Episode #5 How to Attract Investors w⧸ Guyverson Vernous, founder Educode.ca
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Summary
In this episode, I sit down with Guy, the founder of EduCode, to talk about his journey to becoming a successful entrepreneur. Guy is a Haitian immigrant who started EduCode in 2017 and has since raised over $5 million dollars in funding. In this episode we talk about the challenges that entrepreneurs face and how to deal with them.
Transcript
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Essentially, anybody who wants my advice, I always say yes, but they just got to agree to be on camera.
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I sat down with Guy, the founder of EduCode, and as you'll see from the beginning, it was really tough to kind of figure out how I could be helpful.
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So as an entrepreneur, you really want to make sure that you're clear on the specific thing you need help with when you sit down with an advisor, mentor,
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and then we finished off about some strategic decisions
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that he's gotta make about how he grows his company
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over 2018 because he's got some big ambitious growth ideas
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So what are we doing today I don't know anything you want I'm here for you man
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okay congrats on the press release by the way the press release yeah the press
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release went out Friday really about you I mean your team's doing their job I
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didn't even know that yeah I was good about Haitian immigrant starts education
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company I was really okay okay that's good yeah that's good yes you know I
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always like to ask people what would be a 10 out of 10 at the end of our
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conversation like what would you hope to get out of our talk you know doing
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business being an entrepreneur it's it's kind of a funny word mm-hmm but all the
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implications really to do something and then you with success so hard I don't
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know maybe we could could spend some time talking about that just about the
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struggles the struggles and and yeah you know there's two main things I need I
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Not every, I mean it's easy for us to think about,
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You've got a business, you're trying to grow it,
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what are those problems that are showing up right now?
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But it's not, this is funny because money is not really the problem.
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He said what entrepreneurs really need is resourcefulness.
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And I believe in that because when I started this initiative with 17 employees,
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With all that money I had to spend, my challenge is going as fast as I can to deliver the product.
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Because it's for the future of our kids. 2018, we'll make at least $5 million in two
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years of operation. And 2020, only 25% of kids in Canada will have $30 million. And
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I invested all my company, that's why I said resources, resourcefulness.
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I don't go out there, I have an idea, please give me money.
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And I don't plan to do that if I can keep going and make my business fund itself.
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But I'm saying if it will take me like three years to get all my content ready to go to
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us and europe um with an investor spending one year and they have everything ready and make more
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money very very quickly yeah that would be fine but if no one is trusted so so what's your job
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you haven't you like i'm sitting here waiting for like what's the channel you say that that's
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your challenge but i'm not what's the question what can how can i help okay based on what i said
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how can you help me maybe you you don't understand fully i know but well it's not about that it's
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it's just like asking me, it's honestly, as an entrepreneur, it's lazy for me to ask somebody
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else how they could help me. It's like saying, Hey, let me know if you can ever, if you ever
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need anything. It's a lazy thing to do that I never do. I never say to somebody like, Hey,
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let me know if I can ever be helpful because it's lazy. You're better off saying, here's the things
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I know about you. Can you help me with this specific thing? If you email your investors
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or your advisors or whoever and say, Hey, I need help. And they go with what? And you say, I don't
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know, what do you think you can help with? What do you think the response is going to be? So we
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don't want to do that. I think, is it fundraising? What is the challenge? Going back to the first
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question I asked you, what is the problem? Like whatever your challenge, I've built companies,
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I've invested in tons. So I can go wherever you need me to go, but I don't want to leave here and
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then know that I didn't answer your question. Listen, I need more team to complete all my
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content to deliver yeah I have 17 people I'm spending 51k yeah so I don't feel
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like spending more than that this is you want to raise money I want to raise
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money to to go faster perfect do you want to talk about fundraising why not
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okay well I mean I don't know cuz you in the same breath and this is a concern
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you say well I need to raise money but you're like I don't know if I want to
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let's make that decision we can talk about should I or shouldn't I do you
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want to do you want okay let's let them do it on should i or shouldn't i or raising money let's
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let's talk about raising money here's the thing is investors want to see a return as much as
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there's the why there's the passion there's the energy around the business an investor needs to
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see that this is going to be a path to a return the whole con right it's an angel investor it's
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not an angel it's not an angel giver right it's not a non-profit but you know i think a lot of
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people think that. I think that entrepreneurs are like, you know, why doesn't, why don't people see
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my vision? It's like, well, you haven't communicated the economic language and it's not wrong. It
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doesn't mean that they're assholes or like they're trying to take advantage of you or they don't care
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about the bigger mission. It's just you, they're looking at 15 deals. Like the way I think about
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it is if you talk to an investor today, assume he's having 14 other conversations and somehow
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you need to stand out in that conversation. Does that make sense? So step one is how are they
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going to get their money out. That's the biggest fear every investor ever makes, is if I give you
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money, that I'll never get my money out. Not even get my, not make a return, okay? Make my, like,
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get it out of the business. I know a lot of people that think, well, I'm going to generate a return.
