Venture Capitalist | Board Member | Technologist
Lylan Masterman

"You regret the failure, but you know that you can take another swing at that."

- Lylan Masterman

Lylan outlines what he looks for in a start-up

Talk Takeaways

Lylan Masterman sits down with us to talk about venture capitalists. How they are different from angel investors and the dynamics of their relationship in supporting startups. He also shared the role a CEO plays and the value in cultivating company culture to the team.

About

Lylan is an experienced operator, investor, and board member. As an investor over the last six years, Lylan has been a Principal, General Partner, and Venture Partner at White Star Capital and an Executive in Residence at Breakaway Growth. He has served as board member, observer, and advisor at several startups — Drop Loyalty, Unacast, mnubo, Salesfloor, Immunio, Digg — as well Raines International, a 50 year old executive search firm. Lylan previously led Product and Engineering organizations in his 15-year operating career, and most notably worked 4.5 years at aQuantive, acquired by Microsoft for $6.3 billion. Lylan is a Kauffman Fellow, an educational, networking, and leadership development program for venture capitalists. He is a first-generation high school & college graduate and holds a degree in Computer Science from the University of Waterloo and an MBA from Kellogg School of Management. Lylan has lived in Canada, and the east and west coasts of the US and has called New York home since 2011. Lylan has appeared on live TV on Cheddar and TDAmeritrade Network, has been interviewed in Inside The Mind of a New York VC, his writing has been featured in Business Insider, VentureBeat, Entrepreneur, and Thrive Global, and he has been interviewed in the podcasts Something Ventured, Venture Studio, and The Successful Pitch. In 2019, Lylan was selected as one of New York City’s Top 50 NYC Movers & Shakers in technology and in 2020, Lylan was invited to the Quebec Government in New York’s 80 for 80.

The full #OPNAskAnAngel talk

Jeffery:
Okay. Perfect. Well, as we always do, we like to start right away by just having casual conversation. Make it nice and simple, clean and easy. So, Lylan, I’d like to, uh sorry…

Lylan:
Lylan.

Jeffery:
Lylan and I was going through. I’m like, which is the best way I want to make sure I won’t screw it up.

Lylan:
It’s on my Linkedin, actually, how to pronounce it. It’s on my LinkedIn. It shows how to pronounce it.

Jeffery:
I went on there, actually went on there to see if I could listen to the audio recording, and it didn’t show.

Lylan:
So my LinkedIn actually, my bio has a little blurb about how to pronounce my name.

Jeffery:
I went in because you can do the same thing now in Linkedin where you can see that you can press

Lylan:
Oh, you can record..?

Jeffery:
your button. Yeah, and you don’t have it, so it doesn’t say that. So I’m looking at it right now. And that’s why I was, um, here. I’ll show you

Lylan:
view profile.

Jeffery:
I went there specifically just to make sure you can look on my screen. You can see

Lylan:
Yeah. Yeah.

Jeffery:
It’s right beside your name that it shows it. It did not like, damn it. So I was already gone through all your videos, and I thought, maybe it’ll show there.

Lylan:
I wonder. I don’t know where to upload that feature. Where to upload the voice. The recording.

Jeffery:
That’s okay.

Lylan:
I’ll figure it out. Yep. I’ll fix that.

Jeffery:
Done. Well, either way, I didn’t want to butcher your name, So

Lylan:
yeah, the two tricks that I get my friends, if they’re into Disney characters, I’m the Lion King. Or if people are into alcoholic drinks, long island iced tea

Jeffery:
Island iced tea.

Lylan:
Yeah.

Jeffery:
All right, Well, welcome. Thank you. Uh, our podcast today. Ask an angel. Very exciting to have you today, um, for many reasons, but I’m going to start with the more prominent one is that you’re a Canadian living in New York so that’s pretty cool. And that always starts off a great conversation because we look for Canadians globally, and when we find them, they always seem to be, uh, the fun people that we get to have really good conversations with. But outside of that, um, there’s lots of other things I want to dig into, but maybe we start off by if you could give us a little bit of a background in yourself a little bit about where you kind of come from. And then where you’re kind of currently at now and then one thing about you that nobody would know.

Lylan:
Yeah. So I was born and raised in a city of 45,000 people called Cornwall, Ontario. Uh, at the time, when I was growing up, the big two employers in Cornwall, Ontario, were Domtar, which is a pulp and paper mill in CL Paint Factory. So it was really a factory town, and it’s bordering between Quebec and Ontario. So very much of a bilingual city. I was one of the few kids in class with an English name. Come time to go to undergrad. As most of my friends went to the local French speaking schools, University of Ottawa or Lavel etcetera. I decided to break away and go to the University of Waterloo, where I could study with a bachelor mathematics, major in computer science, minor and combinatorics and optimization. And really, the two key things that drew me to Waterloo were the strength of the academic program in the global ranking of the school, as well as a fantastic co op system where we do six co ops or by US terms internships. And my last two were in California at Cypress Semiconductors and then Microsoft Web TV. And then I continued to work for Microsoft first for Microsoft Research. Then I moved to Redmond, Washington, to be part of the team that built the first ever version of dot Net and visual studio dot net Microsoft.

Jeffery:
You’re the guy we need to go after about that dot net stuff. (inaudible)

Lylan:
You know, it was one of the most academically gifted teams I’ve ever been part of. Um, still, I was there 18 or 19 years ago, so the technology has evolved since then. Um, you know, one of the reasons that Microsoft suggested the dot net team for me was because one of my prior co ops was at IBM on the product that is now called Eclipse. It used to be called visual age for Java and visual age for small talk. And so and that was before IBM released Eclipse to the open source community. So yeah, Seattle was great. Was at Microsoft. And then I really had the itch to go to a start up. And so I went to a company called Ask Me. Ask Me product was similar to yammer, which was similar to what slack eventually became, and the difference. The key difference being that we did not know about the Freemium business model in 2003. The idea of giving your software for free to the enterprise with the understanding that at some point you’ll charge the enterprise that really didn’t exist much. And so at Asked Me, We’re trying to sell our product at a high cost per head. Um, and most of the enterprises really loved what we were building but could not justify the spend to sign on the dotted line with us. From there I stayed another Seattle based company called a EQuantive and specifically the Atlas Division of a EQuantive, and I had five of the best years of my career there. I had multiple product lines. We continue to scale and scale the business, and fortunately, in my last year there, we were required by another, none other than Microsoft for $6.3 billion. And so for me, it was a great experience of what it takes to really scale a business. We made some mistakes along the way. Clearly, we also made some positive steps along the way to reach that level, to reach that level of success. And we also had a really special culture. When alumni from the company get together at a conference or whatnot, even though we got acquired in oh seven, we still look back, and many of us have not had as wonderful of a work culture as what we had at Atlas. It was amazing. From there I went and did my MBA at Kellogg School of Management in Chicago. And then and that was tremendous where I really got to round out. My skill sets in, uh, in areas I wasn’t so strong in. Right. So accounting and the structure around marketing the structure around strategy. Porter’s five forces in the season of Peace were all very alien to me. And then from there, spend a little bit of time in San Francisco. And then I saw the growth of the hockey stick of the New York technology ecosystem. So I moved to New York in 2011. And if you look only a couple of years before I moved here, really, New York was only known for a few companies double click and meet up dot com, being two of the standouts and in 2011 things really worth clearly starting to change drastically. And so the Flatiron neighborhood in particular was just full of start ups, and some of these startups were winning major international competitions were scaling on the enterprise and consumer level. We’re winning South by Southwest and now in New York is truly exponentially bigger than it was when I first moved here. And so I was the head of product, head of engineering at a few startups in New York. Then, in 2014, I was invited to join as one of the members of the founding team, not as a founder but part of the founding team of a brand new venture capital firm called White Star Capital and a White star. We raised fund in 2014. That was a $70 million fund. The fund has been known for investments in Dollar Shave Club, which was acquired for a billion dollars old cash by Unilever. It was an investor in Freshly, which a few weeks ago was announced it was announced that was acquired by Nestle for 950 million base plus 550 million of upside. And, uh, the fund continues to have some really spectacular companies that will hopefully scale and be even bigger than Dollar Shave Club. And freshly, we raised fund two. And there we continued adding more offices. And so the firm started with offices in New York, Montreal and London. Then we added offices in Paris, in Tokyo and in Hong Kong, and fund two’s portfolio continues to scale really, really impressively. And in fact, the last two investments from the fund were investments in companies in Seoul and Kuala Lumpur. And so it gives an idea of the global scale that White Star was pursuing and continues to pursue and then approaching White Star Fund three. I wanted to branch off, and so I’ve been involved in some syndicate investing an independent board seats as I work towards building a new firm.

