Mark. my god, his name is escaping me. That’s not good. But one of the coaches that I’ve interviewed at practice for the show that we do who used to be the early CFO at Shopify as a matter of fact because these are Canadians. there’s a lot of Shopify alumni and he was like he had talked about Toby Lefke who’s the CEO over there. He said my job is to grow faster than the company grows. So, if a company is growing really fast, the CEO needs to grow faster than that. otherwise the CEO is no longer good at the job and they will need to be replaced right. So, your job effectively is not only to run the business to a degree of scalability. So, that it runs and it’s able to scale effectively without you. And by that, I mean without you operating that much in the business. But then on top of that, to increase your learning curve and this is where I will say actually that coaching executives, CEOs, coaching specifically, I’m obviously biased. I run a coaching software company. I am one, although I have no room for more clients. But out there, there are executives. like I was just speaking yesterday to the ex-CEO of Etsy who took it public. His name is Chad Dickerson who is an exec coach now for CEOs. So, what happens is that people who have never done the job before, they do not know what they don’t know and they have to execute at such a rapid rate that it is impossible for them to be learning it all by themselves. One of the secrets of Silicon Valley is that there’s a ton of coaches out there, still not enough because everybody is really booked up but enough of them that basically everyone is well supported especially at the high end and they just don’t really tell you that so you assume. Oh, Jack Dorsey or like Steve Jobs or whatever, all it’s like this unique genius, but actually these people have coaches and they surround themselves with good advisors at all times. never mind a single individual but the quality is the quality to learn often that comes with being humble, being well. Let’s say you are humble enough to learn but arrogant enough to run a process and be confident you change the world right. because you need both. But really humble enough to be able to take other people’s advice and at least listen to it and then to iterate as rapidly as possible on that advice to become the best version of yourself. It’s incredibly challenging to do but it is the thing I have seen that has taken founders with no experience at all and turned them into really effective CEOs over time.
Jeffery: I love it. This is pure gold. It’s interesting being that a Montreal native, one of the podcasts we did a while back was Michelle Lozzo and he’s an investor but he’s also a coach. And what I loved about what you’re sharing is that in the coaching world, there are so many great nuggets of advice that you can learn from a coach that can really propel you as an individual and you as a business forward 10 times faster than the world’s markets of learning than anywhere else. you can be and I highly recommend getting a coach or mentor but somebody that’s really focused on you. And like you said, you’ve got a couple of clients and that’s all you’ve got room for. And I can totally understand that because when you’re putting the time and effort into helping coach and guide, there are so many things like I don’t even have any room left on my page to write any more notes because it’s so many great nuggets of insight that come out of being able to work with somebody that takes this holistic view around you and your business that can help propel that and see where these little tiny changes that can be made that can really make a big difference in the overall aspect of your business.
Smith: Yeah. It’s right. It’s interesting that you note that because it’s something normal to you right. like you’re no longer impressed. But to be able to transmit that learning as rapidly as possible to set up people who are ready because they have to execute, because they have to live. That’s one of the reasons we work with coaches and we like to think about practice as being people who help helpers because we enable their ability to run their own thing and focus on helping others. And that is one of the reasons that we do what we do because we really believe that out there, there’s people that can help others learn and help others get better and be better people and operate their businesses better.
Jeffery: brilliant. very well served. we’re going to transition now. we’re getting close to the end and I know we don’t want to. we’ve got lots of time left. we should just keep talking because man, we could talk for hours on all this great material that you’re providing us with. But we’re going to transition now into rapid-fire questions. And the way this works is you pick one or the other. If you’re ready, we’ll jump right in business first.
Smith: I am ready all right.
Jeffery: I love it. Okay, from an investment angle, founder or co-founder?
Smith: founder or co-founder? What do you even mean? I don’t even know what that means.
Jeffery: That’s like if you’re going to invest, would you invest in just a founder or a co-founder?
Smith: I would invest faster. I would like several founders at once. But with a critical CEO, main guy or girl.
Jeffery: Okay, are you looking for a unicorn or a four-year 10x exit?
Smith: I’m looking for a unicorn.
Jeffery: Do you prefer tech or CPG?
Smith: I prefer tech by a lot. I think CPG is a bad idea.
Jeffery: Okay. NFTs or web 3.0?
Smith: I mean the two are related. But I would say that web 3.0 broadly is probably more interesting than NFTs. And in terms of the next few years probably.
Jeffery: Okay. ai or blockchain?
Jeffery: first time founder or a second third time founder?
Smith: always a second- or third-time founder. That’s the unfortunate trap. In order to be a second time founder, you have to be a first-time founder at some point.
Jeffery: Are you more comfortable being first money in or series as an investor?
Smith: I’m okay being in a very early round, but I’m also stage agnostic. And it has to do with traction and team more than anything. And I will say a lot of it has to do with the network. I receive it from very highly networked people as an angel, and not as much as others. But still pretty networked and a lot of is like who I receive it from.
