Dan Martell - Episode #5 How to Attract Investors w⧸ Guyverson Vernous, founder Educode.ca

00:00:00.000 We're doing a new kind of video series thing.

00:00:03.000 Oh, fantastic.

00:00:04.000 Essentially, anybody who wants my advice, I always say yes, but they just got to agree to be on camera.

00:00:08.000 Oh, good.

00:00:09.000 Yeah.

00:00:10.000 Fantastic.

00:00:13.000 I think you'll enjoy this episode.

00:00:15.000 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.

00:00:22.000 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,

00:00:29.000 anybody really they got questions for.

00:00:30.880 We talked about fundraising

00:00:32.140 and kind of the three phases of that

00:00:33.620 specifically around pre-marketing

00:00:34.960 and then we finished off about some strategic decisions

00:00:37.440 that he's gotta make about how he grows his company

00:00:39.400 over 2018 because he's got some big ambitious growth ideas

00:00:44.240 so I'm sure you're gonna find this really fun.

00:00:46.360 Hey.

00:00:47.680 What's up, Geek?

00:00:48.520 How's it going, man?

00:00:49.360 How's your spot?

00:00:50.180 I ran into Dale downstairs.

00:00:51.540 Oh, sorry.

00:00:52.380 Yeah.

00:00:53.380 Did you say sorry for running into Dale?

00:00:55.500 I don't know.

00:00:56.340 That's funny.

00:00:57.180 So what are we doing today I don't know anything you want I'm here for you man

00:01:05.400 okay congrats on the press release by the way the press release yeah the press

00:01:11.700 release went out Friday really about you I mean your team's doing their job I

00:01:16.620 didn't even know that yeah I was good about Haitian immigrant starts education 0.63

00:01:23.160 company I was really okay okay that's good yeah that's good yes you know I

00:01:29.460 always like to ask people what would be a 10 out of 10 at the end of our

00:01:31.800 conversation like what would you hope to get out of our talk you know doing

00:01:36.720 business being an entrepreneur it's it's kind of a funny word mm-hmm but all the

00:01:43.020 implications really to do something and then you with success so hard I don't

00:01:53.700 know maybe we could could spend some time talking about that just about the

00:01:57.840 struggles the struggles and and yeah you know there's two main things I need I

00:02:09.360 I think entrepreneurs really are struggling.

00:02:14.960 What do you need?

00:02:16.320 What I need?

00:02:17.160 Not every, I mean it's easy for us to think about,

00:02:19.240 I think other entrepreneurs probably are going

00:02:20.720 through this too, but what do you need?

00:02:22.160 What does Guy need?

00:02:23.300 You've got a business, you're trying to grow it,

00:02:25.820 you've been at this, you know what I mean?

00:02:28.200 Like if you could just wave a magic wand

00:02:29.800 and have the problem solved,

00:02:31.320 what are those problems that are showing up right now?

00:02:33.240 My company need external funding,

00:02:37.760 But it's not, this is funny because money is not really the problem.

00:02:45.760 I feel that there's one motivator.

00:02:50.300 He said what entrepreneurs really need is resourcefulness.

00:02:55.600 I think it's Tony Robbins who said that.

00:02:57.880 Yeah, totally.

00:02:58.600 And I believe in that because when I started this initiative with 17 employees,

00:03:06.280 With all that money I had to spend, my challenge is going as fast as I can to deliver the product.

00:03:17.560 There's a lot of, how do you call that?

00:03:21.100 I'm Francophone, as you know.

00:03:22.600 I'm trying to find words.

00:03:24.640 You can say it in French.

00:03:25.800 Angel investors?

00:03:27.880 Yeah.

00:03:28.200 Okay.

00:03:29.020 Why should an angel investor give you money?

00:03:31.400 Not giving me money.

00:03:32.820 Invest.

00:03:33.380 Why should he?

00:03:33.880 Because it's for the future of our kids. 2018, we'll make at least $5 million in two

00:03:44.340 years of operation. And 2020, only 25% of kids in Canada will have $30 million. And

00:03:55.380 I don't talk about US, Europe.

00:03:57.380 Do you know what angel investors look for?

00:04:00.380 Maybe I don't know.

00:04:01.380 You don't?

00:04:02.380 I invested all my company, that's why I said resources, resourcefulness.

00:04:09.380 I don't go out there, I have an idea, please give me money.

00:04:12.700 I never did that.

00:04:14.840 And I don't plan to do that if I can keep going and make my business fund itself.

