What Fuels You Podcast with Shauna Swerland

What Fuels You Podcast with Shauna Swerland

Transcript Talk with Shauna Swerland, CEO of Fuel Talent

Dave talks with Shauna Swerland, CEO of Fuel Talent, for her What Fuel’s You! Podcast. https://podcasts.apple.com/mt/podcast/dave-parker/id1449317468?i=1000520058553

Shauna:            Hi, this is Shauna, the CEO and founder of Fuel Talent. One of the things I have loved most in my 25 year recruiting career has always been the stories that people tell, stories of leadership, career choices, company ideas, and team building. My inspiration for starting the “what fuels you podcast?” came from being curious about people’s lives and wanting to help share their stories. What path brought them to this place? What decisions did they make that led to failures and successes? Who influenced those decisions and what lessons were learned along the way? I hope you enjoy the “what fuels you podcast?”

Today’s guests on the “what fuels you podcast?” is Dave Parker. Dave is a five time founder and has been a part of 11 transactions as a founder, operator, board member and advisor. Dave is the managing partner of DK Parker, where he helps founders scale their companies for growth and exit. His 20 plus year career has highlighted his ability to innovate new ideas and scale products and companies in the US and internationally.

Dave recently published “Trajectory: Startup ideation to product market fit”, where he continues to help early stage founders in the process of creating a new startup. For the last 15 years, he has held executive positions at software development, enterprise IT and professional services, software distribution and hardware companies. Today, he serves on the board of directors for many West Coast companies. Welcome Dave.

Dave:                Thanks Shauna. Yeah, it’s great to be here.

Shauna:            I’m so glad that you’re here. And by the way, when I do like background for the listeners, nobody can see but Dave’s just he’s living in a very cool serene house that I’m very jealous of with the cutest little dog Daisy.

Dave:                She’ll be cute until she jumps up into the camera view and we’ll see how we hold her off.

Shauna:            We’re used to rolling like that.

Dave:                We have more humanity now than we’ve had in 15 or 20 years.

Shauna:            I could not agree more. Okay, I’m going to hit you with some rapid fire. You ready?

Dave:                Go for it? Yep.

Shauna:            Okay. All right, my peloton, friend, who’s your favorite instructor?

Dave:                Oh, right now, I would say it would be Kendall too.

Shauna:            I love Kendall he like the head clap.

Dave:                Once she definitely sells that part of it. But she’s super high energy. I’m a big metal helpers fan as well. Yeah. So I’m coming up on my 400 ride. So it took me 13 months to get some to 100. And then it took me less than a year to get to 300. And I’m coming up on my 400 ride and super excited about riding outdoors again.

Shauna:            Ye congrats. Okay, what has been your most embarrassing moment?

Dave:                Oh, my god, there’s so many of them.

Shauna:            I actually have a special for you. Because you seem like so calm and confident that I’m like, I wonder what could embarrass him, probably nothing.

Dave:                Well, I mean, there’s definitely been times on stage where you’re like, I wish I wouldn’t have said that. Or I was – I tend to be a little flippant with people. So there’s been times where in public I’ve given people feedback I wish I hadn’t done and I can look back and go like that was it was embarrassing for me, but it’s probably worse for them. Yeah, that was really like, that’s a bummer.

Shauna:            Well, these are all teachable moments. That’s good.

Dave:                That’s true.

Shauna:            Okay. Is there a tech CEO who you most admire?

Dave:                Whoo! Do I have to be current or can I go but historic?

Shauna:            No just over time.

Dave:                So yeah, for a while. No, I mean, you know what Tim Cook’s doing now? But you know, Steve Jobs innovating new things was so dramatically different than anybody else’s, of being completely innovative versus like incremental. It’s like Steve’s just Steve.

Shauna:            Yeah. He is iconic for sure. Okay. What has been the best concert that you’ve ever attended?

Dave                 I would have to say it would have been scorpions in this little band open for them. I think they were called motley something.

Shauna:            That’s Motley Crue.

Dave:                Oh my god it was Motley Crue. How did you know? Were you there? So it was a great concert.