Jeffery: Okay. Do you rather come in as an angel or a VCU?
Smith: I don’t run a fund. I run and only invest my personal money. I learned that from Jerry Newman who’s a well-known angel. And I only invest money that I’ve made on my own.
Jeffery: perfect. Do you prefer a board seat or an observer seat?
Smith: I, for my own companies, I prefer an observer seat. And as an angel, if I need either one, then the company is in trouble. So, I prefer neither.
Jeffery: Okay. Do you have any preferred terms? safe or convertible note? Which one?
Smith: I offer so long as the lead if it’s all safe. then I don’t care. But if the lead is a good lead, then I don’t really care what the terms are.
Jeffery: Okay, will you lead or follow a round?
Smith: I will always follow in a round just because I don’t have the check size to be able to leave.
Jeffery: Okay. Do you prefer equity or interest payments?
Smith: I have no interest in interest payments of any kind. I’m only interested in equity.
Jeffery: Okay. I love it. favorite part of investing?
Smith: It is more open. I think it has to do with watching people change the world. I love being a tiny part of that and I love receiving investor updates. I love watching the ride happen. And to see it as a coach is super exciting too. So, I just love watching the journey from the outside. It’s really compelling knowing what could sometimes have been through it, what they are going through. That’s a great insight on the company and I do enjoy receiving the same emails. those who get excited for how well they’re doing or the changes that they’ve made.
Jeffery: Number of companies you invest in per year?
Smith: maybe five.
Jeffery: Okay. That’s perfect. above normal. I’m above average which is brilliant.
Smith: above average? I’m not sure.
Jeffery: Yeah. The average angel investor is anywhere between one to two companies per year. So, yeah, you’re certainly doing a very notable investment which is fantastic. We need a lot more angel investors like yourself. any preferred terms? you did mention that it’s not something that you worry too much about if there’s a strong lead. But do you have any preferred paper that you like to work off of or it’s really up to the founders?
Smith: It’s up to the founders. And typically, we’re working on traditional venture capital association deals right. or you’re working on traditional safe notes which are sort of designed by YC. So, it doesn’t really matter. all that is standardized.
Jeffery: Any specific verticals you focus on?
Smith: I focus these days, I’ve happened to focus a fair amount on SAS businesses, it’s not always been true. I have some crazy thoughts but what I will say is this consistency and it just speaks to what I just said a moment ago. I’ve invested in some crazy super-fast-growing deals but they’re so fast that they’re almost dangerously fast. So, it’s almost slower but more consistent and credible and repeatable. It is better than like b2c businesses that are going in, that are going incredibly big, incredibly fast. But for whom? There’s no consistency.
Jeffery: Okay. two qualities a startup needs in order to stand out for you
Smith: I want to take interest. I mean the team is most important. I think the answer, it’s the same as I heard someone in your podcast say the same thing which is like, ultimately you want all three, which is team, the traction and the market. That’s what you really want. if I could only choose two, damn I would have to choose team and traction probably.
Jeffery: Now we’re going to bounce into the personal questions. All right, here we go. book or movie?
Smith: But I did write some books and I do like to read them.
Jeffery: I love it. Superman or Batman?
Smith: definitely Batman.
Jeffery: restaurant or picnic?
Jeffery: Yeah, absolutely. five minutes with Bezos or Oprah?
Jeffery: mountain or beach?
Smith: Actually, I’m into both of these places. I have a place with them. I have access to both which is magic right. But if I had to choose one, I would choose a beach. But I wouldn’t choose Miami Beach, but more like California Beach.
Jeffery: I love it. bike or run?
Smith: I actually dislike both. And if I had to choose one, I would probably choose running.
Jeffery: Okay. Big Mac or Chicken McNuggets?
Smith: Actually, the chicken at McDonald’s is underappreciated and is my personal choice. The McChicken is my real choice.
Jeffery: Okay. trophy or money?
Smith: wait. What was the other option? Money?
Jeffery: trophy or money?
Smith: I would today, I would choose money.
Jeffery: Okay. Beer or wine?
Jeffery: camera or mobile phone?
Smith: mobile phone.
Jeffery: king or rich?
Smith: rich. But at the extreme ends, you get both. But if I have a choice, definitely rich over king. It is awful, sometimes true.
Jeffery: Concert or amusement park?
Smith: What concert?
Jeffery: going to a concert or amusement park?
Smith: ’ll choose the amusement park.
Jeffery: All right. Question.
Jeffery: fortune cookie or birthday cake?
Smith: fortune cookie.
Jeffery: Ted Talk or book reading?
Smith: often the Ted Talk is the condensed version of the book which is too long. So, in most cases Ted Talk. But in the right cases, you want the book because it actually contains the information that’s really good. the real nuggets. a lot of books are just ted talks that have been expanded to look wide enough on the shelf.