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It's like, it might be on paper. I know people that are in deals that on paper look good. They
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can't get any liquidity from that deal. So first off, it's got to be, you've got to present the
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timeline horizon. Like it's got to be a hundred million a year business in seven years. That is
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the beginning. When you're competing against everybody else out there, when you've got sites
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like AngelList, it allows any investor anywhere in the world that's an accredited investor to
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invest in some of the best technology companies in the world. This exists today, that didn't exist
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five years ago. You're competing against that. So what are you going to say? What's the narrative
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that gets your business to 100 million in five years, or seven years?
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No, it's a logical story of here's where we're at,
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here's why in seven years we're going to be a 100 million in your business.
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And logically deconstruct, this happens, this happens, this happens,
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We have a presentation, but I would only call it that way.
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Okay, so I would definitely work on a pitch deck.
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It's all about, like, you've got to assume, this is another thing that people make a mistake,
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is they don't realize that most investors don't know the market, right?
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I invested in a golf company, but before I invested, I didn't realize it was a multi-billion
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So it kind of helps me understand, like you'll have investors that don't understand how big
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So if nowhere is in your presentation, you say, oh by the way, how big is the market,
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Anything that's core to the world, food, shelter, education, is multi-billion.
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But what's the number? I don't remember the number, but the number is really real.
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I don't remember. The only thing that I know, based on research,
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and we're starting to crack it down and this is the next real big market.
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So maybe I'll actualize this research and give you the real number.
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If you think about investing, it's definitely, it's like everything else in business, it's a funnel, right?
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You have people you talk to at the top, you've got people in the middle that are kind of interested
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and then at the end you have the people that are going to give you a check, right?
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And so step one, and I call this the pre-marketing phase,
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like pre-marketing as like pre-marketing of the investment opportunity,
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Not, and this is the funny part, not to raise money, okay?
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So in raising money, like fruit, goes bad over time.
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If you come to see me today and say, I'm raising money,
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and I say, cool, keep me posted as you make progress,
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because you haven't even generated revenue really yet, right?
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If in two years you come back and say, hey, I'm still raising money, what does that tell me?
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The rest of the market, you either didn't accomplish what you did.
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So knowing that, there's a timeline to fundraising, okay?
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So there's literally from the first conversation you have with an investor to when you pull the trigger and say, I'm now raising, there's a timeline.
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I think it's more like six, maybe even more like four. Four meaning that you start and you finish
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and you have money in the bank within four months. You do not want to be out there for a year and a
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half fundraising, yet that happens quite a bit, right? But how do you start the process? So step
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one, it's a new world for me. I don't really know nothing about that. Perfect. Well, I've done it
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twice myself and I've helped a hundred other entrepreneurs do it. So like to me, it's, I can,
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you know, it's kind of like, it's like anything else. Sales, marketing, it's all, everything's
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a funnel. One is you got to make the list, right? So who are the investors that, so to me, the list
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is researching online and saying, who are companies like me? Who are companies in the education space?