Shauna:            So you know what’s so crazy is that I tried for the first I’ve done over 100 of these now. And I tried to like totally mix up the rapid fire so that in case somebody had listened that they It was truly rapid fire and now I’m kind of throwing that one in because I just feel like I learned a lot about people asking about the concerts like you just see them and you picture them with like their younger selves like long hair rockers. I can’t tell you people are rockers they’re like heavy metal.

Dave:                So yeah, that was a good one. I’m also a big fan of like Harry Connick Jr. And so I have very all four of my kids are musicians, which is crazy.

Shauna:            Are you a musician?

Dave:                No my wife is but she would say that I musician. She would say that I’m musical, but I would argue that I’m really closer to tone on the continuum of tone deaf to musical and closer to glory and I purchased a lot of equipment for my kids. So my oldest son is plays lead guitar in a metal band.

Shauna:            You can play fanboy. You can be the guy that’s like, yes.

Dave:                I’ve schlepped gear into every venue in Seattle.

Shauna:            Oh, that’s awesome. I want to hear more about that. Okay, so I do not sure I feel like you might be food wine guy. So I’m curious if you’re like, God forbid, had to have your last meal, what would it be?

Dave                 Oh, it’d be Italian with a big red. Oh, yeah. You know, when we think about where we’re going to travel next, which we’ve been thinking about a lot lately, Italy still one of our favorite places and you know, having a, you know, one of those favorite moments was, you know being on like Camo sitting near the water with a chilled Kiante with somebody be like a chilled kiante? That was horrible. You know, it’s 85 degrees outside the answer is counting sounds brilliant.

Shauna:            Where do you guys want to travel when the world opens up?

Dave                 Well, we’ve been there a bunch when a bunch is relative three times. So, more than for a kid from Washington. That’s a lot. So, but I’ve been doing a bunch of stuff in the Middle East over the last few years. And one of the programs that I work with is opening in a couple new cities. So Casa Blanca is on the list and Amman Jordan is on the west side. Definitely two places where I’m like, definitely on the list of places.

Shauna:            Oh, my gosh, two places that I would not have thought to travel that I’m dying to hear more. That’s awesome. Okay, so I know that you’re an author, and I love your book. I’ve got it right here. But if there was a book written about your life, what would it be called?

Dave:                Highs and lows. Right. And sadly, we will learn more from the lows and you learn from the highs. So I think when I look back, there’s like, in the family in the section to my kids at the beginning. It’s like, I don’t know if you’ll follow my journey, but I’ll be proud of you wherever you do. Because it’s been so weird, the highs have been amazing. And the lows have been one of those. You’re like, Why did I choose that? That was like such a stupid thing to do.

Shauna:            I love that. To my family, Brandon, Carson, Drew and Lauren, I don’t know if you’ll follow my entrepreneurial journey, given the crazy ups and downs you’ve seen but I do know that you’ll follow your own and I’ll always be very proud of you. I loved that I got chills as a mom when we were in that suite. And then you of course acknowledged your beautiful wife Catherine, which is great. Okay, I think I know the answer to this. But are you an introvert or an extrovert?

Dave:                Um, I would say I’m kind of an ambivert. Actually, I can be on stage and performing. But it’s super exhausting.

Shauna:            And do you find a lot of cooperation in the stuff? Or are you just winging it?

Dave:                No. I’m a total over prepare.

Shauna:            Okay, so yes, Washougal guy. Where is Washougal, Washington?

Dave:                Wash, wash. It goes in southwestern Washington. So you go to Vancouver, Washington, not Vancouver, Canada, go south of Vancouver, Washington, hang a left. Get past the sticky part of the canvas paper mill. They were rival High School. And you get to Washougal Washington. It was a town of about 3500 people when I grew up there. Wow. And I was

Shauna:            Have we’d known each other back then like fifth grade seventh grade. What were you doing? How are you spending your time? What were you kind of feel?

Dave:                So if you remember the Caddyshack movie, I was a caddy scholar to the University of Washington. So which meant I academically had to qualify and athletically I had to qualify, but it was also financial means. So the answer is I grew up on a golf course. But I grew up picking up range balls and cleaning the toilets. I didn’t grow up as a member.

