Business Angel, Venture Capitalist , and Executive Coach
Michel Lozeau | Business Angel, Venture Capitalist , and Executive Coach

"If your value is driven, you're headed the right way. If you're value-driven, just value-driven, you're bound to maybe fall at some point."

- Michel Lozeau

Michel Lozeau on failing fast and how he gets founders to recognize what “fail” means.

Talk Takeaways

Michel Lozeau joins (JP) Jeffery Potvin to talk about his experience as an investor, and as an executive coach. He shares his insights on failing fast and how he gets founders to recognize what “fail” means. Michel also discussed the value of making a plan and the equal need to pivot should the need arise. He also shared the best way to help coach early stage founders, addressed the misconception of what a board does, and shared his investment process.


Currently acting as Business Angel, Venture Partner and Executive Coach , I am a seasoned professional with 40 years of experience in Management, IT, and Business Transformation. For the major part of my career, I have had considerable experience in managing and growing professional services organizations.

Since 2002 I have served on multiple corporate Boards, and I have subsequently acted as an Angel Investor to provide seed capital to selected entrepreneurial ventures.

Specialties: Executive Coaching
Strategic Consulting
Venture Capital
Corporate Governance

The full #OPNAskAnAngel talk

Jeffery Welcome! Thank you for joining us, and the way that we like to start is, if you can give us a little bit more on your background. So kind of through your banking days to the coaching. There’s a lot of great things that you’ve accomplished. I’d love to learn a bit more about that and then share a little bit about what you’re up to today, and then one thing about you that nobody would know.

Michel: Well, if I answer the first part, I won’t have time to think about the last one so let me jump in. I raised- born and raised in Montreal, attended McGill University, a bachelor of commerce. It was with a concentration on information technology. So career number one, which lasted from ‘74, when I graduated from McGill, and ended in 2003. So it’s almost 30 years span was mostly information technology. I was a poor programmer, so I quickly became a boss starting with analysts, and then project manager, and eventually running these businesses of IT consulting. I worked for a company that’s today called “Accenture”, but when I was there I had a different name, you know, Anderson, Anderson Consulting, et cetera. So I did ten years with Anderson, five years with Oracle, running services from Toronto, for all of Canada, and at the beginning and the end of this career, I was in financial services my first job was with a Royal Trust Company which, you’re too young to know was bought by Bengal Montreal because the royals and the Montreal’s crosses. You know, Bank of Montreal bought World Trust, and the Royal Bank bought Montreal Trust. So..

Jeffery Oh okay.

Michel: It’s just, it’s an x. It’s crossed. So I started my career there running, programming portfolio management systems. So as you can see I had always two interests technology and finance, and after working for Accenture, for private companies, and Oracle, I eventually joined the bank again. So I joined National Bank of Canada, where I was an executive, reporting to the CEO. This was 2001 now and I was in charge of what they called e-commerce. This old thing which 20 years ago the banks thought this was the next best thing to slice bread, so it took them a while to recruit me but at the end, they gave me all of the channels like call center, all of the alternative channels, call center, web, stuff like that, and also payments and Mastercard. So the job became interesting enough that I took it but it lasted two years and then I said that’s it for career number one. And since then, I’ve done two things which are different. Don’t cross each other, they don’t merge. I do executive coaching. All industries, all functions. The only folks I haven’t coached are priests and rabbis, and I think that’s because they have their own coach but I’ve coached-

Jeffery Or it’s coming.

Michel: No, it’s coming. Yes, hopefully. So I’m in the last 19 years, I think I’ve coached close to 125 people, and next to that, I’ve fell into a career of angel investing and later VC. I fell into it naturally. One of the first things that I did when I left career number one other than learning coaching was taking a board education, board member education. UFT did their first session in Montreal at McGill university and I was part of that cohort number one that was taught by the UFT people. Teaching how to be a board member, so I got that certification and so naturally some friends of mine, running portfolios of startups said, “Well, we need more of these independent directors because we’re tired of setting of all the on all the boards that we own shares in.” So I started 1 board, 2 board, 10 boards, and eventually somebody said, “You know, do you know somebody that could invest in this startup?” And I looked at it and said “Well, yes. Me.” So that’s how I put my hand in. (inaudible 4:22), as we say in French, this piece where it will grab your hand in until it’s you’re up into the, your shoulder. And so, one startup became 2, 3, 4, and eventually, I decided I wanted to go live in Europe. So I did that. I didn’t sell us these investments because they’re not sellable but I stopped investing for a while when I was living in Paris but when I came back I just went at it with revenge. So today I have 15 active investments in these startups. 5 of which I’m on the board, 3 of which I’m chair of the board, and etc. And in parallel, I met some people that asked if I would be interested in working with them in a VC fund, Toronto-based, Canadian VC fund, it’s called Framework Venture Partners, and so I’ve joined them as a venture partner which means I don’t work 60 hours a week like them, but I covered deal flow for my neighborhood here, Quebec, and I’m also active as a limited partner with them. And I’m also, this is where the coaching kicks in as well, I do, before we invest in portfolio companies in this in this fund, I do a profile, a human profile of the founders, and you know, that’s part of our it becomes part of our investment memo of why we’re doing this deal. And we share, of course, the info with the founders and later most of the time, we also do it for the whole executive team. Where, you know, we look at gaps for the team, and we look at lessons that we can learn on how this team can work better. So that’s where I am today you know, doing 60 days of skiing in the winter, 70 rounds of golf in the summer, and around that you know I positioned some work doing some coaching assignments, and some angel investing. I’m also on the board of Ashkebic. I’ve been active there for the last five six years and quite involved.