Jeffery:
Very cool. Well, it’s pretty exciting. The things that you’ve done, where you’ve gone too, and kind of where you’re going to now. Um, and one of the things that I really wanted to kind of dive into a little bit more was kind of your experience that you had working inside of a VC because most of the conversations that we have there always structured around angel investing and angel investors and what they’re doing. So you come from a totally different side because you’ve got experience in all areas big business in raising capital for VC funds. And now you’ve gone into the angel venture side. So it’s a really nice transition, and again, it’s very unique because we don’t get that opportunity. Most people that sell a company, they stay either building new companies. Very few do go into being angel investors. They might do one investment and think, what a waste. I lost my money. Or if I don’t know how to do this. So then they walk away and they go back to building a new company and then other people that run companies, they just tend to be angel investors. They don’t change from that. They don’t move through that cycle. So It’s pretty cool that you’ve done that. So I guessmy first question. Oh, wait, wait, wait, wait. Oh, my God. It’s jumping ahead. I forgot to get the one thing about you that we didn’t know. Can’t forget that. That’s the key to everything we do here. We need to know that one nugget about you that no one knows

Lylan:
So I’m a Kaufman fellow, and that’s an international organization of venture capitalists. And the term that we use for the thing that nobody else knows about you is what is something off the balance sheet about you or what’s you’re off balance sheet items. And I always try to mix it up so I’m not too repetitive about what’s my off the balance sheet today. I’ll share with you that I really enjoyed taking two years of classes for improv, and, uh, it’s humbling. It’s creative. It’s fun. You develop a really new style of communication, and when you fail, no problem a little bit, a little bit, like having a venture capital portfolio. You regret the failure, but you know that you can take another swing at that and you just get back on stage and you improvise a new scene with a new character, and hopefully it works really well. And one of the rushes of being on scene when when an improvised scene is really working out well is that you can sense your control over the emotions of the audience when they’re leaning in, you feel it. You know it. You know exactly you control when they laugh. You control when they cry, and it’s not scripted. And so you have to be on the ball and thinking and planning. And I just love my improv experience. And now I still go well — Prior to Covid, I would still go watch improv shows, and I can see all the tools that the improv actors are using. And that’s it’s a joy.

Jeffery:
Well, that’s phenomenal. And with the improv learning that you’ve got, do you find that just the interactions that you have with anybody and everybody? You’re trying to enlighten me more funny, bring in more things that make it easier to interact quicker, like you find you changed your habits, so you really do kind of try to embrace other people’s, maybe shortcomings and be able to get them to open and move quicker in a conversation.

Lylan:
In most improv schools, the very, very first class is called “Yes And”. Various book authors have talked about it, um, their entire chapters dedicated to yes on. And it’s a very powerful tool for a few reasons. One key reason is so the idea of “yes and” is If Jeffrey, If you and I are on scene together and you say something, the sky is blue. Then I need to start with the first two words. Yes, and the sun is also spectacular yellow. In order to be able to do that, I need to one be listening to what you said. That’s key. I’ve been on many improv scenes where my colleague on stage was not really listening because they were only thinking about what they had to say, and so they didn’t listen to what their stage mate said, because they had something funny to say. That’s not “yes and” that’s I’m going to be The stars show, and we’re not partnering together. So a big part of just interpersonal communication, as it is with improv, is listening and then building on the idea, and so it to be additive to the discussion. And so the and part of, “yes and” right. So when I said yes and the sky the sun is a beautiful yellow that is similar to being in a business setting or a fine dinner with friends setting. And you don’t need to use the worst words. Yes, and. If you have the habit of it, you’re generally going to be an agreement with people. You’re generally making other people feel like you’re listening to them and you’re hearing them and you’re building on the concepts and whether it’s building on a joke, building on a sensitive emotional moment that really resonates. And, of course, the words no and but are important whenever you really want to disagree with somebody. However, when you want to agree with someone, then the philosophy of “yes and” really works in social settings and business settings. And yes, I use the spirit of yes and and sometimes even the words in many, many settings.

Jeffery:
So she just answered the kind of the next step that I would ask for that is that it’s not about saying yes and because in my head I’m like, Okay, say yes, The end. But what it really comes down to is how you have acknowledged that person’s information and how you’ve layered into the next steps of that. So in this case, I would say wholeheartedly agree 100% with what you shared. And the onset of what comes out of that piece of information you shared was that when I acknowledge you and what you shared is that will bond faster together. Because I’m now accepting what you said. I’ve layered on some new information, which is that it’s widely sought, taught and, uh, been papers written on this is that when you can make somebody feel accepted by acknowledging their information and you layer on to it that they will actually feel more comfortable opening more up to you and wanting to share more. And your whole goal in this conversation is to get them to do that, which will put them out of ease. So then they’ll continue to talk and share more information.

Lylan:
Yeah, and it also really creates a lovely setting.

Jeffery:
It makes it fun. It makes it nice. It makes it, uh it makes it easy in a business setting to dig deep on something in a way where it’s not adversarial.

Lylan:
Yep.

Jeffery:
I’ve had a few friends that have one was actually a young guy that worked for us. He would and took courses in this, but he was a funny guy, so he wanted to figure out how he could be funnier. So it worked out quite well, but a lot of great learnings from it, and then the same thing with another friend. She actually wanted to be able to figure out how to overcome for shortcomings in dealing with people and talking with people so that she would actually find wittier things and be able to find and bring humor to things that might not be funny but doing it in the easy way. And that’s how she started and why she went into this, concept of learning how to joke and be able to be improv, right? Do things like that. And she found that it was amazing. She went to be a lawyer, so she just needed to have a way to be able to grasp and work with people better. So I think there’s a way for just like taking master classes and everything else. There’s always a way to layer in and better improve your communication and the way you interact with people. If you take enough time to understand your shortcomings and look at ways that you can improve on them by doing other things to put you out of your own comfort zone.

Lylan:
absolutely one key lesson that I remember from my improv teacher. She really impressed upon the whole class that even though most improv scenes end with humor and have humor along the way, that’s not a set wrought law. There are no rules. An improv, the people are going to the audience is going to be entertained. And if this scene leads you once in a blue moon, not too often to create a scene where the audience ends up crying and they feel pathos for the characters that you are improvising, that is okay. Also, that is beautiful. Also improvisation. Yeah, improvisation does not mean comedy. Improvisation means to improvise. Yeah, in any direction.