Shauna:            Okay, got it. And were you obviously then you were a great student?

Dave:                I think was an okay student, different standards. At the time, we were in a little blue collar town in Washougal met a graduating class of 101. I was two body president.

Shauna:            You have enough surprise and you have siblings?

Dave:                I have one older brother, I had one step brother who passed away and two step sisters. So blended family on that side. Yeah.

Shauna:            Yeah. And so at what point in your life did you realize that you were, you know, driven? Like, where did you think that you’re gonna go? Are you far exceeding what you expected? Are you like? No, of course, I’ve always known I was going to be this.

Dave:                The bar always moves. Right. So I would say, um, it’s you know, the bars I was moving out. So there’s 101 people in a graduating class, I think seven of us went to college, I could not wait to get …, with all respect to the people who still live there. Because most people live really close to where they grew up.I just wanted to get out of that town, because everybody was related to everybody. And everybody was in everybody else’s business. And everybody went to work in the mail. And I just wanted a very different life than that. So one of my friends that I had worked with actually got the same scholarship, I was always called Evans scholars. And he actually quit after one year and came back and I was like, Oh, my God, I would never quit like that would be just completely crazy.So I was super motivated to get out in four years, because the scholarship was for four years. So that’s kind of get in and out.

Shauna:            And so how did you decide you’d ever, did you just focus on that?

Dave:                I applied to one school, because that was the only school where the scholarship apply. So had it not been for that? I don’t know that I would have gone.

Shauna:            When you started speech communications, what were you thinking that you wanted to pursue with that degree?

Dave:                Well, originally, I was kind of studying business, but I couldn’t get into the business school. I wasn’t that great of a student at the college level. So I could take speech communications, which is actually where you know, where I met my wife and you would argue at the time where the pretty girls were as well. It wasn’t a bad thing.

Shauna:            Totally. Yeah.

Dave:                So majored in public speaking in rhetoric and minored in business if the cable miner thought I was gonna do with economics for a while and realized it was like not practical enough. So I’ve always been a bit of a hack that way, like, what’s the shortcut to figure out like, I can’t get into B school? Because I didn’t? Like, no one is like, you’re really going to need to get good grades if you want to. And you’re like, Oh, yeah, that was good. Except that was on academic probation after my first quarter.

Shauna:            Did you have anyone like, you know, teachers, mentors, anyone that was helping guide you, because it sounds like, you know, a seven graduating, going to college, who was there to kind of say, Hey, this is the bigger life that you’re looking for?

Dave:                Not much like I think, you know, my mom has passed away a number of years ago, but I think she was so happy that I was going to school and I was the youngest in that blended family of five kids. And like, everybody’s happy to be empty nesters. And, you know, I have this reminder behind me, there’s photos that I took when I worked for United Press. And so I was a photographer at United press and set on the fourth floor of the Portland Trailblazers for about a year and a half, two seasons. And with a little bit of guidance, I could have been a great, great photographer. But I think I like my career, I’ve gone and done something and either been successful or marginally successful or failed at it, and be like, huh just go do something else? So in that sense, I’ve reinvented my career a number of times.

Shauna:            Yeah, well, speaking of your career, you’ve got you know, 20 plus years, we’re gonna keep ourselves young. You know, your career is highlighted, as I said in the intro, your ability to innovate ideas and scale products and companies. But you’ve done a lot of things. And how did you end up breaking into tech to begin with?

Dave:                I originally got into telecommunications in the early days of the mobile cellular industry, back here you see that phone. So my grandpa, my grandfather was an entrepreneur, my dad was not. So my grandfather had in 1911, had the first Ford garage, and Camus Washington in 1911, which is super interesting, they weren’t automating the process of the assembly line until 1913. So they send the parts out to the locations and they’d reassemble them, but he sold that business too early. Otherwise there’d be a library with our name on it. But he started the first phone company in southwestern Washington, and sold that company too early, and then finished his career as running a local grocery store.