Jeffery Amazing! Absolutely amazing! You’re like the sensei, I love it. All the things that you’ve just talked to are absolutely brilliant. So one thing about you that no one would know?

Michel: That I’d never, again, I know everybody knows everything about me but let’s say something that you wouldn’t suspect you know. I write books. You know, people know because if you write books you want them to know but in general, people that work with me in business would not know that I’ve written a book of short stories that’s been published and I’ve written two other books that I’ve published myself. One of which deals with 11 of my coaching clients. So it’s not natural for a business person to also be to have some literary activities. So that’s- let’s consider a good answer.

Jeffery That’s a great answer. I love it, so you’ve got lots of passions, do a lot of great things, and you write books. Man, full rounded. I love it. Yeah absolutely brilliant! So-

Michel: I like wine and might play guitar too but not as not as good.

Jeffery As they’re all great attributes as well. Well there was a bunch of things that you talked about and that I’ve learned through. I’ve watched a couple of your videos. I saw, I haven’t read your books yet but now that I know you have books, I’m going to find them and I’m going to read those as well. But what I really wanted to dive into is that you know, in all of the interviews and podcasting that we get to do, there’s a couple areas that we don’t always get to touch on and I think that you really exemplify how this actually should be looked at and that is on your executive coaching and of course, on the board seats. I think that one they’re both two underrated components that don’t get a lot of love in the environment and especially don’t in early stage companies because well, founders obviously don’t have maybe the mindset, the dollars, or the ability to be able to work on that. But you’ve been able to take that and drive that through framework ventures, and a lot of the different pieces that you do work in which is amazing. So maybe we can kind of step back into how that banking experience and all the things that you’ve had throughout time, how that actually got you into that executive line of coaching? And maybe we can, well, while we’re kind of exploring that, come up with like, say if there’s 1 or 2, 3 things that you like to share that you’ve learned to the founders that can help them start to think about how they’re going to build this new venture going forward.

Michel: Yeah. Well, the link between the IT career and the coaching, is not natural. So some coincidence in life. So when I quit my last job at National Bank, you know, I was wondering what else to do with the rest. I was 50, so it’s not over. So through the golf club in Montreal, I had met this person who was an industrial psychologist and he became a friend. So before leaving the bank I, you know, I asked him advice on how to leave the bank properly and what to do next, and, but I had noticed that he also had a subsidiary of his company because his company was interested in career transitioning. So he was helping people who got fired find new jobs but he had started this other outfit which was doing executive coaching and sometimes when I was calling him, you know, they would say, “Oh, you can’t talk to him. He’s in a coaching session.” So that’s kind of, I was curious about that. So you know, so when I asked Bob that’s his name and what to do next. I asked him you know, what’s this thing, what’s executive coaching? He said, “Well, we’ll get to that later. Let’s see what you’re good at.” And at the end of the exercises and the testing, he said, “You know what, you know coaching, you might be good at that too but even though I own this company, I don’t decide who gets the coaches.” This person Julien, he’s the guru. “So go see Julien, and if Julien says you can coach, then you can coach.” So that’s how it happened. But in reflecting on my past, in my careers, and that’s an exercise that Bob had me do, I noticed that at Anderson Consulting, Accenture, as well as at Oracle, there were periods where we were asked to do human related stuff. You know, whether it’s with, what’s his name, the guy who wrote the Seven best.. “Seven Habits”. Yeah, Seven Habits. I was trained in Seven Habits at Anderson, became a black belt of that. So that’s kind of a coaching human nature thing that I did there at Oracle. It was another guru but we had, so I noticed that I enjoyed the human aspect of being a boss. So to me it became a natural that coaching other persons to be better human beings, better bosses was a lot of fun. So I adhered to that career and that’s how I made the transition but I must tell you the first summer that I told my golfing friends I was doing executive coaching, they said, “Ahahaha”. You know, they thought ‘he’s looking for a job’ but the next summer, “What are you doing?” “Coaching.” “You’re still coaching? Oh, tell me more,” and I converted five of these as clients. Not to coach them but coach people that work for them so that’s the transition. Now, what do I- what would I tell founders, what I tell everybody is that in angel investing or early stage investing, the most important thing is the founder or the co-founders. And even if their project is not quite right, they will figure it out and they will pivot. So the human qualities and especially the values of these people are key, and it’s no coincidence that Peter Mizek, who started Framework Venture, when he called me first to ask me if I would work with him. Right away he said, “You know, the reason I want you Michel is not because you know tech and you know investments. It’s because you’re a coach, okay?” And he wanted that in his team. So and also routinely at Framework Venture each and every one of our CEO in our portfolio companies, we assigned them a coach, okay? And it’s not me because I would be in conflict. You know, I’m an investor, but we have a number of coaches we use in the US and in Canada to coach our CEO. So we believe in being side by side with them to help them do the right thing at all times. So the human being, the leaders, is the most important thing and if they’re smart, it’s a plus. You wouldn’t invest in them if they weren’t smart but more important the smart is ethics, and values, and the resistance, you know buoyancy, okay? Falling is not a problem, coming back up is what counts, right? And learning, making mistakes, you got to fail fast, you know, but learn fast don’t make the same mistake twice because then you’re not learning. But if you make no mistakes, you’re not going to progress and if you apply that to the people that you manage and you don’t allow them to take risks, you’re not going to grow, you’re not going to create something tremendous of global value. So you have to allow them to fail. You have to leave them space. So that’s probably the second thing I would tell these people but usually these founders they know that. Later on, what I would have to tell them is maybe they have to leave their seat because if they’ve been successful at growing it so much, they’re probably going to be bored in the role that it takes now to keep it growing at a slower pace and-