Jeffery:
Yeah, I like that. And and again, like these things that you’re learning along the way are helping you better work with people. Help people feel more comfortable with you, which in the short and long term is going to benefit your relationships. But it also benefits the people that are working with you, especially if it’s a startup or an investor to feel quicker or feel more comfortable, quicker, faster so that you can kind of work down that fondle, if you will, of where you’re going with that person or that associate or whatever it might be so…

Lylan:
it really is and a fun little aside with this, um, in an environment where someone actually intentionally uses the words, yes, and sometimes you will see a couple of people’s eyes spruce up and see what’s happening because they also took improv classes or read a book or some other way of being familiar with the with the practice. And that’s amazing because there’s this little glimpse of the eye, “I see what you’re doing, and I like it and we’re speaking the same language”.

Jeffery:
I found that when I was on a couple of interviews a few years back, I realized that the same thing when I would post a question and then the way the person would shift the question back in the way that they would package it back up and ship it back to me. It’s very, psychologists use this as a way to get you to open up on the question and just the way they framed the question back after they may answer it. So I would look at this and I’d be like, Wait a second. Did you read a psychology book while you turn this around and it’s funny as you learn little things, you start to pin when people have picked up little things, like you said. So it’s quite fun and clever. I guess

Lylan:
it is all of it if there’s an old, not old 20 year old book called Crucial Conversations. I remember taking actually a two day training class on it because I so admired everything that was in the book, and it’s It’s a little bit the opposite of improv, but with with a similar spirit, it’s understanding how to manage a very challenging discussion, a crucial conversation when the stakes are high and when there is disagreement. And so there are some philosophies and and the one that I most retained is if I, solidly, solidly am disagreeing with somebody and I remind myself that that person is also a well intentioned, smart, caring person, and even more so. What if our intentions are the same? So if it’s a negotiation, we’re on different sides of the table, then we’re both looking to maximize. But what if we’re in the same team with the same goal? To increase shareholder value? And we just have different philosophies about how to get there? If you remind yourself that that person has the same goals, maybe even discuss it in some short form way, and you acknowledge that there is a disagreement and you also acknowledge that the person is super smart, super well intentioned, we’re really on the same page. Coming back to those philosophies are really powerful and allow you to “yes and” a situation in a way that can foster an environment to come to a nice decision together.

Jeffery:
I love it. My brain was running through these scenarios of things that happened throughout my career, and it touched on one situation that was very much like this. When I worked in corporate, you know, 20 years ago. It would come up through my boss at the time, and he would make comments about, uh, you need to learn how to play the politics game. And I would be like, I don’t have time for this man, I’m a doer. I get stuff done. That’s it I’m whipping through. We’re making this happen, he said. You need to learn it. And he just pulled me aside one day and said, You need to learn this. So I decided, You know what? I can’t learn to be something. I have to be the best at something. So I’m going to work this politics game to be the best at it, and I won’t even know I’m doing it because I’m going to be so good at it because I’ve spent the last 20 years paying attention to everybody in their politics. I’ll just turn it around and said and make it better. So I had to figure out a way to get through things easier so that the outcome was always a positive outcome. So just like saying that, “yes and” but I would structure it a little bit differently. So if I knew that I was going through business analysis process and we were doing this as a team. And I knew that if I threw out data and numbers and factual information that was going to benefit you. But you are the owner of that brand. You would become quite frustrated because I would be obviously, sharing something that you didn’t know about your own business, and you might not be happy about that. And I would undermine you. So and I didn’t realize that at the beginning that I was just doing this would be like, Well, this works better. And I show data they’d be, like, kind of give me those evil eyes so shifted around. And what I would do is because I knew had this information or this drive, I would give it to them prior. And I would work with them to say, How do you envision this coming out so that I can support you on helping this build you forward better. And then they would be like, Okay, well, I can understand where you’re coming from, so I guess if we do it like this, so then in the meeting, instead of me just rifling out ways to help, I would bring it up so that they would look like they were the ones that rifle this together. And then we would be on the same page, and then everybody else would get packaged together and supporting it because two of us were on the same wavelength, and then they were able to drive it forward. So it ended up becoming quite collaborative without anybody feeling that they were being shoved out or not being supported. So I guess in a way, you find your own ways to “yes and” and support while you’re working through those ecosystems to help build up the base. So, um, to just the effect that you’re saying that there’s a lot of different ways to work inside of that. But it’s also positive reinforcement on how you support team to get that to go forward, right?

Lylan:
You hit the nail on the head, that whole best practice of If you want to have something get done, a great way to make it happen is to have someone else recommended it first. And then you “Yes and” them.

Jeffery:
Yeah, yeah. Brilliant. See, man, this is great. This took us in a total different direction. What super fast, super quick learning, which I love, um, but now we’re going to go back to the original question, which was I want to also dive into, like, we built up this great way of communicating and teams and and this probably is going to go two ways. I’m going to go into the V C. Side, but because of the topic we just talked about, I want to also ask because you mentioned it a few times, which was all around, culture and how you define that. You had this amazing culture in this first team and I want to explore this because when we were talking, when you were talking about that when I worked my first jobs, I did lots of different things in start ups and whatever else, but the job that always had the biggest attention to me was when I worked at the largest retailer, which was low blows my real corporate job, and for some reason, I connected with everybody that I worked with tightly and closely with. But I really enjoyed that. And if someone ever said, Hey, would you go back and work for this company or any of the other things I’ve done? I probably would go back to this just because maybe it only lasts a day, but it just had so much impact on my growth of a person that it made such a difference. And it was the culture. Um, even if it was a small, large team, however, so I want to explore how you felt that this made an impact. And how do you carry that culture that you created? Or you’re part of into all of the other things that you’ve been doing because I think it’s important that maybe we don’t realize how much of a, uh, culture makes a difference in growing a business.

Lylan:
At Atlas, we had something so special going on and to really put an exclamation mark on it. Keep in mind, we were in Seattle. At a time when both Microsoft and Amazon were scaling like crazy, they could not hire enough great people, and there were many other companies in Seattle to Getty Images and Zillow, Redfin, all all kinds of companies. Despite that, the engineering team at Atlas had almost zero undesired people leaving the company, and we were paying slightly lower salary than what Microsoft and Amazon we’re offering. The reason people were saying was really about the culture and the joy of working together and the fact that it doesn’t hurt, that we we knew we were succeeding. Well, we could see the public market stock going up and that it wasn’t just going. The stock wasn’t just increasing because the market was increasing. We were growing fast, and so that was a part of it. And then another part was we didn’t do many things halfway and I’ll use an example. So in 2004, time frame, Agile was barely known in the software development world. Some people knew, and some people have been doing it for a few years, but not many. And when the management at Atlas decided to take on agile software development, we didn’t simply have a few people, read a few books and wing it. Instead, we brought in the godfathers of agile, the people whose names are attributed to the agile manifesto, the people who wrote the initial books on Agile and we didn’t just simply send our people to the to the conferences or the events where those speakers would be speaking. We pay to have those people come into our office, and then, instead of doing a big training in front of the whole company, instead those trainers would come in the try to use the word trainer. They’re also the most prestigious book authors and people who define the agile manifesto would come in and spend time with each small team one by one, and some of them spent one week per team. And then some we would invite back to come back to the office six months later to re evaluate us to give us feedback on how we had or how we had failed to implement the strategies that they had recommended for us,

Jeffery:
Amazing.

Lylan:
Right? That’s a real conviction, real budget, real heart and attention being put on the fact that we want to deliver software in a way different than the rest of the world was doing, and we wanted to do it in a way that we would succeed or that would maximize our likelihood of success.