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And then go find in the early days who supported them, right? It's a strategy. It's instead of
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going, like most people make the mistake of just saying, well, I heard Dan's an investor. I heard
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did. I've never invested in an education company. Well, that's not true. I invested in Udemy. So
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that, I would say that was my education bet, right? But, so that would be a good one. So you
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go to Udemy, you go to Treehouse, you go to all these new platforms, the, I don't know, these
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like university multi, you know, massive multiplayer, whatever they're called, the
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moogs or moogs. Yeah, the moogs. Who invested in those companies? That builds your hit list
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first part is making this list once you have the list and it's reaching out to
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them okay so reaching out to them is a 20-minute conversation about what
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you're doing how you're doing it what's unique about it are you raising money
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no soon as you say yes the timer starts that's how it works as soon as you say
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yes timer starts okay right yep soon as soon as I say are you raising money you
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say yes the timer starts if it's eight months from now and I say hey have you
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close your round and you say no, that's a bad sign, right?
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ask for money, get advice, ask for advice, get money.
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the person will convince themselves into doing the deal.
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Right, because now it's not your idea, it's my idea.
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So I always tell people to use big challenges going on in the business to seek advice.
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You don't want to like, you know, reach out to somebody and be like, oh, I don't know how to hire somebody.
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It's like, well, you're going to have bigger issues than that when you build the business.
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That's like you make the list, qualify the investors.
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I mean, this is no different than sales, right?
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Like, hey, I'd love to pick your brand about like.
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we're not sure if we should raise money or not, right?
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that you know how to get in front of investors, right?
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No investor wants to be the only person in the deal.
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Because they weren't capable of convincing anybody else
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it's not a big surprise that like things didn't work out.
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Ever since then, I've never been the only investor.
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we have all these people that are interested in the outcome.
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So you spend six weeks, all your time, the other thing is when you're raising everything
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else on your plate, what else do you do in a day?
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At work, sometimes I do developing too, because for my first company, IQ Media, otherwise
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it's really managing this company so okay all the other stuff you pretty much
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put on hold to focus on fundraising again yeah yeah it's like I don't think
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founders realize it a lot of them write code a lot of them manage product a lot
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of them are running the marketing it's like you need to plan to not be present
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because you're spending all your time networking to connect with investors to
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to reach out. I mean, and then, so one of the best ways to reach out to an investor is to email,
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and this is what I, you know, I kind of teach entrepreneurs to do is create a column of
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entrepreneurs that have recently raised from that investor to, and cold email them asking for advice
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on fundraising. Okay? So who do you know that's raised money in this city? Okay.
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I know a little bit about Boudreau, Yves Boudreau.
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So you look at Alongside, you look at their investors,
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And I always call it like one or two lines of awesomeness
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So just like, here's, and like brag a little bit.
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Most founders that have recently raised money from,
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Like if I just closed my round six months ago and I knew prior to that for six months I had people helping me and I get an entrepreneur, especially from the same city as mine, that actually is doing something and they want advice, the hit rate is almost 100%.
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On the call, if you do your job and you ask good questions and you listen, this won't work if you talk the whole time, just so you know.
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It only works if you have good questions and they answer them and they feel committed, ask for advice, get the answer.
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at the end they'll say something like hey this sounds really interesting let me know if i can
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ever be helpful okay if you get that then you write them in the spreadsheet that you have
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tracking all this stuff okay when i'm ready for the introduction to the investor i'm gonna get
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it what you want to do is you want to get all those conversations with entrepreneurs done
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so that um when you're ready to start meeting with all the investors you want to do it very
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like compressed you don't want to meet an investor now and then meet another investor in a month
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You essentially want to do all your entrepreneurial meetings, get them all excited about your
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business, have the opportunity to circle back for them to say like, you know, hey, how can
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Then you circle back and say, hey, Eve, I noticed that Jerry was one of your investors.
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He's somebody that's on my list of people because of these reasons.
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Here's the copy to use to make the introduction.
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hey, Guy, do you mind making introductions for me?
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You start it, and you're like, you know you gotta do it.