So when I got out of college, I had a chance to get into the early days in the wireless industry, started off in video production, which was super interesting from a career development standpoint, because you were selling concepts, right? We were selling a video that would do training or do marketing. And you never had a product you could sell, you always had to sell somebody on the concept and get them to see us on the concept, which I think from a career development standpoint was great. Right? When I look at startups, you’re like, because you’re pitching an idea. And people have to buy into a vision of what it can do. But I made the transition from that services business to a product business in wireless early on, and in the mobile phone days early. Right where a phone was $2,000 and didn’t work very well and weren’t very cool. Today, they’re still $2,000 phone that don’t work very well. But they are cool. Yeah. Right. So early wireless days was a super interesting place to learn the telecom, wireless and made the leap into the IT staffing business, was my first leap into software and then from staffing went into the actual product business.

Shauna:            Yeah, I don’t think I realized that you had worked in staffing.

Dave:                Yep. Good place to learn the ropes for sure.

Shauna:            It’s definitely. That’s amazing. Okay, so tell me, walk me through some of the highlights like you’ve had, as we will learn more in your book. I know that you’ve had some wins and losses, peaks and valleys. Obviously, we’ve had lots of successful people on the podcast, and you’ve had your fair share for sure of success. But tell me about some of the learning.         

Dave:                Well, you know me so you don’t get revisionist history, you get the real history. So the first company that I started was company called license online. We started in 1998. In the service IT staffing company I worked for, we did big projects, and Microsoft was one of our big biggest customer. So every month that Microsoft rep would come to me and say, hey, how much Microsoft stuff we’re gonna sell every month? I’d say we don’t sell software, we sell services. And after a while, Chanell went back and said, like, how many people do you ask this question of every month? He’s like all of them. I’m like, how many systems integrators are there nationally? He’s like, 40,000. So the problem that we wanted to go solve was, how do we make it easy for those systems integrators to actually sell software into licensing? So we created a chemical license online with a few co-founders, very few and grew that company, the 32 million in sales and 155 employees in about three and a half years. So made a ton of mistakes, like the scars on my back have healed, but I still get twitchy on occasion, like building culture and product market fit and you know, when I look at that one now, we sold the company in 2002. Which if you remember 2002 was post the tech bubble and post 911. So we got it sold. But I would say like, I wouldn’t call it….

Shauna:            That some money on the table.

Dave:                Yeah, I wouldn’t call it a win, right? As far as like you said return some shareholder money, but not all of it, you know, and people will be like, yes, but you learned from it. So it was still a success. That’s BS. Like if you don’t return shareholder, capital, it’s a failure. Now, did I learn something from it? Absolutely! But those things are two different things. Learning from your failures and your mistakes, or having a failure or success is just revisionist history from someone who’s never tried, right. So the people who typically say that are like, you should follow your passion, because money will follow that, again, it’s BS, it assumes that your idea that you’re following is a good idea. So in venture, you’ll hear it phrased as like, the idea doesn’t matter, only execution matters. Again, it assumes it’s a good idea.

Shauna:            Assuming that there’s product that people need, right?

Dave:                So yeah, lesson learned on that one was margins were super rough. And we were competing against the company, we sold to did a billion and a half in revenue, and we did 32 million in revenue. So then we went from zero to 32. But like, our next biggest competitor was 1,000,000,002. And the two big competitors, and were 13 billion and 15 billion, and we were selling Microsoft products. So the world was like going from you know, when you switch dancing partners? Except all my dancing partners were gorillas, right. And the answer is you’re not through till he is. So a super rough business in retrospect, I wouldn’t have started it. Like glad I learned a lot. But knowing what I know now, I’d be like; margins are super brutal when you do it.

Shauna:            Yeah. And so what was your next move?

Dave:                So went from there and did an entrepreneur and residence gig with a company out of Tokyo called Mitsui and company. So large, third largest company in Japan, but 187 billion in revenue, so their venture fund had a product, they wanted to take the market. So I did a project for them and went to work on their fund. It was a $250 million fund based in Cupertino. So it was my first foray into being on the other side of the table as a venture capitalist. And the product we worked on, there was a hardware product.