Jeffery More of an operational role.

Michel: Yeah, exactly. Exactly. You know, we have hunters and farmers and you can’t exchange them, and they have people good at climbing, others diving, some at spending money, and others that not spending money, cutting costs, and but we don’t like those so much in our industry. You know, we like to be on the upside.

Jeffery For sure. No, that’s awesome. So I like that the fail fast, and the grow and learn, and make sure you take the risks because the risks are going to give you the rewards and if they don’t you’ll re-pivot and you’ll figure out where to go next. And you hear this a lot on fail fast, can you describe a little bit more what you mean by fail fast? Because I think a lot of the time we don’t even realize we’re failing and we’re kind of just keep going back to the same well thinking that something’s going on but really we failed and we should just pivot or we should change the mindset. So how do you get founders to recognize what a fail means and what that looks like at least from a high level perspective? So that they can keep this in mind as they build and risk.

Michel: So when you’re in the hole, you have to stop digging but the question is how do you know if you’re in the hole? Well, usually if you’re accompanied by people of structure you will have a (inaudible 15:37) that you’ve put on the table, and that plan has milestones, and targets, and KPIs. So you will realize if you’re hitting them or not, right? If you’re hitting them and not recognizing that it’s not always the fault of the environment, COVID, or someone else but that maybe has something to do with you or with the business model, then you know, you recognize and and then you pivot. So it’s awareness. It’s the same as in coaching. The first step of coaching is knowing yourself. If you don’t know yourself, you can’t go anywhere. So when you’re a business leader, you have to be aware, you have to look at the signs, and you have to be humble and realize that this grandiose vision that you had it’s not happening. And so next vision or version of the vision, but so smart people realize that and they have to be detached from their pride. You have no ownership of the thing and if someone else has a better idea you have to be welcoming of other people’s ideas as well.

Jeffery I like that and the humble part and kind of being aware. I think it makes a lot of sense and value for that founder. I think you’ll- they’ll realize those once they realize who they are. They can start to see these things as they’re in that hustle and that pivot and being part of a plan makes a big difference, and you’re right when you start to get to a level playing field and things are getting boring, how do you kind of ramp that up? What type of risks are you gonna be taking? We have a startup and they said to me the other days like, “If you gave me 10 million dollars, I don’t even know what I’d do with it.”

Michel: Right.

Jeffery And I was like, “Okay, well, that’s something that we need to talk about. We need to do that because you’re in a good spot but 10 million dollars would do a lot of things for businesses.” But in their mind, they weren’t able to shape that because they didn’t build that next plan. So now his whole plan was, “I need to build this plan and that’s what’s going to get me to move forward.” So I think that having that plan really makes a big difference and how do you see that plan shifting from that pre-seed, pre-revenue, how do you keep them motivated to keep shifting that plan to get to that series A?

Michel: Yeah, absolutely. Well, I’ll start the other way. I’ll start that framework and I’ll tell you what framework once we’ve invested in a portfolio company, and then in the first month, we do what we call an atomic growth framework. We sit down with them, roll up the sleeves, and we figure out the path between now and 100 million dollars of revenue. And we figure out what that path mean for each one of these executives with milestones. Not to say that this is what will happen over the next three years, it never is but before you can change a plan you got to have one. So you have to document your plan, okay? Now, if I go to the earlier stages, I don’t think we could do that because it’s too early. I mean you don’t know what you don’t know yet. So the plan that you have is less detailed. It’s more of a vision. It’s not totally clear but you have a direction and you have big dreams. You know, I see so many decks. You know, I see hundreds of decks per month and you know, you get bored of seeing these hockey stick financials. I mean after the first year, 18 months, you know I don’t care what’s right of that of that column because so many things will change. So I’m not as intense in asking them to have detailed plans beyond 18 months but the first you know, 18 months should be pretty clear as to what you want to try, and also clear in terms of which triggers would tell you that it’s not happening, and that you need to rethink the plan. So it would be a different type of plan. If I take an analogy between planning and control, you know, if you’re general electric, the world is plan and control. You know, you plan your budget, you inject resources, you inject talent, and then you control, and it happens. But if you’re a startup, you can’t do plan and control, you need to do sense and react. If you try to use plan and control on a bicycle, and you would say, “Okay, I’m on the ground. Step one: I put my foot on the pedal. Step two: I push as if I release the other foot.” You’re gonna crash, man. It’s not gonna happen this way. It has to be sense and react. So you have to sense that you’re going to the left, you have so that startup is sense and react. It’s not plan and control.