Jeffery:
Well, that’s crazy. So there’s a lot of… it sounds like there’s a lot of work driven effort to keep everybody educated, driven, but the culture was driven because of where they could see the business going. So the culture was actually sounds like it’s really been. It’s really drove around everybody’s success as a whole, every success as an individual and then being able to monitor this success through the markets or through wherever else you were seeing those growth and those changes occur. So you weren’t looking at the things falling down. You were looking at the things going forward. Where are we going to get to here? So you’re in this fast pace and around you was also a fast paced environment because Amazon and Microsoft were growing really quickly. So you were kind of almost in a horse race, not knowing it but feeling like you’re one. And everybody just collectively felt that you were part of that same race

Lylan:
Very, very much so. An example is on the HR front, we all know, and when we are working at a big company that, indirectly our colleagues are our competitors, we might be stack ranked against them for yearly evaluations or some people are going for promotion. Some people are not, bonuses are divided up, so we all know that our colleagues are slightly competitive to us at Atlas that was de emphasised as much as reasonably possible. And so Team’s success and company’s success was really embedded into the culture of what we were all focused on. And if we sensed some superstar behavior of people who just wanted to do their own job and not be helpful to others, those are the types of people that one we try to filter out of the company and to in our interview loops. That was a key criteria that we would always try to dig into because we wanted people to work together and for us, we believe that our competition was the competing companies double click primarily. And so double click was our competitor, not our colleague, that we sat beside in an office or a cube or an open agile space right double click was a competitor. That’s so key when I know that I can trust my colleagues and that we’re working together towards the same goal. It feels a little bit like a sports team. Write your competition should not be your teammates. It should be the competing teams.

Jeffery:
And to that point where I like what you went with this is that because you define it as a sports team, you know that you’re always going out against the challenge. There is, in front of you. There’s a team that you have to beat in order to get that point that gets you further along. I think in business we sometimes tend to forget that we’re competing so and I don’t mean individually against the person beside you. I mean as a corporate. And then sometimes you can have an issue with who you’re going after as your competitor. So when we work with start ups and the startup says my competitor’s sales force and we’re like Salesforce is now your competitor, Salesforce is the godfather of the business. Your competitor is this company down here? Maybe components of slack, but they’re too big. But you’re down here competing with the small and mid tier. You need to find people that you’re literally trying to steal a land grab from, so that you can work your way up to being a competitor to the Salesforce. Maybe in the four foresight they might be, but really, you’ve got to work down at this layer first and work your way through it. But have a competitor. And the thing is, is that when you don’t have a competitor, you can have a strategic drive. You can’t get everybody to go after a goal, and that goal has to be formulated around something that creates energy. And usually it’s about winning a war. And if you don’t have a war to win, you kind of can’t really move forward fast enough. You kind of become complacent.

Lylan:
So it is, you know, and I have no problem if a startup says that, let’s let’s imagine we take a time machine and it’s 2013 or so and we meet a startup. Who says that their competition are these large companies called Skype and WebEx. Okay, right, that that’s fine. As long as they’re not naming a massive company that doesn’t have a specific product within it. A startup could come to me right now and pitch an idea of creating a better, better software for creating presentation decks. And they can say Microsoft Power Point is one of my competitors. Okay, good. But don’t say Microsoft is my competitor to your point. Microsoft Power Point. It’s the users of that product and Google presentations, users of those two products that I am trying to capture. Okay, good. But it’s not Microsoft and Google. Correct. It’s a specific products,

Jeffery:
correct? Yep. And it makes a difference. And I think, uh, just along the lines of getting your team into a culture or getting them all driven is that when you provide people believe in the founder, they believe in the CEO. They believe in where they’re going to have a direction. So I think it’s really important that your teams understand that in order to build a culture, you have to have a drive and you have to have somewhere to go. And that’s what am I accomplishing this year, and you know you’re getting into that crawl, walk run scenario. But if we all know the common goal of where we’re trying to go to, then we all know the type of work we need to put into to get there. And if I can do that with my team and we’re all supporting each other, then it’s going to be something we can get there faster, and then what’s the end goal when we do get there? What’s the payout? What’s the win? Is it camaraderie? Is it a life experience? Or in the case of Atlas, you guys left with this, um, real team bonding that when you guys meet up, it’s like you didn’t actually stop hanging out and working with them. It’s just this quick. Remember, we did this. God, that was cool. And you just move right in through like you were hanging out with him yesterday and it could have been 10 years ago, but it built that strategy because you are all in the same sinking ship. You were all on the same high speed locomotive when you were running at full tilt. So you felt part of something

Lylan:
Very much so. And you may have heard many investors say, I don’t want to hear a company speaking too much about their competition. I want the companies that I invest in to be focused on building their own companies. That is 100% true. It doesn’t preclude at least a little bit of awareness of what the competition is doing. And let’s say it’s a BDB company and they will be doing bake offs to know what the competition might say about you or the competition Salesforce team sales team What they might say about your company. Um, and that’s critical to build your own company. Don’t worry about the competition, but at least have a little bit of intelligence on them. Just make us sufficient because that can inform all your decisions.

Jeffery:
Agreed. Yeah, And I think also, if you tie in with that understanding to me, I want the the CEO or the founding team to be almost psychotic about the market. Because when you’re fully in that market and some of the stuff that I’ve read in the articles that you’ve posted and the video of Syrian, a lot of things you talk about is obviously around, um, understanding the market, being really interested in figuring out where you got to go. And I guess that all comes down to strategy. But the team has a good sense of where they fit in and how they can pivot, how they can change, how they can be dynamic, how they can move. And I think if you’re being a psychotic founder and you understand what your landscape looks like, then you can fit in better. You can actually figure out where I’m going to change next to because you know what’s going to happen next. You can almost see it coming. And if I can’t see it coming, I don’t know enough about my environment. I better learn more. So does that kind of fit into that whole structure inside of mentality, of how you and your business have to fit in order to build forward

Lylan:
When I’m evaluating investment opportunities, I need to see a company that will one really understand their customers and whether it’s an enterprise, because you know you mentioned Salesforce earlier, or whether it’s the next WhatsApp to have an incessant passion for making your users and your customer is successful and you need to be dogmatic. Now you may do an 80:20 rule on that. That’s fine. But for whatever subset of the people that you care about or the customers that you care about, you make them so incredibly successful that if you were to quiz them, how would you feel about this product no longer existing tomorrow and they respond, I can’t imagine that I can’t that’s that’s unacceptable. That’s the response you want and I’m here. I’m quoting a few different other VCs who have made similar comments, but it really is nailing it perfectly. That’s what you want from a company and from the from the company’s users to say,

Jeffery:
Yep, I like that. I do agree, Uh, so now take all these great little things that we’ve talked about, the kind of shape your team shape, your call to shape your business and the reason I think we really dove into these pieces, and of course, how to communicate is you come in from a VC perspective, and now you’re coming in from an angel perspective. So to dive a little bit more into the VC side, maybe give us a little of an explanation of what does the VC term mean for one? Because I think a lot of people really don’t understand what the word VC means or what venture capitalists is all about. So maybe give us a little bit of an understanding from your perspective and where you sat in what that looks like and then kind of the needs and wants of what a VC looks for