00:04:21.560 But I'm saying if it will take me like three years to get all my content ready to go to

00:04:30.340 us and europe um with an investor spending one year and they have everything ready and make more

00:04:37.140 money very very quickly yeah that would be fine but if no one is trusted so so what's your job

00:04:44.260 you haven't you like i'm sitting here waiting for like what's the channel you say that that's

00:04:47.700 your challenge but i'm not what's the question what can how can i help okay based on what i said

00:04:53.460 how can you help me maybe you you don't understand fully i know but well it's not about that it's

00:04:58.980 it's just like asking me, it's honestly, as an entrepreneur, it's lazy for me to ask somebody

00:05:03.620 else how they could help me. It's like saying, Hey, let me know if you can ever, if you ever

00:05:06.940 need anything. It's a lazy thing to do that I never do. I never say to somebody like, Hey,

00:05:13.460 let me know if I can ever be helpful because it's lazy. You're better off saying, here's the things

00:05:17.500 I know about you. Can you help me with this specific thing? If you email your investors

00:05:21.920 or your advisors or whoever and say, Hey, I need help. And they go with what? And you say, I don't

00:05:26.400 know, what do you think you can help with? What do you think the response is going to be? So we

00:05:30.200 don't want to do that. I think, is it fundraising? What is the challenge? Going back to the first

00:05:35.640 question I asked you, what is the problem? Like whatever your challenge, I've built companies,

00:05:39.840 I've invested in tons. So I can go wherever you need me to go, but I don't want to leave here and

00:05:45.000 then know that I didn't answer your question. Listen, I need more team to complete all my

00:05:50.660 content to deliver yeah I have 17 people I'm spending 51k yeah so I don't feel

00:05:56.960 like spending more than that this is you want to raise money I want to raise

00:06:00.620 money to to go faster perfect do you want to talk about fundraising why not

00:06:07.100 okay well I mean I don't know cuz you in the same breath and this is a concern

00:06:10.820 you say well I need to raise money but you're like I don't know if I want to

00:06:15.420 let's make that decision we can talk about should I or shouldn't I do you

00:06:19.200 want to do you want okay let's let them do it on should i or shouldn't i or raising money let's

00:06:25.640 let's talk about raising money here's the thing is investors want to see a return as much as

00:06:30.840 there's the why there's the passion there's the energy around the business an investor needs to

00:06:35.240 see that this is going to be a path to a return the whole con right it's an angel investor it's

00:06:39.640 not an angel it's not an angel giver right it's not a non-profit but you know i think a lot of

00:06:45.220 people think that. I think that entrepreneurs are like, you know, why doesn't, why don't people see

00:06:49.380 my vision? It's like, well, you haven't communicated the economic language and it's not wrong. It

00:06:54.300 doesn't mean that they're assholes or like they're trying to take advantage of you or they don't care 0.99

00:06:57.440 about the bigger mission. It's just you, they're looking at 15 deals. Like the way I think about 0.99

00:07:02.200 it is if you talk to an investor today, assume he's having 14 other conversations and somehow

00:07:07.340 you need to stand out in that conversation. Does that make sense? So step one is how are they

00:07:13.420 going to get their money out. That's the biggest fear every investor ever makes, is if I give you

00:07:18.480 money, that I'll never get my money out. Not even get my, not make a return, okay? Make my, like,

00:07:24.680 get it out of the business. I know a lot of people that think, well, I'm going to generate a return.

00:07:28.940 It's like, it might be on paper. I know people that are in deals that on paper look good. They

00:07:33.020 can't get any liquidity from that deal. So first off, it's got to be, you've got to present the

00:07:39.080 timeline horizon. Like it's got to be a hundred million a year business in seven years. That is

00:07:43.800 the beginning. When you're competing against everybody else out there, when you've got sites

00:07:47.920 like AngelList, it allows any investor anywhere in the world that's an accredited investor to

00:07:51.740 invest in some of the best technology companies in the world. This exists today, that didn't exist

00:07:56.700 five years ago. You're competing against that. So what are you going to say? What's the narrative

00:08:03.680 that gets your business to 100 million in five years, or seven years?

00:08:08.440 Uh-huh.

00:08:09.300 Do you have one?

00:08:12.220 I do have one.

00:08:13.740 Okay.

00:08:14.220 In terms of scaling up.

00:08:17.760 No, it's a logical story of here's where we're at,

00:08:20.560 here's why in seven years we're going to be a 100 million in your business.

00:08:23.940 And logically deconstruct, this happens, this happens, this happens,

00:08:27.920 and we succeed.

00:08:29.940 Okay.

00:08:30.700 And you may not have it, and that's okay.

00:08:32.340 Maybe I need to work on it, really writing it.

00:08:35.700 Yeah, write it down.

00:08:36.840 It should be a visual.

00:08:37.740 It should be in your pitch deck.