Jeffery So with that sense and react, what I love about that analogy is that, that means that in the early stage, the founder really needs to be in the weeds. They really need to understand their business and sometimes, I think a lot of the founders after they get that first round of funding, they try to, they get pushed. I think to kind of step back and be this planner and be this guru of something that they don’t know what’s going on. When in fact they should be really enthralled inside of the mix and learning exactly what’s going on and trial and error and figuring it out until you can get to that stage, and maybe it’s series A is that stage but so you can work through all of those problems, so that you know it better than anybody else on your team because the only consistent factor in an early stage company is you or the co-founder. Everything else can change in an instance.

Michel: Agreed.

Jeffery So if that person isn’t in understanding that and baking that process in that happens later, which is as you further grow up then your sales becomes repetitive and automated. If you don’t have that knowledge, it’s just going to keep failing all the way through and you’ll never get to that end goal which is as you said, building in that 100 million dollar atomic plan. You’re not going to get to build that because you’re not able to sense and react quick enough.

Michel: Exactly. You have to be close to the ground. Yeah, you can’t be in your tower. For sure, but you were asking before you know, how it is that I get to be involved on the board. It’s the structure of the way I get involved. I mean, Hajj Quebec has a structure and it’s part of the term sheet that says from day one even before the term sheet. We tell them that if this works you will have on your board two of our angels. It’s not an option, right? And later on of course it’s never an option if you see reason beyond that’s going to happen but some startups sometimes you find they say, “No, no. The board is three people. It’s us,” and we, but for angels it’s not acceptable. It’s a no deal if you don’t want us on the board. At least at Hajj Quebec. I don’t know everywhere else but so that’s why it’s forced and the difficulty then on our part is to find the right people, and but we’re working on that very seriously. We’re doing our strategic plan at Hajj quebec. It will be delivered to our board on May, May of this year. And you know, we’re making some very it’s angel version 3.0 now. We’ve skipped from one to three and it’s really quite a change in the processes and we’re really maturing. I think we’re already one of the best angel groups in the world but this time we’re giving it another notch.

Jeffery No, I like that and I’ve been following along with you guys and what you’re doing at Hajj Quebec, and I’m excited to be chatting with your newest CEO of Hajj Quebec in June.

Michel: Genevieve?

Jeffery Yes, yep. Very excited I went through her profile and I was like, “You guys locked- rocked in a rock star,” like she has an incredible background. So very exciting.

Michel: I was part of the group that picked her so I’m quite happy that, you know, and I was the interim CEO, and so I was eager to find somebody, you know, pretty quickly but not to say that we botched a job you know we were very lucky to find that person that was available at that point. Young woman on top of that and great experience in the investment business. So yeah, you’ll have-

Jeffery Huge, huge.

Michel: You’ll have a good interview with her for sure.

Jeffery No, very excited. Yeah and like I said, great background. I thought she would be a huge fit for kind of the changes that you guys were implementing too and where you’re going with Hajj Quebec, and we’ve had multiple discussions but basically excited for what you guys have been doing. So very cool. Now to kind of transition a little bit, but maybe, so the coaching thing I think is really amazing how it allows for you to work with the startups, educate them, help them feel a little bit more comfortable in what they’re doing, which I actually think would help those startups really adapt quicker and faster because you have methodologies, you have a way to interact with them. They’re going to kind of look at you as I mentioned earlier as that sensei because they don’t understand a lot of these moving parts and how entrepreneurship works. It’s their first, maybe second company, if they’re lucky, but they probably never had this type of mentorship or coaching. So I think that that really defines how this business can have some success but now you kind of are going to shift into this board position, and I’d like to explore more about how: one, how you got into the board side? You took a course on it, you got all the credentials on that which again I think is phenomenal. Very few angels or VCs go through that process. But I think it carries again a lot of weight because I think there’s such a misunderstanding of what a board is supposed to do for a company-

Michel: Oh, you bet.

Jeffery -and it’s unbelievable. It’s almost like a group of people that don’t hang out that are on a piece of paper that are accountable to all of the investors that don’t share anything that don’t really talk about anything, and you kind of wonder is this just a picture play but what really is the ‘meat and potatoes’ of why these are here. And maybe you can start by just sharing that because I think you would educate a lot of people on what’s the point of the board, and how do you form one?