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she wanted an introduction to a really important company
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Copy, change some things, tweak it, personalize it,
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But if you would've made me sit there and be like,
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I don't know what's amazing about their company today.
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if you don't tell me those, like, awesome lines of greatness,
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and trust me, he'll copy, paste, tweak it, whatever,
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I remember one time we were raising for my company, Flowtown,
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and there was this really notable guy named Peter.
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but he was a real big fan of what we were doing.
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to say this other guy that you know of made introductions for me here's the language he used
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like yeah you know what i mean so so like there there's really cool ways of of just kind of like
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building process around it to make sure that you get what you need but it's like everything else
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like you have a funnel you have people that do stuff some people won't do the intros but that's
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why i do two entrepreneurs per investor so i always get an introduction okay i just need one
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of them to do it. There's this great saying that investors don't want to meet you, they
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want to be introduced to you. Right? That's true. It's so true. They don't want to meet
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you. They want to be introduced to you. They want to, if you can't get somebody else that
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they know and that, that is vouched for you to do the intro, then it says something about
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the entrepreneur. Right? That resourcefulness. Yeah. Right? Yeah. That's the beginning. I
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mean it would take me a day to unpack the rest of it but if you just did that if you if you did the
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work of like identifying the investors figuring out who they recently invested in emailing those
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entrepreneurs to get advice on the fundraising process the rest of it would kind of figure
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itself out because they would tell you right build a real pitch deck and there's enough
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information on the internet to like really and i've got video if you search dan martell pitch
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deck there's i have videos on it um that'll get you there because the cool part is a lot of people
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don't do this. They don't know. So you'll stand out just by doing it. Does that help?
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Very helpful. The second thing maybe, because I start to understand how you're helping
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me by speaking, is how do you restructure your company? Because right now we are in
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process of transition of growth I would say. I start to feel a little bit lost
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the way I'm gonna restructure everything from 2018 because 2018 this
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company will be totally changed because I kind of know what's gonna happen in
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terms of new clients and new reality. So this is where I feel a little bit lost. How do
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you structure a company, your marketing team, you should be the CFO.
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Yeah, I really need to get some piece of paper to show you stuff. I mean, here's
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the way to think about it. And this is true for any business, right? When you plan the
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year at the beginning of the year, usually I plan in December for, you know, like 2018.
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So my team flies in in December, and we plan 2018.
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There's the where you're at today and where it's going to look like at the end of the year, right?
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So it doesn't matter, like, I understand that this feels like a big change, and it is,
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but this process should be a yearly thing anyway.
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And unfortunately, this city doesn't have a whole lot.
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And if I went in and audited their business, it would be embarrassing.
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Some of them are lucky that they have great margins and great business and they have a history, so they keep taking orders.
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But if the market actually shifted and had to compete, they'd be in a lot of trouble because they don't have this kind of process.
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What are the key changes on a, like, systematic process for changing things?
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It's really tough to come into a business and say,
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today we look like X and tomorrow we look like Y, right?
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It's going to cause a lot of confusion and it's just, it's harder to do it overnight.
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People move offices overnight because they hire, like, a moving company.
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And it's like, okay, on Friday you went to this work and on Monday we all go to this new building.
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But to say, like, roles are going to change, the things that are your priorities are going to change, I'd much rather say, at the end of the year, we're going to be done the transition.
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Here's the big pieces that need to transition, right?
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And break it down into, you know, it could be departmental.
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And then those are the themes per quarter, right?
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And what you do is you kind of set the org chart.
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So this is, for me, is really important is here's the functional org chart, okay?
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And if you have two businesses, in your case, this is what I would do is I would have the current business, the new business, the current business, the new business.
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So essentially what would happen in those two org charts is you'd have names on both right now, right?
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And at the end of the year, there might be names on both, but most of them will shift over, okay?
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So it's kind of like a visual of like, here's the org structure, here are the different people in those positions, but there's this other one that at the end of the year is going to look like this, but we need to figure out who are the people from this side that are going to end up over here, right?
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But you can do that on a quarterly basis, right?
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So you could say Q1, first quarter, is, let's call it marketing, right?