00:08:38.840 Do you have a pitch deck?

00:08:40.740 We have a presentation, but I would only call it that way.

00:08:44.520 Okay, so I would definitely work on a pitch deck.

00:08:46.820 Yeah, you need a pitch deck.

00:08:48.080 It's not a government fundraising deck.

00:08:50.320 It's not a bank loan deck.

00:08:52.880 They're very structured, right?

00:08:54.720 It's all about, like, you've got to assume, this is another thing that people make a mistake,

00:08:58.100 is they don't realize that most investors don't know the market, right?

00:09:03.660 I invested in a golf company, but before I invested, I didn't realize it was a multi-billion

00:09:08.420 dollar market, you know what I mean?

00:09:10.580 So it kind of helps me understand, like you'll have investors that don't understand how big

00:09:14.740 the education market is, right?

00:09:17.480 So if nowhere is in your presentation, you say, oh by the way, how big is the market,

00:09:21.820 do you know how big the education market is?

00:09:23.780 I forget, it's multi-billion dollar.

00:09:27.780 Anything that's core to the world, food, shelter, education, is multi-billion.

00:09:31.780 But what's the number? I don't remember the number, but the number is really real.

00:09:35.780 I don't remember. The only thing that I know, based on research,

00:09:39.780 they said every corner of our society

00:09:43.780 was being revolutionized.

00:09:47.780 The only one left is education.

00:09:51.780 and we're starting to crack it down and this is the next real big market.

00:10:01.060 So maybe I'll actualize this research and give you the real number.

00:10:08.700 If you think about investing, it's definitely, it's like everything else in business, it's a funnel, right?

00:10:13.260 You have people you talk to at the top, you've got people in the middle that are kind of interested

00:10:16.820 and then at the end you have the people that are going to give you a check, right?

00:10:19.660 And so step one, and I call this the pre-marketing phase,

00:10:24.420 like pre-marketing as like pre-marketing of the investment opportunity,

00:10:28.260 you have to talk to a number of investors.

00:10:30.840 Not, and this is the funny part, not to raise money, okay?

00:10:34.800 So in raising money, like fruit, goes bad over time.

00:10:39.140 If you come to see me today and say, I'm raising money,

00:10:42.120 and I say, cool, keep me posted as you make progress,

00:10:44.720 because you haven't even generated revenue really yet, right?

00:10:47.020 If in two years you come back and say, hey, I'm still raising money, what does that tell me?

00:10:52.860 There's a problem.

00:10:53.860 There's something wrong.

00:10:54.700 Somebody else said no.

00:10:55.900 The rest of the market, you either didn't accomplish what you did.

00:10:58.280 So there's a negative signal.

00:10:59.800 Again, it's like fruit, right?

00:11:01.020 It goes bad over time.

00:11:02.220 So knowing that, there's a timeline to fundraising, okay?

00:11:06.760 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.

00:11:14.080 Some people think it's 12 months.

00:11:15.780 Some people think it's nine.

00:11:16.760 I think it's more like six, maybe even more like four. Four meaning that you start and you finish

00:11:23.300 and you have money in the bank within four months. You do not want to be out there for a year and a

00:11:27.260 half fundraising, yet that happens quite a bit, right? But how do you start the process? So step

00:11:34.440 one, it's a new world for me. I don't really know nothing about that. Perfect. Well, I've done it

00:11:38.460 twice myself and I've helped a hundred other entrepreneurs do it. So like to me, it's, I can,

00:11:42.940 you know, it's kind of like, it's like anything else. Sales, marketing, it's all, everything's

00:11:46.760 a funnel. One is you got to make the list, right? So who are the investors that, so to me, the list

00:11:52.520 is researching online and saying, who are companies like me? Who are companies in the education space?

00:11:59.000 And then go find in the early days who supported them, right? It's a strategy. It's instead of

00:12:05.560 going, like most people make the mistake of just saying, well, I heard Dan's an investor. I heard

00:12:09.040 did. I've never invested in an education company. Well, that's not true. I invested in Udemy. So

00:12:12.800 that, I would say that was my education bet, right? But, so that would be a good one. So you

00:12:18.560 go to Udemy, you go to Treehouse, you go to all these new platforms, the, I don't know, these

00:12:24.220 like university multi, you know, massive multiplayer, whatever they're called, the

00:12:28.740 moogs or moogs. Yeah, the moogs. Who invested in those companies? That builds your hit list 1.00

00:12:34.820 of potential investors.

00:12:37.080 And now here's the other filter

00:12:38.120 about potential investors.

00:12:39.460 They've written a check

00:12:40.380 in the last 12 months.