Michel: Well, the typical CEO of a startup thinks a board is a- is there to control them on behalf of the shareholders which is a mistake. I mean the board is there to help them but there’s that’s the fundamental problem of perception of what the board is. The other flawed perception is that the board is just a networking platform. So you want on your board, according to this theory, you want the people that can bring you the sales because they have access to the market. Wrong again, okay? So what the board is of course, legally, it is the entity that hires the CEO or fires the CEO. It is the entity that approves the strategy, okay? It doesn’t make the strategy, okay? The saying is nose in, fingers out, okay? So you have to smell everything, you have to be aware of everything, you have to approve orientations but you’re not running the company. They are but you’re there to show them the fences to question, you know, to ask difficult questions and to make sure the shareholders are protected because that’s your duty. But you’re also not only reporting to the shareholders, but you also now with the… with our laws, you’re also responsible for the other stakeholders whether they’re suppliers, whether they’re the community, you know. It’s the root the legal system makes it now that your responsibility is beyond just responsible for the shareholders. So but that’s the theory that’s governance and that’s what you learn at school but if you’re coming back to the startups, they- what they have to understand is that you’re there to make them grow, to give them directions, and support because if you have the right experience there you will you will agree with the pivoting, okay? It won’t necessarily cause it because it has to come from management but you will be with them, hand in hand going through the implications of that pivot.

Jeffery I love it and that’s a great explanation. And I love that you took it from this sales funnel and turned it into the fiduciary responsibility of what is actually occurring inside of this, and how it not only benefits the shareholders but it actually benefits the CEO of the company, and keeps that business in line to the direction that the CEO is setting. And I’m going to use this line for from you forever because I think it just knocks it out of the park: ‘nose in, fingers out’.

Michel: Yeah

Jeffery Yeah. I love that because that’s really what you’re doing, right? You’re going in, you’re taking this overview of what’s going on in this plan.

Michel: Yeah.

Jeffery And you’re not in there to do the work, you’re not in there to write the plan for them, but you’re coaching them to get to that stage where it’s something that’s applicable and executable, and then go out and test it. And then again go back to your coaching side, if they’re not in the right spot, and they might, right- the business isn’t going down that right framework, then you can get in there and make, “Hey, it’s not working.” “You might not see, you’re digging a hole right now but you’re digging one. It’s time to get out and kind of get above water here.”

Michel: Yeah, yeah. There can be some factual holes like that one but the coaching part from the real coach to the CEO can also be helping on keeping the head reasonable size. You know, what happens when your CEO gets a term sheet a year from now, with I don’t know 200 million dollars of value for his company, okay? There’s an exercise there in having them live with that, right? And maybe rejecting it because that’s not the end game yet, right? As an investor, you have to agree with the founders that’s what’s the end game, okay? If your end game as an investor is 100 million and your CEO is 25 million, you’re not aligned but you have to start this discussing that from day one, and then you have to deal with the emotional side. You know, some people are at 200 million I mean they now think they own the truth but unfortunately, as we’ve seen multiple examples in the world, you don’t necessarily own the truth, and the truth changes. Yeah, that’s the problem. What used to work in the 50s, don’t work much these days.

Jeffery Oh, exactly. And sometimes what goes up does come down so-

Michel: Exactly.

Jeffery -a lot of founders don’t always see that and we were talking about that a little bit at the beginning where you know they’re working in the weeds, they’re working hard, and then all of a sudden they get that first amount of money. It’s almost they sense the blood and then it happens and then that’s where the CEO starts to shift and gets more, I think more out of the business but also not balancing enough of what the opportunity is on the table, you know. It’s kind of like, ‘I was driving a chevette and now I’m driving a lamborghini’, and I forget that I still have to run and operate a business that was able to contribute to all of these factors, and I think sometimes it’s that gradual learning as you go so that you don’t hit bigger pitfalls because you become out of the weeds and you forget what your business is really about. So I can see where there can be a lot of faults that grow if the founder isn’t coached along those ways just so that they can balance out that and still put the same hustle into what they’re doing every day, regardless if they’re 200 million or 2 million.

Michel: Yeah, you know, there’s a big difference between ‘value’ and ‘values’. And if your value is driven, you’re headed the right way. If you’re value driven just value driven, you’re bound to maybe fall at some point. The best people that I’ve coached are those that are driven in their job by a sense of accomplishment which touches directly their values. I’ll give you an example, you know, I was coaching ahead of sales for a pharmaceutical and when he wakes up in the morning, goes to work, he’s curing people. The drug that he was selling was an organ replacement, you know, type of drug that keeps the pain away when you’ve plugged in a new heart or whatever. And so what he’s doing is not reaching quotas with his team of 12 salesmen. What he’s doing is helping people not suffer, so that’s being value driven and you can find that it doesn’t have to be health related. You can find that in society in many, many places, you know. Impact investing with some of my companies: ed tech, you know. Trying to make students more, you know, more performant whether it’s through tutoring or whatever. If you’re goal driven that relating to your personal human values, you will do the right thing at all times. But if you’re only worried about the dollar sign, at some point you might not go in the right direction.

Jeffery Things can pivot for that in that your mindset for sure and go the opposite end of the spectrum. When you talk about driven, which is obviously the passion, can you find that in the CEO when you first meet them? Does she or he, does it stand out right away and you’re like-

Michel: I can. I can. I don’t know if everybody can, but I can.

Jeffery What are they? What are the signs? What do you look for?