So that one was the interesting exercise in the early days of like, this is an engineered product looking for a problem. So they had spent about a year and I don’t know how much money in retrospect in six or seven engineers building a product and they’re like, we have this product here. Can you find a product or problem it will go solve? And which is kind of a classic startup dilemma, right. And at the time, I wasn’t smart enough, in the beginning to say that won’t work. So it took about six months. And when that won’t work, we should just give the money back to the investors.

Great lesson learned though, and I’m like you can’t force product market fit. So if you remember that a company called Quigley launched a year ago, right? And it was Meg Whitman, and this famous people, they raised a billion dollars, right. And they burned through it in less than a year. And even with a billion dollars, you can’t force product market fit.

Shauna:            I love that.

Dave:                You still have to go find it. So hardware in the VC launched their consulting company, we grew to about 65 people, I sold my portion back to my co-founder, and left that company after about eight years, nine years, which is one of the longest time frames I’ve ever done anything.

Shauna:            Did you get all sorts of cool experiences?

Dave:                Yeah, for sure. And it plus I’m easily bored. Yeah, to be candid, right. So it’s like, other than being married to my wife for a long time. I’ve been on one board for 17 years.

Shauna:            So in the beginning, you were like talking about innovator, or integrator, and most of your experience from what I saw was founding companies.

Dave:                Yeah, I’m kind of a big fan of having founder on the card. It doesn’t have to be CEO anymore, but having founder on the card matters. Like I did, join one movement in progress or one train in motion, and probably the better analogy. So I did get to join a nonprofit. After I did my fifth startup, I sold three of them close two of them. And they were all singles. So I raised – raised 12 million and exited about 85. And so you know, okay, right. As far as what’s left for the founder, depending on how much dilution you take the answers, that sounds like a hell of a lot bigger number than it actually is.

So I did get a chance to join a nonprofit called Startup Weekend. And the parent company is called Epic Global. So it’s the merger of startup weekend and Startup America. So when I joined there, we were doing about 500 events a year each. And doing a startup weekend is an event for those people don’t know if you show up on Friday night, you pitch your idea. There’s about 125 people in the room. And by Sunday, six or seven teams pitch a demo product to a group of investors or entrepreneurs.

So I had a chance to help grow that was definitely movement in progress, right. So the team that I think the average age of the team was 28 when I got there, so I singularly brought up the average for sure.

Shauna:            I had great goddess and I’m here talking about rover from Startup Weekend.

Dave:                 Oh, Yeah, so it was a great Startup Weekend company. So there’s been a number of unicorn companies that came out of Startup Weekend. So to give people scope, oh, yeah. So Greg’s rover was one. But before rover, there was at least two one was out of Spain, and one was out of Brazil.

Shauna:            That’s amazing.

Dave:                So to put some perspective in it, so my last full year there, we sold the company, the tech stars in 2015. But the last full year, we did 1265 events worldwide, in 120 countries with 74,000 attendees. And which really got to why I wrote the book, because people would come out of this event, and they’re like, I met Chanell. We’re soul mates. We’re gonna go do Cobra, right? I believe our day jobs Monday, and I’m like, wow, like, before you do that, like, there are some things you can know about the startup before you like leave your day job and your benefits.

So that was super fun. We sold the company to TechStars. In 2015, it became TechStars community programs where it resides today. And, you know, the team at TechStars was great. They’re like, here’s our org chart, where do you fit? And I’m like, I’ve never stayed with any company I’ve sold. So I don’t fit, but thank you. And so yeah, that’s been the only one I’ve done interim CEO work where, you know, it’s probably a sign that the company was for sale. You know, with one of them, you know, I had a term sheet to sell this company in 31 days, and the deal got kicked sideways, which was a bummer, because I was like, I was working on solidifying my brand. Oh that’s the CEO, the company’s for sale.

Shauna:            You know, I met you, I think, at a geek wire event. And I just remember thinking, like; this guy is so smart and so interesting. And I just felt like you were dialed and dynamic. But the biggest overarching feeling; and I know that it’s even in your book is this whole give first idea, I felt that from you. And you’re just about like, give, give, give. And at what stage in your career did you learn that was important to you or like could actually help others and help you in return?