00:12:42.320 I don't know if you've ever

00:12:43.440 talked to a customer

00:12:44.240 that kind of acts

00:12:45.020 like they're interested

00:12:45.640 and then they just drag you along

00:12:46.960 because it's their job

00:12:47.680 to act interested.

00:12:49.100 Investors will do

00:12:49.720 the exact same thing.

00:12:51.340 So wherever they're at

00:12:54.440 in their investment process,

00:12:56.060 you need to ask,

00:12:56.860 like you got to figure out

00:12:57.580 have they written a check

00:12:58.340 in the last 12 months.

00:12:59.780 Because if they haven't,

00:13:00.820 then you could be wasting your time.

00:13:02.520 Right?

00:13:03.200 So that's the first

00:13:04.800 first part is making this list once you have the list and it's reaching out to

00:13:08.640 them okay so reaching out to them is a 20-minute conversation about what

00:13:13.980 you're doing how you're doing it what's unique about it are you raising money

00:13:17.820 no soon as you say yes the timer starts that's how it works as soon as you say

00:13:23.920 yes timer starts okay right yep soon as soon as I say are you raising money you

00:13:30.600 say yes the timer starts if it's eight months from now and I say hey have you

00:13:34.140 close your round and you say no, that's a bad sign, right?

00:13:37.180 Yeah.

00:13:38.100 That is probably the most important thing.

00:13:40.520 And, you know, there's this great saying,

00:13:42.620 ask for money, get advice, ask for advice, get money.

00:13:45.580 It's asking for advice, right?

00:13:47.820 If you go in there asking for money,

00:13:49.560 you're gonna get advice on how to raise money.

00:13:51.880 If you go in there asking for advice,

00:13:53.700 the person will convince themselves into doing the deal.

00:13:58.160 Okay.

00:13:59.000 Right, because now it's not your idea, it's my idea.

00:14:02.220 See how that works?

00:14:03.040 So I always tell people to use big challenges going on in the business to seek advice. 0.98

00:14:09.040 That doesn't make you look like dumb, right?

00:14:10.700 You don't want to like, you know, reach out to somebody and be like, oh, I don't know how to hire somebody. 0.76

00:14:14.360 It's like, well, you're going to have bigger issues than that when you build the business.

00:14:17.760 That's just pre-marketing.

00:14:19.120 That's like you make the list, qualify the investors.

00:14:22.640 I mean, this is no different than sales, right?

00:14:24.340 Then you reach out asking for advice.

00:14:26.680 And they all know it.

00:14:27.680 I know it.

00:14:28.280 Investors know it.

00:14:28.960 Every investor knows.

00:14:30.140 Like, hey, I'd love to pick your brand about like.

00:14:31.760 And your advice could be like,

00:14:33.380 we're not sure if we should raise money or not, right?

00:14:35.880 So they'll take the meeting,

00:14:37.360 they'll give you 20 minutes,

00:14:38.340 and then they go, so are you gonna raise?

00:14:39.580 And say, well, we're not sure.

00:14:40.580 We're just, we get a lot of meetings,

00:14:41.640 a lot of conversations with people.

00:14:42.720 That's good for you because it shows them

00:14:44.360 that you know how to get in front of investors, right?

00:14:47.660 No investor wants to be the only person in the deal.

00:14:51.060 Every time I've lost money

00:14:53.120 in the very early days of me angel investing,

00:14:56.040 there was only one investor, this guy, okay?

00:14:59.580 Right?

00:15:00.340 Because they weren't capable of convincing anybody else

00:15:02.660 that it was a good idea,

00:15:03.520 but somehow I drank my own Kool-Aid

00:15:05.540 and I threw the money in

00:15:06.980 and then, you know,

00:15:08.900 it's not a big surprise that like things didn't work out.

00:15:12.600 Ever since then, I've never been the only investor.

00:15:15.380 Yeah.

00:15:16.420 All right.

00:15:16.760 And only because I think it's more fun.

00:15:19.220 I think it's more fun for you.

00:15:20.320 I think it's better for me.

00:15:21.220 I think it's better for the group to say like,

00:15:22.600 we have all these people that are interested in the outcome.

00:15:25.200 Yeah.

00:15:26.500 That's just on the pre-marketing.

00:15:27.940 So you spend six weeks, all your time, the other thing is when you're raising everything

00:15:33.860 else on your plate, what else do you do in a day?

00:15:37.180 Family, that's the most important thing to do.

00:15:42.180 At work, what do you do?