Michel: It’s hard to say, you know. You’ll see it when it’s there but you know, of course, you need intellect, you need to see it in the eyes, but you see it in the body language as well and of course, you look at their past but you just have a frank discussion of what is it that they’re looking for in life. And if they haven’t thought it out, that’s not a good sign. So and it’s not a question of age, right? Sometimes they’re really young but they know what they’re there for, they know what they want to accomplish, and it starts from within them. If they’re trying to make it mimic some Elon Musk or whatever image they have, then it’s not sincere. I mean just you’re just trying to be a copycat of something. “Oh, I want to start this new marketplace.” “Okay, I’ve seen two dozen this week.” So they need to be original, and innovative, but it has to start from their heart and their values really. That’s where you see the passion.

Jeffery Yeah, I like it. Perfect! Well, I think we’ve, I guess, just to end up this board positional side of things, maybe just to summarize, is there three things that stand out that you would say when you should get a board? Is it seed, pre-seed, series A, and outside of when you should get a board? How do you compensate for it? What do you recommend for a compensation? And three, how much time do you think people should put into that board? Meaning if they’re on the board. And the last one is, what are two things where you think somebody has outgrown the board?

Michel: Well when, if you’re doing the three f’s, you know, friends, families, and fools. That’s probably too early. Then the board is you and daddy, but as soon as you take some external investors that are not in your family, I think that’s the right time to start having a board. Maybe it’s three people at that time and then, of course, if you do angel investing the structure will take you there. How do you compensate the board? We don’t have one fast and set rule at Hajj Quebec about remunerating our board members. Certainly the founders don’t need their remuneration. In general, the angel group does not like the idea that their angel representatives are going to be compensated on the board but it’s not forbidden, and if it’s happening and I have about a mix in my companies, most of the time I’m not compensated. But if I am, it’s never going to be cash, right? So it’ll be some options or some scheme of phantom shares or whatever. But if then, if we do take an independent because usually we have two founders, two angels, and one independent, then you know you have to give him something. He’s not an investor so he’s not going to spend all of his time for free so then you have to have compensation for this person. How much time? How much effort? You know, typically, of course, at least one meeting per quarter, so four meetings a year, but on top of that certainly an annual planning which is more of a half day or more. And then you got to be ready maybe one more around budgeting time, so instead of four you’ve got to be thinking 6, 7 dates, and the work is not only drawing that, of course. You gotta, you have to do the reading. There’s nothing worse than a board where the CEO is reading you a deck that he didn’t have time to send you because he finished it at midnight last night, you know. You have to have the material a week ahead and everybody’s read it and we’re not going to go slide by slide. We’re going to concentrate on the issues that we haven’t resolved and we have to try and answer the questions that you do have you the CEO of us and vice versa. So it’s got to be productive exchanges.

Jeffery I like it. That’s awesome. Okay-

Michel: And you had one on outgrowing? Who’s outgrowing who in your question?

Jeffery When the board, when you should be changing the board.

Michel: Ah! All along, all along. Obviously, it happens naturally. I mean the new set of investor comes in and says you know, ‘if I’m putting in 10 mil in your company. I’m going to be on the board.’ So naturally just the investment cycles will bring new persons at some point, of course, the founder, one of the founders has to step back and we don’t need two founders for 10 years, right? So it evolves but it evolves naturally.

Jeffery No and just to summarize, I think those are great responses. I think, you know, if you’re looking at that probably earlier on, maybe 4 to 6, and then it’s going to grow 6 to 8 times a year with a half a day of planning. Maybe once or twice, you’re gonna focus heavily on working the board, I guess, with the CEO planning weeks in advance, getting material out, and then I think the biggest one is that making sure that you have targets. That you’re building things to grow inside of the business so you have somewhere to go.

Michel: Yeah, absolutely.

Jeffery And on the, and I guess, now we’ll kind of take that and transition into I love getting a little bit of a storyline. I think we’ve learned a lot today but is there a story that kind of just really encapsulates all the years that you’ve been investing in startups and you just had this one startup that just really blew your mind away. You couldn’t believe this was gonna happen. They just somehow pulled a cat out of the bag and they made it work. They were going to fail or they were going to win or something. Just some heartfelt story that really shows what it takes to be an entrepreneur.