Dave:                Yeah, I’ll definitely give credit where it’s doing, TechStars has the hashtag give first, that they kind of launch when they launched TechStars. And I definitely institutionalized it as we were doing Startup Weekend and others because I was part of the community before them, but that the line between like, being an active partner community and being deliberate about it was kind of pre Startup Weekend around, how do you give to a community that doesn’t have any money because startups don’t have money to spend? Right? So some people are, like, well, I’m gonna take equity, or I’m gonna get paid. And the answer is, if you’re working with startups, you’re not going to get either of those, right.

So that was kind of the start to it of like, you really need to just get first without anticipation of getting anything. And then if you get something back then all the better, right. And so I think that that’s, you know, institutionalized with Startup Weekend in the team there because they were very grassroots, and we were doing stuff. And he said 120 countries. So what you were doing was you were empowering the – the facilitators and the local organizers to have an influence on their community. But because we were nonprofit, they didn’t make any money and we were raising money to support them. So the answer was, we were giving you influence, but we’re not giving you money. And that’s super important.

So I think today is I look at the work we’re doing with in Seattle and the Northwest in Washington State. And then a couple of the projects we’re working on is like, how do we get more women entrepreneurs and more BIPOC founders and more people who are disenfranchised, to have access and capital, because you have to have both and not my word says words I’ve integrated from friends, because you know, like, what the thing for Minnesota yesterday and just reached out to some African American friends got a feeling because they know earlier in my career, I blew that, right, where I’m like, I was tone deaf to what was going on in their lives.

Shauna:            They are being reflective on it. And you do have a growth mindset. And you know…

Dave:                I think that’s a good measurement, right is, am I better than I was before, and I’m a big fan of Carol’s duacs book and one of things I read in the book is I probably referenced 60 bucks in the book and training.

Shauna:            I saw that and I’m like you are definitely reading a lot, incredible books that you’ve been reading. Is there any books that have had the biggest influence on you? Like, oh, this book, if there’s any that I mean, aside from trajectory startup, are there others that you’re like this is the book I give out to entrepreneurs?

Dave:                Yeah, well, it depends. So I end up writing a blog post about it for there’s a group called Gann, which is a globalacceleratornetworkagain.co. They have about 120 programs that they helped facilitate worldwide through local accelerators. And I ended up being a trainer with them for like the Middle East stuff. And so one point they said, Hey, would you just give us your list your top 10 list and I started to build it out. And I’m like, Well, I have a top 10 Classic business books, you know, like, good grades and you know, sort of and then I have kind of a top category startup books because it kind of depends on where you are starting stage. Yeah, versus if you’re at the scale stage or fundraising stage.

Shauna:            So through all this experience, what have you learned as your takeaways as far as like, where were you excelled? Where’s your ninja skill? If you were to go get hired somewhere? What role? Is that a marketing role? Is it a sales?

Dave:                It’s probably; I would say if it’s a big idea and a willing CEO, would probably be CEO, because I can be a good CEO whisper. I’m at a point career wise that I don’t feel like I’d have to be CEO. But I clearly have control issues after being a CEO for 20 years. Plus, what’s yours?

So I think the thing there is like, I enjoyed, like, I worked with Mark Naga, at startup weekend. And Mark was an amazing, visionary guys, dear friend to this day. And like, it was great, because I’ve gotten good at processes and details. I’m not natively good at that right? So I spend most of my time on sell side merger and acquisition work, and helping founders actually sell and land their deals and to get sold.

Shauna:            And how did they find you like, who are these founders, just from all of your relationships over the years?

Dave:                Yeah, a lot of us, you know, from referrals, like TechStars and 500 startups and local within the community. So in our deal is the really targeting the founder who’s at that point of like, okay, I can raise $5 million, which means I’m going to have to exit 50 million plus, and it’s gonna take me five or seven more years, or I could go sell now. So they’re typically found or controlled, they’re under the price point. Well, most of the larger regional investment banks even care about right, because some of the big investment banks are like, we have to have a million dollar minimum fee. And it’s like, yeah, that doesn’t work for these size deals. So really helping them figure that out. And then that allows me some flexibility to work on other community building stuff and programmatic stuff. And so it ebbs and flows like 20% is that but sometimes my 20% 100% because I’m working on a particular program.