00:15:44.180 At work, sometimes I do developing too, because for my first company, IQ Media, otherwise

00:15:51.440 it's really managing this company so okay all the other stuff you pretty much

00:16:00.500 put on hold to focus on fundraising again yeah yeah it's like I don't think

00:16:05.480 founders realize it a lot of them write code a lot of them manage product a lot

00:16:08.240 of them are running the marketing it's like you need to plan to not be present

00:16:11.960 because you're spending all your time networking to connect with investors to

00:16:16.940 to reach out. I mean, and then, so one of the best ways to reach out to an investor is to email,

00:16:23.360 and this is what I, you know, I kind of teach entrepreneurs to do is create a column of

00:16:27.920 entrepreneurs that have recently raised from that investor to, and cold email them asking for advice

00:16:33.660 on fundraising. Okay? So who do you know that's raised money in this city? Okay.

00:16:40.540 I know a little bit about Boudreau, Yves Boudreau.

00:16:43.720 Yeah, so Kimpo.

00:16:44.920 Yeah, Kimpo.

00:16:45.880 Yeah, well, sorry, Alongside.

00:16:48.220 Alongside, yeah.

00:16:48.860 Yes, and I should know I'm an investor.

00:16:50.500 So you look at Alongside, you look at their investors,

00:16:54.680 you say, well, I would like this investor

00:16:56.180 to also invest in my company.

00:16:57.860 You put Eve's name on it.

00:16:59.280 If that's the most recent investment,

00:17:00.740 I usually put the most recent investment,

00:17:02.460 the entrepreneur, right?

00:17:03.960 What do you think Eve's email is?

00:17:07.260 I don't know.

00:17:07.740 It's eve at alongside.com.

00:17:09.780 Every entrepreneur, it's their first name

00:17:11.560 at 90% of the time, right?

00:17:13.600 So you email the entrepreneur and you say,

00:17:15.320 hey, you know, here's who I am.

00:17:17.060 And I always call it like one or two lines of awesomeness

00:17:19.340 and then three bullets.

00:17:20.680 So just like, here's, and like brag a little bit.

00:17:23.020 Here's what we are, here's what we've done.

00:17:24.800 These are the three lines, like three bullets.

00:17:27.920 We're unsure if we should raise money.

00:17:29.400 We've self-funded so far.

00:17:30.580 I noticed that you raised.

00:17:31.600 I'd love your advice.

00:17:32.760 Most founders that have recently raised money from,

00:17:35.340 like that have raised money,

00:17:37.080 they know that they did it

00:17:38.620 because other people gave them advice.

00:17:40.620 So they'll reciprocate.

00:17:43.180 It's kind of like the good karma thing.

00:17:45.320 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%.

00:17:58.980 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.

00:18:07.180 It only works if you have good questions and they answer them and they feel committed, ask for advice, get the answer.

00:18:12.220 at the end they'll say something like hey this sounds really interesting let me know if i can

00:18:16.780 ever be helpful okay if you get that then you write them in the spreadsheet that you have

00:18:22.640 tracking all this stuff okay when i'm ready for the introduction to the investor i'm gonna get

00:18:26.900 it what you want to do is you want to get all those conversations with entrepreneurs done

00:18:30.660 so that um when you're ready to start meeting with all the investors you want to do it very

00:18:36.620 like compressed you don't want to meet an investor now and then meet another investor in a month

00:18:40.680 You essentially want to do all your entrepreneurial meetings, get them all excited about your

00:18:45.980 business, have the opportunity to circle back for them to say like, you know, hey, how can

00:18:49.900 I be helpful?

00:18:50.900 Then you circle back and say, hey, Eve, I noticed that Jerry was one of your investors.

00:18:54.560 He's somebody that's on my list of people because of these reasons.

00:18:57.820 Would you mind making an introduction?

00:18:59.640 And this is the key.

00:19:00.640 Here's the copy to use to make the introduction.

00:19:03.640 Yeah, you write the email for him.

00:19:06.680 If you expect him, imagine I'm like,

00:19:09.340 hey, Guy, do you mind making introductions for me?

00:19:11.620 You start it, and you're like, you know you gotta do it.

00:19:13.780 You don't know what to say.

00:19:14.780 You don't know what you should say.

00:19:16.500 I had one of my clients recently send me,

00:19:18.680 she wanted an introduction to a really important company

00:19:20.560 in Canada, and she knows my style,

00:19:23.400 so she sent me the email.

00:19:25.220 Copy, change some things, tweak it, personalize it,

00:19:27.520 hit send, done, response within an hour.

00:19:30.180 But if you would've made me sit there and be like,

00:19:32.680 oh, man, I gotta do the intro,

00:19:34.560 what should I say, what should I not say?

00:19:35.960 I don't know what's amazing about their company today.

00:19:38.860 You know what I mean?