Michel: There’s many stories, of course. Many many stories of pivoting, and almost failing, coming back, and there’s, of course, stories of good exits. You know, my best exit until this year I was chair of that company and I got hired to run the board because there was dissension among the investors and the first thing I had to do was fire the CEO. So in that case my role had been hiring the CEO. And then the CEO looked around the investors and said, ‘Okay, I need another million or whatever it was to get this company going.’ And the investors were tired and said, “Nah, you’re not getting any more money.” So the CEO said, “Well in that case, I’ll buy the company and I’ll do it.” And he says, “Michel, do you wanna buy the company with me?” And I say, “Yeah.” So that was my best exit and in that case, I you know, I was kind of earning it because I picked the CEO and I invested the company, okay? Second example is totally the the opposite. I mean I just invested as an angel. The- usually we do lots of work in due diligence, right? In this case there was no due diligence, why? Because we didn’t finish the job as angels not we didn’t get to the due dil that a fund from the US and put in a term sheet, and then the c- the founder said, “Well, I have my term sheet,” and so I let the group of angels, I sat on on a phone call with the investors in the US, and I asked this this fund if they had a report to share with me on due dil and said, “No, we don’t do that. We know the space, and we like the company, and here’s the money.” Okay, so it looks quite disorganized but if you fast forward has been a couple rounds since then, it’s the biggest exit that I’ve never seen. And it’s happening right now, and it’s like a 30x type of thing, and which is unbelievable. So a couple weeks ago I spent the afternoons distributing about 30 million dollars to 15 people and you know, it’s not the money. It’s the achievement of having helped a company grow big, grow really big. The entrepreneur was surrounded with good advice. It was a nice space and all the circumstances of the perfect storm the right way, you know. And someday the story will be public and we will be able to share all of that but two different stories but

Jeffery Two good outcomes.

Michel: Two good outcomes and, of course, we won’t talk about the other outcomes but you learn from each and every one of these outcomes.

Jeffery Yep, no that’s pretty exciting. And I like the fact that someone took a risk without having all the material but just had a hunch if this was the right one.

Michel: Absolutely.

Jeffery Not a bad hunch for that US venture partner.

Michel: Exactly.

Jeffery And I think that comes down to that, maybe you can call it velocity investing which is where I like to go, which is you know you gotta hunch get in behind it and make sure that there’s some other great partners investing that want to take a deeper role in supporting and helping but jump in and go quick.

Michel: Absolutely, don’t let an opportunity pass. Yeah.

Jeffery Well, some great stories. We’re going to now jump into our rapid fire questions. So these are the questions that you were doing your homework on which is great. All right, so you kind of talked a little bit about this one so-

Michel: Yeah.

Jeffery How did you get started in investing into startups?

Michel: Yeah, from boards to becoming and you know, somebody asked, “Can you invest in it? Do you know somebody that can invest?” And that’s how I did it. Yeah.

Jeffery I love it. Why do you invest?

Michel: I love innovation and technology. I enjoy helping entrepreneurs build something that’s new and exciting, you know. Sometimes we refer to that as the shiny object, a new shiny object. It makes me dream of how we can make the world better with new stuff, right? So that excites me. So reading decks. I love reading decks of new ideas. I get bored with some decks because some are just trying to the same recipe all the time but if it’s really innovative, it gets me going.

Jeffery What’s your favorite part of investing?

Michel: Dreaming the future and then reaping the rewards but dreaming the future is even more fun than reaping the rewards.

Jeffery I like it. How many companies do you invest in per year?

Michel: 3 to 5 myself and around 5 with the fun framework venture. So total of 10, maybe.

Jeffery You’re breaking the average, I like it. Any verticals you like to focus on?

Michel: Fintech, impact investing, anything sas, yeah.

Jeffery Okay, do you have any due diligence requirements that you look for before you make a commitment?

Michel: I don’t know with one answered before, you know, yeah. In Hajj Quebec, we have a formal process and, of course, an even more formal process at framework but you know, there was this one instance where there was no due dil and it still worked out at that point. But normally, that’s not what you would require you know. You can’t say go in blindly but there’s something and I mentioned before we are revamping the processes at Hajj Quebec, and one of the things we’re looking at is shortening the time, and it’s complicated because you’re dealing with volunteers you know. Some of these people have jobs so you have to draw a process where there are clear milestones and clear expectations of what need to be accomplished by to speed that up. And you have to to know where to stop as well, okay? Stop digging. I mean you have the 80% rule you know, pareto. Go. You’re not investigating GE, you know, and it’s not a nuclear plant. I mean it won’t be perfect. It’s a startup so-

Jeffery Yep.

Michel: You know and the people that ask financial plans to the cen- for the next 18 months. Come on this is not going to happen. Yes we need a budget but you got to stop somewhere.

Jeffery Agreed, and timeline? You mentioned, you’re changing it. What is the typical timeline for yourself or for any of the venture groups you’re part of?

Michel: Probably 8 weeks is a good number for 8 to 10 weeks for a startup. If you’re going series A, B, maybe it’s 12 to 16 but if you’re really nimble and agile, you can still do it in 6, 8 weeks, I think even if it’s a larger deal.

Jeffery I like it and you talked about a couple of these things indirectly, but what other dd materials do you look for that fit outside of your typical paperwork and things like that around the teams-

Michel: Yeah, it’s a human side. That’s why I get involved and I have a test that I- a questionnaire that I apply to them it’s called (inaudible 46:53), it’s from france because I, that’s where I picked it up but it’s like an MBTI on steroids. If you want, you know, myers-briggs that sort of thing. So it’s a profile, it tells you what makes this person tick, and what do they enjoy doing and not enjoy, and you have to if you do it for the team then you can see gaps. So of course, yeah the human side you need to understand the human side and the values. I mentioned it several times already so you need to get a sense for their values.

Jeffery I’m going to have to get you to send me that I’m going to take it. I don’t know if I want to share the results but I would love to take that test.