Lylan:
A venture capitalist. For the most part, let’s call it Nettie, 9% of the time is someone who first and foremost has to raise capital the way an entrepreneur raises capital. Because most venture capitalists are not investing their own money or if they are, it’s only a small part of the total percentage of the capital that they are actually investing. Well, that’s a point that’s lost on many entrepreneurs. I remember a few years ago, Um, I had finished pitching a prospective investor into my fund at the time and that perspective investor, we call it a limited partner. The Perspective LP, the perspective limited partner had said that they were not going to be investing in my next one. My very next meeting was with an entrepreneur who opens up to me in the first two minutes and says, Lylan, I’m failing at raising my round. You have no idea what this is like. You have no idea how hard fundraising is. Well, I had just gotten rejected, possibly 180 seconds earlier. And so there is to use a beautiful analogy, a waterfall of capital. The employees get it from the employer who’s a startup. The startup gets it from the VC. The VC gets it from the limited partners. The limited partners well, there are different types. Some of them might get it from the school that they represent, or the pension fund that they represent, or from a new type of a larger type of limited partner that doesn’t invest in smaller funds but invest in a fund to invest in other funds. And so there’s this massive waterfall, and venture capitalists are effectively in the middle of it all. We’re not at the top of the waterfall. To continue answering your question. Lot of the deal flow that a seed series A even Series B venture capitalists will look at A lot of deal flow comes from introductions from our favorite angels, where we develop trust because if you consider the Angel Investor to be the first check writer into a company, well, how does the next round of financiers learn about those companies? There are many ways, and one of those ways is by really warm intros by the Angels. And so it’s important for the Angels and for the VCs to have a very trusted relationship, and I’ll use an example behind this. If I see a pattern of an angel sending me deals, and then I see that they have had other great companies that other firms have raised in. But I was never introduced to. Then that will make me feel like I’m not getting that Angels best set of companies. So why should I really invest in them? If there is a trusted relationship, the angel will be giving me a heads up that a certain company might be raising six months from now. And I should start fostering a relationship with that CEO now. Similarly, it needs to be a give and take type of world where we all need to support each other and get karma points with each other. And so it’s important that if I see companies that are too early stage for me, but that really piqued my interest, that I share them with the angel investors that I want to have that trust relationship with also.

Jeffery:
Oh, that’s a really good way of sharing what a VC does. But it’s also a great little road map on how angels and VCs collaborate and work together. And what I like about what you shared is that I believe this is kind of like your US model. I find that the Canadian model really does need to open up more to this because there’s a little bit of I will say tension between what angels bring to the table and what early VCs do. And a lot of the time, the early VCs have a tough time working with the Angels because they find it. They may be, are wasting time or not investing quick enough. What the difference is is that Angels are investing their dollars to support and their time to support for these companies to get them to a stage where a VC can now come in at seed or a series A to really dive in and make a difference. So I think there is a bit of room of growth that can occur there. But you’re bang on that it should be a handoff because, like anything, you’ve got a funnel and the funnel has to start with different mechanisms that work along. When you’re going to raise money. What’s the time period that you usually do? Those are pretty standard times, right? Like Angel VCs raised up to 10 million as evaluation, they don’t tend to keep raising out for that, um, VCs usually step in around eight million to 15 million. I call it the Dead Zone, where nobody really wants to invest because they’re not really sure that the company is going to go anywhere. Yeah, they got some investment. Yeah, they’ve got some some revenues, but they’re still in that sticky spot. So that’s where a VC starts to vet in and learn, and angels are still trying to support it. But you don’t want to be in that area when your evaluation and then anything after I’d say about 12,000,000 to onwards, You’ve got series A, B, C, and all the way up. And those are all hand to hand it off to a VC or someone that you’ve built the relationships with. And I think that if you follow kind of those standard practices, you’ll find that your company will raise funds at the right time and move quicker. And when you try to go outside them just creates this crazy chaos of people not knowing how to manage it, or who should I go after and where they represented properly and, uh, the ecosystem just gets a little bit, uh, discombobulated. So, um, I like that you were able to break that out and really sort through where an angel helps VC and that VCs are willing if they have a relationship to take that deal flow and do something great with it.

Lylan:
Two points on that point number one. Pretty much every day I hear from an entrepreneur. Hey, Lylan, I have all the capital that I need from my next round secured, except that I need a lead. And I’d heard that so many times that I ended up publishing an article on how to find a lead for your next round of financing. And with a very New York pride mentality, I published what I tried to make as the authority of list on who are each of the firms with the New York office that lead rounds at each stage. Precede Seed A, B, C and D. With the intent there being that an entrepreneur who had raised an angel round and wants to go raise from pre-seed and seed investors, it really shouldn’t be reaching out to the VCs who leads series being Series C. That’s a mismatch. It’s great to foster relationships when the timing is right. But when you’re in the heart of raising your pre-seed round, you might want to focus on the right type of investors, and that’s often overlooked. And that type of chart, I think, would really benefit the Canadian ecosystem. And it maybe it’s not —

Jeffery:
(inaudible)

Lylan:
Maybe it’s not even a Canada as a whole. Maybe it’s simply the Toronto Waterloo corridor, right? Or you could even put in Montreal in there. But I think Vancouver is enough of a different ecosystem, or the West Coast and maybe even the Atlantic’s different ecosystem also. But for some people to create a similar chart that has Georgian on the later stage that has golden on the earlier stages that has iNovia and White Star in the middle, that is real right? And as we can go on and on, you can almost visualize what the table would look like. I’m not aware of that table haven’t been made out yet for the Canadian or Toronto Waterloo ecosystem, and I think it would be very, very helpful. The second point is going to raise that the second point I should bring it up on. This is the fact that when you were talking about the difference between the speed of investment, an angel, for the most part makes investments from their own budget from their own capital allocation strategy. And they answer to nobody other themselves and their families. VC firm and let’s, let’s say, let’s say, $100 million VC firm, $100 million That sounds like a lot of money. The $100 million the LPs of the VC firm has already committed to their investors to the LPs that there is going to be a certain strategy. They’ll invest in a certain number of companies at a certain range of valuation and for a certain percentage of ownership. And I’m going to overly simplify this example. I will ignore management fees, which is how the VCs actually pay themselves and pay for a lot of their fees and their lawyers and their rent and so on and just use some very, very simple numbers. $100 million fine. Let’s say that the VC firms says that on average, uh, they will invest $5 million into each company they invest in. And let’s say that they communicate that they want to put half the fund aside for re reserves so they won’t want to put half the fund aside to continue investing into their best companies, which is in the best interests of the startup Because the startup need to tell future investors. Yes, my prior investor is still investing in the next round. So if it’s $5 million first check, $5 million of reserves, that’s 10 million per company. That means the VC firm only is only going to invest in 10 companies in the fund. So what sounds at first like a large $100 million fund actually ends up being only 10 investments, And you and I know that math is actually can be a lot more refined and and result in even a smaller number of investments.

Jeffery:
Probably work around maybe nine,

Lylan:
Right? And

Jeffery:
that’s it. And everything else. You probably sit around nine. Yeah,

Lylan:
And that is going to be over typically a three year period. So that means that VC firm only gets to make three or so new investments per year. But too many entrepreneurs $100 million fund should be if they believe in what I’ve been doing, they should be able to invest. And that’s what I used to think before I became VC. So the reason I share this is to relate, because I remember what my perception was of how big $100 million fund of sound or even 300 400 million. Still, um, when you divide up the number, investments, the reserves, the fact that’s probably going to be over three year investment period, it doesn’t allow the firm to make that many investments.

Jeffery:
For sure, no. And that’s great sharing. And the other side of that, then, is what are, and maybe you can define it. When should an early stage company pre-see, seed When should they start engaging with a VC? If they’re looking to do a series A? Should they start really early on and just sharing kind of where they’re at because a lot of time gets burned doing deep dives and them thinking that they’re going to get this VC to invest in them when 90% of the time it probably won’t happen because they’re too early? Is there a couple of points that you have on criteria that says, Hey, you know what? If you’re going to talk to an early stage VC, do it when you’ve got at least 500,000 of ARR or you’ve got this many users or you’ve got this much current investment already and then come talk to us. Is there some structure that you look at that really defines that process to help early stage companies kind of say, You know what? Put them in the rear view until you get to hear.