00:19:39.520 Like, if I made an intro for you,

00:19:40.800 if you don't tell me those, like, awesome lines of greatness,

00:19:44.900 I don't know.

00:19:46.200 And it could be amazing, right?

00:19:48.380 So it's like, give him the email,

00:19:51.320 and trust me, he'll copy, paste, tweak it, whatever,

00:19:53.540 make it his own.

00:19:55.800 I remember one time we were raising for my company, Flowtown,

00:19:58.420 and there was this really notable guy named Peter.

00:20:00.920 He wasn't even an investor,

00:20:02.900 but he was a real big fan of what we were doing.

00:20:04.640 and everybody knew who he was

00:20:07.340 because he had been like CEO

00:20:08.460 of two other really important companies.

00:20:10.220 So he was never the founder

00:20:11.080 but came in as CEO.

00:20:13.580 And one of the things I would do

00:20:15.160 is when people agreed to make the intro,

00:20:17.520 I would say, you know,

00:20:19.620 hey, thanks again for the call.

00:20:20.780 You mentioned if I ever need help,

00:20:21.920 I'm actually looking to connect

00:20:22.700 with this investor.

00:20:23.940 By the way, here's the language

00:20:25.520 that Peter da da da used.

00:20:27.460 Feel free to copy and paste

00:20:29.060 and edit as needed.

00:20:30.640 So it was like another level of proof

00:20:32.980 to say this other guy that you know of made introductions for me here's the language he used

00:20:38.380 like yeah you know what i mean so so like there there's really cool ways of of just kind of like

00:20:44.440 building process around it to make sure that you get what you need but it's like everything else

00:20:49.320 like you have a funnel you have people that do stuff some people won't do the intros but that's

00:20:55.180 why i do two entrepreneurs per investor so i always get an introduction okay i just need one

00:20:59.900 of them to do it. There's this great saying that investors don't want to meet you, they

00:21:04.140 want to be introduced to you. Right? That's true. It's so true. They don't want to meet

00:21:08.760 you. They want to be introduced to you. They want to, if you can't get somebody else that

00:21:12.120 they know and that, that is vouched for you to do the intro, then it says something about

00:21:19.060 the entrepreneur. Right? That resourcefulness. Yeah. Right? Yeah. That's the beginning. I

00:21:27.440 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

00:21:32.920 work of like identifying the investors figuring out who they recently invested in emailing those

00:21:38.080 entrepreneurs to get advice on the fundraising process the rest of it would kind of figure

00:21:41.360 itself out because they would tell you right build a real pitch deck and there's enough

00:21:45.740 information on the internet to like really and i've got video if you search dan martell pitch

00:21:49.520 deck there's i have videos on it um that'll get you there because the cool part is a lot of people

00:21:56.120 don't do this. They don't know. So you'll stand out just by doing it. Does that help?

00:22:03.920 Very helpful. The second thing maybe, because I start to understand how you're helping

00:22:08.840 me by speaking, is how do you restructure your company? Because right now we are in

00:22:18.180 process of transition of growth I would say. I start to feel a little bit lost

00:22:31.020 the way I'm gonna restructure everything from 2018 because 2018 this

00:22:35.640 company will be totally changed because I kind of know what's gonna happen in

00:22:40.680 terms of new clients and new reality. So this is where I feel a little bit lost. How do

00:22:50.140 you structure a company, your marketing team, you should be the CFO.

00:22:56.060 Yeah, I really need to get some piece of paper to show you stuff. I mean, here's

00:23:01.000 the way to think about it. And this is true for any business, right? When you plan the

00:23:06.000 year at the beginning of the year, usually I plan in December for, you know, like 2018.

00:23:10.320 So my team flies in in December, and we plan 2018.

00:23:13.640 There's kind of two...

00:23:14.720 I'm going to have to take notes.

00:23:16.300 Yeah, you can take notes.

00:23:17.860 There's kind of two parts to it.

00:23:19.680 There's the where you're at today and where it's going to look like at the end of the year, right?

00:23:23.100 So it doesn't matter, like, I understand that this feels like a big change, and it is,

00:23:27.540 but this process should be a yearly thing anyway.

00:23:30.240 Like, high-performing companies, okay?

00:23:32.720 And unfortunately, this city doesn't have a whole lot. 0.56

00:23:35.240 That's just straight up fucking honest. 0.70

00:23:36.940 And if I went in and audited their business, it would be embarrassing. 0.95

00:23:40.760 Some of them are lucky that they have great margins and great business and they have a history, so they keep taking orders.

00:23:45.060 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.

00:23:51.920 The process is, here's where I'm at.

00:23:54.060 Here's where I need to be.

00:23:55.920 This is what it looks like.

00:23:57.020 This is what it's going to look like.