Michel: I’ll send it to you. I’ll send it to you right after.

Jeffery I love it. Okay, do you lead rounds?

Michel: Yeah, angels typically lead rounds and framework, we are always lead or co-lead.

Jeffery Yes, okay. Do you have preferred terms that you like to invest in?

Michel: Well, if for the angels preferred shares is I think is preferred but when we do safe kiss convertible adventures. I mean the whole, I mean there’s certain circumstances for each one of these, yeah.

Jeffery Agreed and you do follow on investments? And what percent?

Michel: Well, as an angel I’d say it’s almost 100% because you don’t have the discipline to- that a fund has now. If you’re the fund of course, you’ll reserve and then after a while, okay, you will reserve money for half of the investments you’ve made and maybe even less because you have the discipline to do that and that’s it’s a machine at that stage. But for angels, you know, the tendency is to protect your investments. Maybe not right but you’ll put in more money because you don’t want to lose the first one. If you’re fund you’re, you know, you don’t have that sensitivity and you’re doing it with the numbers. So as an angel, yes, probably too many times too long, you followed too long.

Jeffery I like it and you did answer this but taking board seats. How often is it? I’m assuming it’s pretty quite common then.

Michel: It’s quite common but not for all angels and that’s one of our issue is, to find enough people interested in and dedicating themselves to taking these board seats because that’s where the value is in that, you know, our motto at Hajj Quebec is “(inaudible 49:06)”, which is invest but to invest yourself as well. So all of our members are subscribing to that motto but there you know not everybody is quick on saying, “Okay, I want to spend a lot of my time doing this.” So we have to resolve that and we have ways in which we’re working now with our plan to get more angels to get involved properly because that’s a critical part of what we’re bringing.

Jeffery I agree and to that you pretty much answered the next question, so I think what we’ll do, just based on time, so we keep everything aligned. I’m going to, we’re going to jump into the personal side.

Michel: Oh.

Jeffery Yeah. So that I don’t- we don’t talk about this one. We leave this one right to the end so we get out all the good stuff.

Michel: Okay, surprise me. Yes.

Jeffery So on the personal side, first question, what’s your favorite sports team?

Michel: I don’t watch sports.

Jeffery Ah okay!

Michel: I would say Canadians but they’re losing all the time so-

Jeffery Well being that you’re from Montreal, I’m gonna let you take Canadians because someone has to be cheering for them because you’re right. They’re not doing very well this year.

Michel: But my son’s favorite team was the Maple Leafs for a long time because we did live in Toronto for a while. So he picked it up.

Jeffery Okay, fair enough. All right, favorite movie and what character would you play in the movie?

Michel: That stuff, so many good movies. Oh, what.. that’s a tough one. Okay, I’ll say a series. I’ll say the “Sopranos”.

Jeffery Okay.

Michel: Oh no, what character? Oh, I want to be his wife [Laughter].

Jeffery Tony Soprano?

Michel: Tony soprano’s wife.

Jeffery Tony Soprano. I actually never watched the series. So I’ve watched like little tidbits of it. I think one day, I’m gonna have to go back and watch this series but I’m gonna write that down. I don’t know what her name is but I’m gonna dig into that and find out what her character is like. Very cool, okay. And then the last question is, what is your superpower?

Michel: I read minds. [Laughter]

Jeffery Oh! [Laughter] All right.

Michel: I read intentions. That’s what’s important.

Jeffery Nope, I agree. I don’t know if I want to ask but what am I thinking right now?

Michel: I can’t do that with Zoom. You have to be in my presence. [Laughter]

Jeffery [Laughter] All right, fair enough. Fair enough. Oh that’s good. Well, those are some great skills I’m gonna have to check out the movie. It’s a great superpower to have and outside of that Michel I want to say thank you very much for all your time today. I can say that even though I try, I say this all the time. I’m trying not to take notes but I do. I can’t help it. I’m old school that way. I just like writing down things you’re saying. There’s a lot of great stuff there. I learned a lot. I think the community is going to learn even more with everything you’ve shared today. I guess, one last thing before we do transition out is, how do people get a hold of you if they’re looking to get in touch with you? What’s the best way? Linkedin?

Michel: Everybody will find me on Linkedin.

Jeffery Done, we’ll make sure that happens. Outside of that, we like to leave you with the last word, Michel. So anything you want to say to the entrepreneurs, or to the startup community, or to the investors. I leave it to you but again, thank you very much for all your time today. You are awesome.

Michel: Just say to them, follow your heart. Can’t go wrong.

Jeffery Done. I love it.

Michel: Thank you.

Jeffery Thank you very much again for your time today!

Michel: Pleasure!

Jeffery Okay, that was fantastic with Michel. Man, so many takeaways: their atomic plan to make mistakes, correct, pivot, fail fast, coaching, and what the best way to help coach early stage founders, the board seats, putting those together, how you remunerate the people that are on that board. But just lots of great details. Really enjoyed that conversation. So I implore you to like, share, tweet, all that good stuff but all of them are all over here. But thank you again for joining us and thank you very much Michel for being part of our Ask An Angel Podcast. Have a great day!

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