Lylan:
I wish the list that I built out for the New York VCs could be expanded to add additional detail. I just don’t have the time to do it myself because there are many firms out there who invest pre revenue. There are firms out there that invest pre product, right? Um, it takes time and effort to for an entrepreneur to learn who those firms are. There are some firms that have a rule. They don’t invest in any company unless there’s 100 K m r great. That’s rarely on their website very, very rarely once in a blue moon. And so it’s challenging for an entrepreneur. There are no universal rules other than the fact that every firm is kind of different from one to the next, and so do not get too frustrated. You might have five discussions in a row with firms who say that they look for at least 100 k MRR and you’re not there yet. And but you’re at 30k MRR. So you know you are generating revenue. You do have traction, but you’re not at that target yet. And it’s easy to lose hope and say, Well, gosh, no one’s gonna invest my company because I’m not not at that point yet. The reality is there are firms out there at your stage. You just need to get the right at the Do the right research to find out who those firms are or, um, speak with other entrepreneurs who have raised rounds that were at that timing. I guarantee you that exists. And one of the things I love about the way good startup ecosystems like Toronto, like Waterloo like Montreal, like New York, Boston and some other cities are starting to evolve. I think Miami is going to really grow quickly now as a result of people moving to the city is the fact that there are CEO support groups, I don’t know, a term they actually use. They always use different terms from one to the next, but having 10 different CEOs in a room where they can meet regularly and where they share advice and feedback. And maybe there’s an entrepreneur that says, Hey, I’ve been told over and over again I am not getting 100k MRR and and so they don’t wanna invest in my company. And there might be three entrepreneurs in that room who say, Oh, you’re just speaking with the wrong firms. You should speak with the investor who invested in me when I was only having 10K MRR. So you’re at 30 and my old investor will be so impressed by what you’re building.

Jeffery:
It creates accountability, too, right

Lylan:
it does. Being a CEO is often a very lonely job. Uh, not that it’s solitary because you’re often surrounded by many people. You’re surrounded by your direct reports by your co founders by your investors, but you really have a limited number of people that you can show vulnerability to, and so those CEO support groups are a great place for that, where a CEO can show that vulnerability that, Gosh, it feels like no one wants to invest in my company or I’m having a situation where I need to figure out a compensation plan or terminate someone’s employment or promote someone over someone else. I’d need advice on how whatever. There are many, many scenarios where CEO to CEO advice in a non coaching environment can be very valuable and for what it’s worth, it’s also helpful for us investors because there are not many people that we can show that level of openness to, and so to have a few other investors who can relate. But that won’t judge us when we show that when we show vulnerability, that’s also very valuable for us as it is for start up CEOs.

Jeffery:
I love it. To be honest, we could probably break this out into, like, six episodes, and we just you and I’ll just keep talking until we’ve just solved everything that’s going on in the VC in the world. But being honest, we so good, Um, because you just touched on another piece that, uh, we’re gonna jump into, even though it’s off topic again. But because I’m like, Oh my God, I haven’t heard this from any interview, so I want to jump on it. So, uh, and you you nailed it on the head. This for the whole conversation we just had, but vulnerability. So there’s founders groups. There’s lots of groups that are out there trying to help CEOs elevate their game, be accountable to each other in those groups like you mentioned, which I think are fantastic, There’s CEO global. There’s lots of different ones that work at all different stages, just like investors come at different stages. But there’s one thing that I find it and I had someone called me, and I remember I was boarding a plane to the Middle East back in October. Sorry, in December last year, and we ended up having a call for, like, an hour before I go on the plane, and it was all about this. Hey, I want to talk to CEOs and I want to get in there and help them better build their company. How do I do it? Because every time I’m talking to them, they don’t really give me their focus. They don’t give me the time of day, and I know I can help them. So how do I really break into this? And he’s like, How do you do it? He said. Well, there’s a difference. We come in from a money perspective so they have more time to focus on you. But at the same time we solve the problem, which is we come in from this vertical, so there is a reason to come into. But now it’s How do I interact with them to get them to engage with me and open up so that I can understand more of what’s going on inside their business so that I can see if there’s an opportunity to invest but also support them and make some figure out if there’s vulnerabilities on both sides and how do you appeal to them? So they want to continue talking to them because I’m not coming in to sell. I’m coming in to support, and when you come into support, you get a little bit more valuable because eventually it will lead to a sale longer term, which would be an investment or whatnot because you’re there to listen. You’re there to understand, and you’re making time because you’re providing them of value and service of value that they want, and that could be either funding, knowledge, exchange of information, whatever it might be. But that builds that relationship of trust, which then allows them to open up and be more vulnerable. And then you can decide as you get more information where you want to go. So from a VC side, how did you How do you work inside that company when it comes to vulnerability? Because that really makes a big impact on a decision that you’re going to make. If you’re investing $5 million into that company, how do you at that stage build that relationship so that they’re going to open up kind of what’s going on inside the company?

Lylan:
I just thought of 20 different answers to your questions that are all powerful. I, as an investor, say what many other investors, but not all tell a CEO upon investment, which is, I want to be your first call when something goes bad in the company. It doesn’t matter if it’s three in the morning. I’ve already programmed your phone number to bypass my do not disturb sleep mode. If There’s something that needs my attention and some way that I can support you because ultimately the investor works for the CEO, other than having the power of replacing the CEO and that’s a big caveat granted. But other than that, one big caveat, we work for the CEO. We are there to empower the CEO to be the most successful and so if they’re facing a challenging situation, I want to be helpful to them. I also want to hear the good news when good news happens. But if the CEO forgets to share with me the good news for for 24 hours, that’s not as bad as the CEO not calling me when there’s bad news and so there’s a vulnerability aspect that comes in where this C and this has happened countless times where the CEO would call me or message me saying Do you have a sec, right? Not let’s catch up tomorrow. Do you have and those are words you you never want to see in a way because do you have a second is rarely a good thing that’s going to be shared, but that’s okay, that’s what we’re here for. So that’s one concrete aspect. A second thought of mine that came up as you were asking. The question is, there is a friend of mine in the New York VC ecosystem. He was a long time venture capitalists at several different firms locally. Then he really got into leadership coaching and CEO coaching. And then he joined a new VC firm, and he wanted his identity as an investor to be that he would take on the dual role of investor and CEO coach. What could be better? He learned that actually, a lot of CEOs do not want to show that much vulnerability to their investor because you don’t want to lose the belief from that investor because you want that investor to be leading your next round. And you don’t want that investor to be replacing you unless you want to be replaced. And so my friend had to step back and really look in the mirror and decide I can do both. But it’s very challenging to do both with the same company. And so which one do I want to make my primary passion and goal in life? Because there’s a limit to how much vulnerability as CEO is willing to show to their direct investor. One other aspect, which I find quite compelling, is that some CEOs end up showing a lot more vulnerability to their investors who are not on their board, which, when I am the board member, uh, I want to be that person. But also there’s a There’s a good reason there are good reasons. There’s good logic behind. Why is CEO might show more vulnerability to a non board member investor? One key one is that it’s a board member that’s responsible for the compensation and the potential replacement of that CEO, whereas a non board member might have a vote. But it’s not that significant of a vote. And so there’s an extra degree of separation. So that’s one key reason. And then another key reason is sometimes that non board member might have been an earlier investor where there or there has been report and trust for a greater number of years. There are many other reasons, too. I’m just giving you two out out of brevity. That’s always an interesting dynamic where it’s not always the lead investor or the board member that gets exposed to the most vulnerability by the CEO.