00:23:58.640 And then work backwards on a quarterly basis.

00:24:00.940 What are the key changes on a, like, systematic process for changing things?

00:24:08.140 It's really tough to come into a business and say,

00:24:11.320 today we look like X and tomorrow we look like Y, right?

00:24:14.420 It's going to cause a lot of confusion and it's just, it's harder to do it overnight.

00:24:20.200 People move offices overnight because they hire, like, a moving company.

00:24:23.440 And it's like, okay, on Friday you went to this work and on Monday we all go to this new building.

00:24:27.340 That is a little different.

00:24:28.520 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.

00:24:38.420 Here's the big pieces that need to transition, right?

00:24:41.960 And break it down into, you know, it could be departmental.

00:24:45.820 So you could start with departmental.

00:24:47.060 So you could say, like, engineering.

00:24:48.440 You could say marketing.

00:24:49.280 You could say sales.

00:24:50.120 You could say operation and finance.

00:24:53.080 And then those are the themes per quarter, right?

00:24:56.340 And what you do is you kind of set the org chart.

00:24:58.780 So this is, for me, is really important is here's the functional org chart, okay?

00:25:03.580 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.

00:25:11.600 So essentially what would happen in those two org charts is you'd have names on both right now, right?

00:25:17.640 And at the end of the year, there might be names on both, but most of them will shift over, okay?

00:25:22.600 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?

00:25:36.800 But you can do that on a quarterly basis, right?

00:25:40.100 So you could say Q1, first quarter, is, let's call it marketing, right?

00:25:45.940 So in marketing, before and after.

00:25:48.580 What does the org structure look like now?

00:25:50.180 What does it look like after?

00:25:50.920 and design that so that there's a plan

00:25:54.660 and the person who leads marketing can understand it.

00:25:57.040 And look, it may not even take a quarter.

00:25:58.660 It could take two weeks, right?

00:26:00.380 But you probably have things like,

00:26:01.980 hey, we need to shift resources,

00:26:03.420 but we can't also have this other thing just die.

00:26:05.520 Is that the concern, is that you have this other business

00:26:07.260 and you're shifting to a new business?

00:26:09.960 Like, is one of your concerns

00:26:10.940 that this old business is going to maybe, like...

00:26:13.480 Not the first business.

00:26:14.720 I'm talking about EduCode,

00:26:16.480 because the way I started it,

00:26:17.980 But we have somehow a functional structure, but I want to go, I know I can't keep going

00:26:25.740 like that.

00:26:26.740 Yeah.

00:26:27.740 So I need to restructure that new business, not the whole.

00:26:28.740 Okay.

00:26:29.740 So you don't have to transition.

00:26:30.740 You're just saying the current business doesn't work.

00:26:32.240 You need to fix it.

00:26:33.240 Perfect.

00:26:34.240 I didn't want to use that word, but if you want, yeah.

00:26:36.740 Yeah.

00:26:37.740 Well, I don't know.

00:26:38.740 If it was working, you wouldn't fix it.

00:26:39.740 I mean, it's funny because just as a side, in my weekly meetings with my team, I have

00:26:44.300 a category called issues, but they're not issues, but they are issues in the sense that I need them

00:26:49.180 to get used with the word issue. Okay. You know what I mean? Like I specifically call them issues,

00:26:53.640 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

00:27:03.200 as issues. Okay. Right. So you may not want to call it to fix it, but it doesn't really matter.

00:27:08.820 Yeah. Yeah. So same process. Here's where you're at. Here's where you need to be.

00:27:13.000 I think one of the challenges, are you clear on what it needs to look like?

00:27:17.460 Yeah, it's clear in my head, in my mind, the way I want it to.

00:27:21.800 Okay.

00:27:22.160 Yeah.

00:27:22.740 But can you draw that out?

00:27:25.180 I guess so.

00:27:25.980 Yeah.

00:27:26.260 So draw it out at the end of 2018.

00:27:28.700 What's it going to look like?

00:27:31.780 I'm not saying do it now.

00:27:32.760 I'm just saying you've got to draw it out, org structure, right?

00:27:37.600 And look at where you're at today.

00:27:39.780 That's the delta.

00:27:40.820 That's the difference, right?

00:27:43.340 And you need to communicate that change.

00:27:46.380 You know, the role of a CEO is really make sure you don't run out of money,

00:27:49.460 hire great people, and sell Intellivision.

00:27:53.180 Over-sell Intellivision.

00:27:54.160 Like, communicate often.

00:27:55.580 If you know that there's a difference in the way the team's going to structure

00:27:59.040 their work at the end of 2018, you need to start communicating that today.