So right now with some of the board of the Washington Technology Industry Association, and the board chair for startup programs there. And we’re getting to working on a federal grant of matching dollars to scale up the programming we’ve done in Seattle, to founders outside of Seattle, Yakima, Wenatchee Washougal, we’ll see whether Washougal gets there or not. And they’re kind of a suburb of Portland these days.

But, you know, how do you help founders get access and get capital, where they’ve traditionally been boxed out of that market? So the question is, how do we provide more access to those? So we’re doing a bunch of programming stuff with WETA and our numbers there are moving the right direction. And you also have to catch people early and help them as far as the, you know, startup thinking and thinking about product versus service. And so we’re trying to do some of those things as well. So see, as I said, it kind of balances my time. I’m not quite in a lawyer, six minute increment building stage. But if you looked at my calendar for today, you’re like; you’re kind of all over the map.

Shauna:            And when you’re thinking about helping them think about selling, I know there’s like a, I think I was reading a book called Built to Sell, like people working in the business versus on the business. Are you helping them just get it ready to sell like, hey, these are the things you’re not ready yet, in order to get ready. These are the 10 things you need to do, are you making the connections between them and the acquirers?

Dave:                So a little bit of both and the early stage. So one of the ones I’m helping out right now, we’ve known him for probably four or five months, and they’re one of the things that draws your valuation data is if your revenue is super concentrated around a particular industry or particular customer. So customer concentration is a bad thing in valuation. Yeah, so one of the things we help them do is identify two new markets that can go after where they could get new customers, which worked out incredibly well. But just kind of when your point, when you’re working in the business, you’re kind of like I’m focused on this, and I don’t really have perspective of the business. So we were able to help them do that before they got ready to sell, which is dramatically increasing their valuation. So we’ll go in and help them early on as far as like, here’s the things we would want to address that impact your value. And then we go through the mechanical process and helping them find a buyer, you know.

Shauna:            Wow Interesting. And so as far as your venture work, what types of companies are you looking at? And what’s the ideal portfolio company?

Dave:                Yeah, so I would say I’m a random Angel these days and no longer run a fund. So I ran a family office fund for about three years and then worked at a venture fund here in the Northwest. So I would say I’m a random Angel, when something really pops across where I’m like, Oh, I like that founder. Oh, I like that idea.

Shauna:            How many deals are you looking at on average? Are you just slowing that down?

Dave:                Slow that, other than I’m looking so from the WETA perspective, we bring in 20 to 25 founders in every cohort – twice a year. So I’m mentoring fairly actively 25 companies during any particular six month period.

And that’s really about the founder more so than the business. So we’ve taken them into the program because, you know, there we have women founders, we have BIPOC founders we have, but we’re there to support the founders first knowing that this idea may or may not work. And that’s okay because we want them to be able to work, right. So if this idea doesn’t work, we have to pivot to another idea. And since we’re not a venture fund, we’re not only considered about returns, we’re considering, like, how do we leave? So my personal perspective is how do I leave Seattle better than I found it? Right. And so that’s where the bar keeps moving. Right? I want to look at the….

Shauna:            What’s the vetting process to do these programs like?

Dave:                Yeah, so they actually have to go through an application process, we do two cohorts a year 20 to 25 companies, they have to have a team, they have to have a product, they have to have some traction, so a little bit of market confirmation that they are working on or something. About 40% in this cohort, I think we’re women, 26%, were people of color. So we’re really trying to, you know, we could have looked at and said, we’re only taking the best companies, and we’re only gonna take 12 because only 12 are really good. And the answer is no, it’s about the founder, right? It’s not about the business.

And if they don’t, if this particular idea doesn’t work, and we still given them the tools and resources they need and a framework for them to think about for the next idea. And those type of relationships and access to capital that didn’t have before. So from that standpoint, that’s kind of our measurement of success.