Jeffery: Well, said. most famous person that pops into your mind now.
Smith: I mean you just mentioned Oprah and Bezos. But aside from that, I would say Jack Dorsey is the person that comes to mind.
Jeffery: Okay, first brand that pops into your mind.
Smith: The first one that comes to mind is D-squared. But that’s a brand that I hate all right.
Jeffery: I would say 90% of people ask this question, pick Apple. favorite movie and what character would you play in the movie?
Smith: my favorite movie of all time right now, ,I just saw Dune in theaters and I think it’s a masterpiece. So, I choose Paula Tradies. if I would choose Dune.
Jeffery: I’m starting to see that movie. That’s awesome. Okay. Perfect. favorite sports team?
Smith: The Toronto Raptors.
Jeffery: Yeah. They rock. All right. favorite book?
Smith: Man’s Search for Meaning is one of the books that had the biggest impact on me. I wrote it’s not my favorite book but it’s my favorite book of mine. It is a book that I wrote called Flinch which you can look up and it’s free. And I don’t know. I really like a lot of books. It’s really hard for me to choose. I’ve read a lot of bars but those are good choices.
Jeffery: Those are perfect. Those are great. Okay. What is the meaning of success to you?
Smith: to be able to live the life that you want to live with as little restraints as possible.
Jeffery: brilliant. very well said. What is your superpower?
Smith: Man, the real superpower that I have is I know how to talk to people. that’s it. that expands to a lot of different adjacent skill sets. And for a long time, I really believe that I was special in a lot of different ways than that. like oh, I am good at telling the future. No, but in reality, the number one skill that I have is I know how to talk to people and I know how to convince them.
Jeffery: Well, I think taking all of this well-rounded entrepreneurial experience investor experience and all the things you’ve done on podcasting, YouTubing, writing, you’re very well-rounded and I would say that in that writing aspect, it’s allowed, to be 100 percent very understanding, have a strong empathy but being able to work with others and help bring out the best in them.
Jeffery: So, I can totally understand how that would be one of your strong suits and getting people to move forward in the right direction. I think it’s brilliant. So, Julien, we’re going to thank you for joining us. There is so much material here. I’m not even sure you can see it. But I’ve never written so much in my life. Probably, it could have been kept going or you would have a million taps on the keyboard. But again Julien, thank you for all of the insights you shared today. It was super impressive, really helpful. I think a lot of people are going to learn from this and I just wanted to turn over the last segment to you. And the way that we like to end our show is that we like to give you the last word. So, anything that you want to share to founders’ investors and anybody in this ecosystem globally, we turn it over to you to share and please share with us also how you can be reached. But again, thank you very much for all your time today.
Smith: Yeah, sure. Yeah, you can find me on Twitter at Julien which is spelled j-u-l-i-e-n, the French way. My company, Practice, which is a practice.do. My advice to founders is to have a combination of passion, because you need to work on it for a long time with marketability, which is the ability for it to actually succeed. not one and not the other with one. you’ll go on and achieve nothing with the other. you’ll achieve everything but you won’t give a damn about it. So, that only the combination works well and I guess I will leave it at that.
Jeffery: Julien, thank you again. Thanks for having me. Okay well this was amazing. that spending the time with Julien and being able to deep dive into so many great pieces and being that he’s a coach today and building a practice around that it’s been phenomenal to have him share. I love the things that you have to look for when you’re raising funds. He’s already raised over 150 million and some of the great nuggets there are, don’t miss the numbers, don’t mess up the numbers when you’re writing those down. they’re pretty important. understand your cager but I think what I really loved about the fundraising side too is that if you’re raising funds, raise funds when you’re on your upside. So, we usually have big months in the entrepreneurial experience. So, if January to March are your low months, then that’s when you should be working really hard to get a line so that as your numbers start to build. you get out in front of everybody. So, you’re running that high volume and I think that’s really going to bring a lot of value back to you and your business especially when you’re raising. And a couple other things that don’t chase success, and if you don’t know which one it is, put it in the middle and do a drip small. Reach out but focus on the people that are really interested in what you’re doing and build a process around it. Everything is about focus and process and if you can do that and commercialize how you raise funds or how you’re building your business it’s going to bring you a lot of extra traction. We talked about Ethos Pathos to Legos and tying those three elements into your empathy, how good you are, the teams, how great the team is and putting together that fantastic student deck for your audience. Again, these things are all powerful and make a big deal when you’re raising funds and building your company. Julien, again thank you very much for sharing all these insights. Thank you for joining us today. If you enjoyed the conversation, please feel free to share with your friends or subscribe to our YouTube channel. follow us on Spotify, Apple Podcast and or Stitcher. Your support and comments are truly appreciated. You can always check us out at supportersfund.com or for startup events, visit opn.ninja. Thank you very much and have a great day.