Jeffery:
No, I like that. And the way you kind of talk about how that investor is interacting with the CEO, that their mandate is that they’ve got to support them. They’re going to help them. But when they’re the lead, that’s the also. CEO also knows that I need a perfect game. I need these people to keep believing in me the whole time. And it might be tough to show weakness. Tough to show a fault when you’re moving the ship forward fast, and it’s probably easier to get support from, maybe an LP versus somebody. It’s on your board. Get their perspective so that you go in more guns blazing so they continue to keep that shell or that hard CEO look and feel so that the main board members continue to support you and think the great things. But in retrospect, we probably should be looking at it that if you want them to really be dug into who you are and what your business is about, you really need to open up more of that and not go to your LPs and share and get the right feedback so that you can drive forward and keep impressing your board and keep impressing people is that you need to let them help solve the problems because that’s why they’re on the board, open it up, let it out and let them all kind of collaborate and figure out ways to solve it. Because that’s what’s actually going to build you a stronger board, stronger presence and help you as, um, a CEO grow and not get removed. And then to when you do sell that company, those are the people. They’re going to come invest in you the next business you build.

Lylan:
Yes, and to build on the perfect game. And I won’t talk too much baseball because not all of your listeners are sports fans in baseball fans. The best pitcheer throwing a perfect game will still throw balls. Not every pitch will be a strike right, and they will give up hits and doubles. Well, not for a perfect game, but there’s still throw balls right, And for a no hitter, they still might walk a few batters. And so this somewhere analogy there, which is if CEO, always seems like everything is perfect. That’s scary to me. And that’s scary to most investors. If things seem just too polished humming along to perfectly that just it’s too good to be true. Um, you know, we talked earlier about the company that I was at that got acquired for six billion by Microsoft. One of the things I said about that is that while we clearly had a lot of successes, we made some mistakes along the way, and we learned from those mistakes. We want to see that as investors. We want to know what mistakes the company is making, what the changes are, what the little pivots are and changes in mentality and changes in culture. Um, that’s really, really valuable to see that there’s humanness involved in the company because we know that the humans leading the company cannot be robots. They are human, and humans will falter. And it’s how you adjust to those mistakes and those faults that really matter the most.

Jeffery:
No, I agree. I like that Well, only because of time. I would love to keep this conversation, and I think what we’re going to do is we’re going to set up the very first part two, and we’re going to move that to the new year. But we’re going to arrange that because there’s so much more. I want to keep talking with you about, um and I’m just, uh, a fan of again the background and knowledge that you carry around the V C and the Angel side. And there’s still the Angel Side Explorer. So we’re going to take that one aside. Um, but I think we’ve made a really good journey through the learning and pulling in the vulnerabilities, the communications, so much great stuff. But we do got to jump into the rapid fire questions. So we’re gonna jump into those, um, we’ll end things up over just around that, and then we’re gonna book that new time, so hopefully you’re okay with that.

Lylan:
Let’s do it.

Jeffery:
All right. I love it. Okay. So rapid fire questions. How many companies do you invest in per year?

Lylan:
It has changed lately. Lately I’ve been more than ever. So let’s say 5 to 10 now.

Jeffery:
Perfect. What’s your favorite part of investing

Lylan:
the relationship with the CEO.

Jeffery:
Okay. Any vertical as you like to focus on,

Lylan:
I geek out on all things data and application of data.

Jeffery:
Likeit. I like data. Do you have any due diligence requirements that you like to do and make dive into first?

Lylan:
It is absolutely situational based on what the company does based on the company leadership based on everything that they do from B to B to B to C uh, what type of kpi s they have? Are they pre traction post traction? There isn’t a universal rule. If there was, I’d be sad about it.

Jeffery:
Okay, Timelines for investment

Lylan:
Depends on the stage of investment. If it’s a pre-seed deal, then we can make our decisions pretty darn quickly. Maybe a week or so if we’re talking about a $10 million check or even larger than it requires. More diligence requires more analysis. One thing I know that’s not a rapid fire answer, but I think it is timely and topical. Prior to covid, entrepreneurs could only take on three or four meetings a day with VCs because at the drive from one office to the next, or take the subway or commute in some way, things have changed now because so many of the pitches are done over Zoom, an entrepreneur can now meet eight or nine VCs in a day. As a result, it creates a much more competitive environment where in the past, where a VC would need to say to the entrepreneur, I really like what you’re building. Let me discuss it in our Monday partnership meeting. Now many VCs, we need to make our decisions same day or next day, and we need to be more agile in our decision making process. And we can’t wait till next Monday. If we believe that your company could get five term sheets from other peer firms,

Jeffery:
That’s a very good and valid point. I like it. Is there anything that you look for outside the CEO that’s really important in your deep dive paperwork, anything that really just sense of stage? You’ve got to have this in order for us to move forward,

Lylan:
So we have a big checklist. But one example is the strength of the entire leadership team, combined with the awareness of the holes within the leadership team at the early stage, you can’t have the perfect well around leadership team, but at least you can say Here’s what we’re here is what we are doing well. And here are the areas where we know we need to staff up at the senior level once we have the appropriate funds and they acknowledge those holes.

Jeffery:
Okay. Do you lead rounds?

Lylan:
Yes. Jeffery: Take board seats? Lylan: Yes. Jeffery: Percentage of follow up investments.

Lylan:
The dream is 100 because the companies justify it.

Jeffery:
Okay, preferred terms like, pref shares common shares?

Lylan:
Most deals over the last decade or so have been preferred. One x licked, and that’s very, very normal. But I’ve seen everything from I’ve seen forex participating preferred. That’s pretty aggressive, but the situation called for it. And I’ve seen situations where even getting one X liquidation was a challenge because the ground was so competitive,

Jeffery:
Interesting and fascinating. Any company that you want to showcase that you feel is really cool and exciting right now.

Lylan:
One company where I recently led an investment have a health. Their product is you could call it e cigarette or a vaporizer that is controlled by software to help people wean off of their addictions and first and foremost addiction to nicotine. And the best comparison I can use on the importance of this product is my mom, at 73 years old, recently stopped smoking and she was smoking three packs a day since she was 15 years old. Now that’s wonderful, right. Now, my mom used the patch to stop smoking, helped wean her off of the nicotine. My parents have been married for 49 years, every single day to my dad does something that annoys my mom and my mom every single day. Wanted to reach for for a cigarette because of the oral fixation, and so have a health addresses this. It gives the decreasing nicotine over time while also giving the person that’s the oral fixation satisfaction. Even if you consider the person who stopped smoking except for the social environment when they’re out for having beers, well, here again, that device can be smoked in that social environment instead of having to take in nicotine and potentially regain an addiction.

Jeffery:
Awesome!

Lylan:
Yeah. So massive Market. Sensational CEO. Ah, the hardware. I’ve tried it. It’s fantastic. Um, the app works great. All the right ingredients are there to build a multibillion dollar business and there are still many, many risks that the company must overcome but it has all the right ingredients. And that’s why I chose to lead an investment in the company.

Jeffery:
Brilliant. I love it. Okay, one last question. Then we’re gonna go personal for a second. So the last question we have is we like, for heartfelt stories. You’ve been working in venture capital for over 10 years, give or take everything that you have been doing and you’ve come across lots of different founders from that have gone through struggles or gone through winds or whatever to get to where they are. And I love a good story that kind of says, you know, this startup. She went through this to get to here, and we thought she was gonna fail, and she just rocked it out. And now she’s this big company, or whatever it might be. But just looking for one of those heartfelt stories that really shows, what entrepreneurs go through, it can be happy or sad. I’ve had some crazy stories. I’m not gonna lie like, um, blow your mind away kind of stories. But you can listen to all the podcasts and get those ones, but we need a meaty story. here something good.