00:28:04.100 And then, like, figure out the plan of saying,

00:28:06.160 okay, these are the departments that are going to get shifted first, right?

00:28:09.420 And you put that on a map.

00:28:10.720 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?

00:28:28.460 Well, first is I need to be clear on what it looks like.

00:28:31.180 Most people make change when they don't know what it's supposed to look like.

00:28:33.760 So be clear on what the outcome is,

00:28:36.680 then break it apart into the different quarters

00:28:38.740 of what needs to get done in each one,

00:28:40.640 and then it's about executing.

00:28:42.540 But here's the thing is when I do this with companies,

00:28:46.780 one of the challenges you gotta ask yourself is

00:28:49.280 do you have the right people on the bus?

00:28:52.820 So before even communicating that with the team,

00:28:56.060 actually ask yourself as you design it,

00:28:58.500 do I have the right people on the bus?

00:29:01.240 and if not, what seat should they be?

00:29:04.180 It's not that they need to get off the bus,

00:29:05.720 they're just in the wrong seat.

00:29:07.300 And you know to really compete.

00:29:08.800 Like when you start selling a $100 million a year vision

00:29:11.480 in seven years, you can't have people

00:29:13.740 that you're coaching all the time to perform.

00:29:16.420 You need to have somebody come in.

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,

00:29:21.940 they're giving you money to change the way

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

00:29:28.700 because take that money, redeploy the capital,

00:29:31.120 into key hires and or infrastructure, right?

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?

00:29:42.040 So that people plan is who needs to get hired

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?

00:29:51.480 So to me, that's one of the part,

00:29:53.860 like there's always the people side of the business.

00:29:56.380 Every business is a people business.

00:29:58.000 I don't care if it's software, yeah.

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.

00:30:05.300 What are the estimated salary range?

00:30:06.580 Payscale.com is a great site for giving you a sense of

00:30:09.640 what should I pay people.

00:30:11.200 And if there's a gap in hiring,

00:30:14.200 in regards to your infrastructure

00:30:15.500 and your ability to pay for it,

00:30:16.940 that's where you go to investors and say,

00:30:18.420 here's how I'm gonna deploy your capital, right?

00:30:21.460 Because that's what they wanna know.

00:30:22.740 All of them at the end is something called use of funds.

00:30:25.380 How are you gonna take,

00:30:26.460 what are you gonna do with my money, right?

00:30:28.420 So if you show them a compelling vision of year one,

00:30:30.680 and really you wanna use them one three

00:30:32.060 in kind of like a bigger timeline,

00:30:35.840 they're gonna know that you've been thoughtful about it.

00:30:38.580 Yeah.

00:30:39.980 That's what investors want.

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

00:30:46.100 like I have, you get burned, right?

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,

00:31:00.100 and the valley's really shitty, and, right?

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

00:31:07.900 and come up on the other side.

00:31:09.260 And if they're not, they don't win,

00:31:10.880 and that's just the way it is.

00:31:11.860 Like, we're not supposed to.

00:31:13.580 That's the sad part, is nobody's supposed to succeed

00:31:15.780 in business, right?

00:31:18.320 But I think everybody thinks they are,

00:31:19.760 and it's fun to think that, and it's great,

00:31:21.100 but then it's like, okay, for me to win,

00:31:23.520 let's build a plan that's gonna increase

00:31:25.320 the probability of success, right?

00:31:27.600 Does that help?

00:31:28.600 A lot.

00:31:29.600 Awesome, Guy.

00:31:30.600 I got to bounce, man.

00:31:31.600 Thank you so much.

00:31:32.600 Super fun.

00:31:33.600 Really glad to chat and I appreciate you doing this.

00:31:35.600 Will you visit my dev team over there?

00:31:37.600 Yeah.

00:31:38.600 Because they knew you were coming.

00:31:39.600 Real quick, Kerry is over there. 1.00

00:31:41.600 Oh, hey, Kerry.

00:31:42.600 I want you to say hi, Kerry.

00:31:44.600 You're just going to run away.

00:31:46.600 I told him about the press release.

00:31:48.600 He didn't even know about it.

00:31:49.600 I was like, congrats.

00:31:50.600 He's like, on what?

00:31:52.600 That was fun.

00:31:53.600 I didn't know much about raising money.

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.

00:32:31.520 And actually, yes, I did.

00:32:33.440 Okay, dude, you guys have a lot to work on.

00:32:34.900 Keep me posted, okay?

00:32:35.640 Thank you so much.

00:32:36.520 100%.

00:32:37.000 We'll talk soon.

Dan Martell - January 04, 2018

Episode #5 How to Attract Investors w⧸ Guyverson Vernous, founder Educode.ca

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