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and the person who leads marketing can understand it.
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but we can't also have this other thing just die.
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Is that the concern, is that you have this other business
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that this old business is going to maybe, like...
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But we have somehow a functional structure, but I want to go, I know I can't keep going
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So I need to restructure that new business, not the whole.
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You're just saying the current business doesn't work.
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I didn't want to use that word, but if you want, yeah.
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I mean, it's funny because just as a side, in my weekly meetings with my team, I have
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a category called issues, but they're not issues, but they are issues in the sense that I need them
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to get used with the word issue. Okay. You know what I mean? Like I specifically call them issues,
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even though they're opportunities, they're announcements, they're standard things we're
00:26:58.540
doing, but they go under the issues list because I need our team to feel okay talking about things
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as issues. Okay. Right. So you may not want to call it to fix it, but it doesn't really matter.
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Yeah. Yeah. So same process. Here's where you're at. Here's where you need to be.
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I think one of the challenges, are you clear on what it needs to look like?
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Yeah, it's clear in my head, in my mind, the way I want it to.
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I'm just saying you've got to draw it out, org structure, right?
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You know, the role of a CEO is really make sure you don't run out of money,
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If you know that there's a difference in the way the team's going to structure
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their work at the end of 2018, you need to start communicating that today.
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okay, these are the departments that are going to get shifted first, right?
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I mean, at the lowest level, I just use a piece of printer paper, and I just, like, draw December 2017, December 2018, draw a grid, break it up into four, and that's my quarters, and then say, okay, what are the big rocks, big pieces that I need to figure out to make this transition?
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Well, first is I need to be clear on what it looks like.
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Most people make change when they don't know what it's supposed to look like.
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then break it apart into the different quarters
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But here's the thing is when I do this with companies,
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one of the challenges you gotta ask yourself is
00:28:52.820
So before even communicating that with the team,
00:29:08.800
Like when you start selling a $100 million a year vision
00:29:18.420
Like that's why the investors are giving you money.
00:29:20.300
They're not giving you money to do what you've been doing,
00:29:23.200
you've been doing things to get a higher growth curve, right?
00:29:25.860
Like your curve's like this, you're gonna have 3x growth
00:29:34.200
So when you look at that org chart at the end of 2018,
00:29:38.120
with that capital, you gotta build a people plan, right?
00:29:45.060
in what quarter and how that can affect top line revenue
00:29:47.780
or bottom line revenue or production or development, right?
00:29:53.860
like there's always the people side of the business.
00:30:00.200
So design the people structure, work backwards,
00:30:03.240
and then figure out who needs to get hired when.
00:30:06.580
Payscale.com is a great site for giving you a sense of
00:30:18.420
here's how I'm gonna deploy your capital, right?
00:30:22.740
All of them at the end is something called use of funds.
00:30:28.420
So if you show them a compelling vision of year one,
00:30:35.840
they're gonna know that you've been thoughtful about it.
00:30:40.820
They wanna know that the person's thinking, right?
00:30:43.660
Cause it's just, if they've been doing it for a while
00:30:48.660
You get burned when people are just like overly excited
00:30:51.700
about this small little piece of traction they have today
00:30:54.240
and they think it's gonna explode into the next big thing.
00:30:57.600
Most don't, and they actually go through the valley,
00:31:02.660
It's just, it's horrible, but that's where the magic happens,
00:31:06.320
if they're willing to grind through that valley
00:31:13.580
That's the sad part, is nobody's supposed to succeed
00:31:33.600
Really glad to chat and I appreciate you doing this.
00:31:56.600
So, it's kind of one-on-one about raising money, but I will need more.
00:32:04.520
I know it's pretty busy, but I'll need to do my job on that.
00:32:09.060
The second thing is about how do you restructure your company, how do you do all the planning
00:32:13.680
process if you're in a transition phase, all of that, so really that was so helpful.
00:32:20.600
He has a lot of experiences in building companies and so and so.
00:32:26.340
I thought if I can have him for 30 minutes, I would have a lot.