Lylan:
I will not name the company.

Jeffery:
That’s cool.

Lylan:
I was diving deep to invest into a company that had two marquee customers and very little else in terms of revenue. As I’m digging in deeper and deeper into the company, I learn on my own without the company’s CEO telling me that one of those two marquee customers had a change in senior leadership. And for me, as an investor, that meant that the relationship between that marquee customer and the startup could legitimately be at risk. That was painful. That was painful to see. Because one I wish the CEO of the startup would have alerted me first and second, Um, what if the situation that already sounds bad gets worse and the company legitimately loses 50% of its marquee customers one out of two? That’s a challenging, challenging situation, and there was doubt because it wasn’t guaranteed that they were going to lose this customer. They might actually be in a situation to impress the new management and increase their revenue from this new management team. We had no way of knowing we had no way of guaranteeing that, and it’s different when a company has 20 customers and one customers at risk when there are only two marquee key customers. It’s a different challenge, and that was a very challenging situation that I still remember like it was yesterday.

Jeffery:
And what was the what was the outlook? What did what came about? What did you guys end up doing? What did they end up doing? And did it work itself out?

Lylan:
The company, um, ended up deciding that mhm how to answer this? This is when you’re going to need to edit my friend. Um, the company is still alive and well, and after a few hiccups, they’ve actually raise some capital from some prestigious investors, and they are now growing

Jeffery:
Perfect. That’s like the best story ever.

Lylan:
Yes, yes.

Jeffery:
Good.

Lylan:
And it brings me joy because I built a very nice relationship with the CEO, as an investor and CEO do. And now that I see that the CEO’s company is growing and scaling and raising capital and most likely bringing on more and more customers, I want to see the CEO succeed and be a multibillion dollar company.

Jeffery:
Well, it puts things into question in perspective and when you dive in, you start to question things. It may pull you away from it. And, you know, at the end of the day they were able to persevere. And I think that that’s the key is that they found out what the problems were, and hopefully they tackle them head on. And then they were able to get around that. And sometimes they probably had to go down before they went back up again. And that’s just part of the way that markets work in the business, right?

Lylan:
Absolutely. And if it was a smooth ride, then everybody would be doing it

Jeffery:
Feels like everybody is doing it. But you’re right. It’s not a smooth ride. It’s never easy. It’s a bumpy ride, and you’re gonna sink more times than you swim. So you just have to figure out how to get your water wings in there and just keep going. So all right, we’re gonna switch it just over to the personal side. Real quick. Um, so favorite sports team

Lylan:
Montreal Canadians.

Jeffery:
All right, It’s better than the trauma beliefs. So we’re good with that,

Lylan:
and I’ll go along with other sports Toronto Raptors, Seattle Seahawks, Toronto Blue Jays.

Jeffery:
I like the year Blue Jay Fan. That’s good. That’s good. All right. Favorite movie. And what character would you play in that movie?

Lylan:
Yeah. Favorite English language movie is Kill Bill Volume One.

Jeffery:
Okay.

Lylan:
Can you guess what character I’d want to play?

Jeffery:
I’m gonna have to make a confession. No, I have not actually watched kill Bill because I couldn’t get myself to get into the mode of watching it way back when it came out. And now they brought it up. My brain is like, I need to watch Kill Bill. So now I’m going to watch kill Bill. But I haven’t actually seen it.

Lylan:
Yep. So it’s not often that a man says that that he would want to play the role of a woman but Black Mamba

Jeffery:
Black Mamba, Alright.

Lylan:
And then in French, I have several, But I’ll go with L’auberge Espagnole. The English name of the movie is the Spanish apartment, and, uh, I forget the exact character, his name, but it’s the lead character. Um, and the experience is that he goes through in life learning his own identity, who he is within his friendship group. Uh, and how to treat other people well. It was as truly, truly beautiful. And for people who are not familiar with the movie and think Oh, just some random French language movie. Audrey Tattoo is in the movie and Audrey Tattoo, you’ve seen her in Amelie, Uh, and many, many other legendary movies that have been very successful in America.

Jeffery:
And how do you say the name again?

Lylan:
L’auberge Espagnole

Jeffery:
Espanol in his apartment. I will say that since I started asking these more personal questions, I have a lot of movies to watch, but I do find it. Uh, what I love about it is that when I find out who the character is, it really does define the person. And it’s quite amazing that the people that pick themselves as that from what I know of the person and the character they pick it totally is almost bang on. So it’s almost like you can envision yourself as playing that character, and then you have some of those roles. It’s not like they’re super action oriented, and man that kicks a, but so that’s why I want to be them. It’s just how they play the role. How they talk how they act and they interact, and you can see those elements in the person that you’re talking with. So I think that’s pretty cool.

Lylan:
I hope after you watch both movies that you associate me more with the main character from the Spanish apartment, then you do from the Kill Bill character. For me the Kill Bill Volume One, it’s the artistry of the movie. The combination of the acting, the scenery, the music come together so beautifully that it’s an enriched, not enriching experiences and all encompassing experience. You really get soaked into the movie and you want to see the quote unquote good guy, you know, female characterized. I know it’s an outdated, sexist term, but you want to see the good guy win.

Jeffery:
Love it. All right, Well, Lylan, I think that was brilliant. We’re going to do a version to You broke the record for the longest interview that I’ve done yet, So that’s why we’re doing a version two, because there’s so much more we’re going to talk about, but brilliantly done. And the way we like to end these is We like to give you the last word. So Whatever you feel that you want to share to investors or to start ups, we give you the last word. The mic, yours. Take it over. But again, thank you very much for your time today and really appreciated everything that you’ve shared as I always do. I took lots of notes, my note taking king on this stuff. But Big fan learned a lot. And thank you again for your time today.

Lylan:
My pleasure. My advice is to be kind to each other and not only during these challenging covid times, but even once we get past all of this, that kindness is something for life. Understanding that other people might be putting on a front or an appearance, that things are going great and they might crack once in a blue moon and understand that there might be more than meets the eye. That I’ve friends who confided in me some situations that everything looked great and then it actually wasn’t. And so don’t just assume that a situation’s wonderful with someone. If there’s someone you care about and it doesn’t need to be your BFF or a family member, it can just be someone that you know, a little bit, but you care for. And it’s okay to say is that you find your own way of articulating that I care for you. And if you need me for something, you know I’m here. Don’t be afraid. I’m not forcing this upon you, but I’m here for you. And that should happen. Not only during these covid times, but for life.

Jeffery:
Well shared. Brilliant. I like it.

Lylan:
Thank you, Jeffrey.

Jeffery:
Yeah. Thanks for your time. Fantastic.

Lylan:
My pleasure.

Jeffery:
Okay, that was honestly, that was great. Another fantastic interview. Big fan. Loved all the things he’s done. You use so many different ways that, uh, tie everything together and yeah, from all the companies he’s worked with being in venture side. All the VC experience the things you need to do in order to kind of get VCs interested and excited about you. Some of his background even talk about, but from IBM to Microsoft, he was an umpire. Uh, yeah, he’s got a lot of cool things. So, uh, really worth to listen and really enjoyed the analogies and how he delved into the V C side and the things that they look for and how important the CEO really is. And the team behind that CEO. Thank you guys. Peace.

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