Shauna:            And that is you leaving Seattle and the community a better place than you found it. That’s got to feel good. A lot of people that’s what they’re focusing their career on these days. It’s awesome.

Dave:                It’s always this weird balance.

Shauna:            It is a balance, a fly on the wall and watch you I mean, in action, just the connecting and all the different things on your calendar, I can’t imagine. So you’ve been on several boards. You sit on boards right now, what makes a good board member? And if you’re an entrepreneur, how do you think about putting together a board?

Dave:                Yeah, great question. So the first off, it has to be somebody who’s willing to support you as the founder and provide value for you, not just be there to watch their money. And so there’s a lot of boards I’ve been on where it’s like, you know, somebody who’s very professorial and provide advice, it’s like, I’m not sure you’re actually listening, because you asked the same question every other board meeting. And a lot of that happens in the institutional board world, because you’re sitting on somebody’s boards that you kind of some people’s string on your back, and you get whatever their routine is. So I think it’s really the person have capacity and willingness and experience to really add value to your board. So I’m a huge fan of independent board members relatively early on that balances out you with the founders, and your institutional investors, and every institutional investor will say they add value. And some of them occasionally do. But mostly they don’t. Right. So and part of it because they’re stressed, there’s some practical reasons for it.

Shauna:            Yeah. I know people talk about like, hey, need someone with like a finance and accounting background, some have a little bit more of a, you know, just almost rounding out the C suite, but like, from a board perspective, from a practical skills. So what role are you in that?

Dave:                It’s therapist and CEO coach, No, I’m really go to market is my insights I’d save there, the roles are kind of equally split. So for me, it’s all about go to market. So marketing and sales unit economics, that the data conversion metrics, though lately, it’s been like, Oh, that’s a great question. And you should get a VP of sales and that person or VP of Marketing, and that person should be a woman and a person of color. Yeah. And so here’s a list of people you should consider because I’m not available. So the important thing there is, I think, if you round out your, as a co-founders, if you look at the we’re weak in marketing, we have the money to hire a marketing director, but we don’t have the money to hire marketing VP, then you should look for somebody who doesn’t look like you. And hire them to be your independent board member with CMO experience, who can help you set your strategies for marketing, and then provide some direction to not as an operator, but provide some direction to your director of marketing to help them do that. The same is true of Finance.

So the drawback is that the category of women on boards tend to be finance and HR, right? Where they really need to expand it to every category – CEO to VP marketing, VP sales, there’s just fewer women in those senior sales roles than there are marketing roles. So finding that balance, because diverse teams produce better results. I mean, the data is super conclusive. At this point, I’m not sure that anybody can argue with it.

Shauna:            Yeah. We’ve actually been putting a lot of intention around it this past year and measuring it and It feels good. It’s like we’re actually doing something too also, hopefully leave Seattle a better place in this community a better place by putting more diverse leaders into companies.

Dave:                Yeah, and I would encourage other folks who are in current board roles, it’s very much like I’m gonna ask to come on be a panelist for when he has the flywheel conference coming up in May. And I’m like; I’d rather not be on the panel. Like here’s a handful of people you should think about that don’t look like me. And if you want me to do something else, like you want me to moderate something, or you support it like that. So I always want to have a list of people I can recommend. And here’s a list of people you should think about.

Shauna:            Yeah, that’s great. So you’ve got this book? When did you decide to write it?

Dave:                It’s kind of a little bit of a life work? Yeah, I think you could rush through the book from a reading perspective and a few days, but given the fact that I read it to the audible narrator folks in about four. But to do the work required to validate your idea, it’s probably going to take you four to five, maybe six months.

Shauna:            Oh, my God.

Dave:                You have to do the work. Yeah. So, but I can’t tell you, if you read the book out loud every day in a small closet studio from you know, for five hours, it’ll take you four days to read through it.

Shauna:            So it took you many years to write it. How did you pick the name?

Dave:                We originally went with six months startup and because we after came up with startup weekend, we had Startup Weekend and Startup Week. And so I like the time constraint of like, you can do this in six months. And then we found we were delivering it on, you know, Saturday seminars for underrepresented founders in Kansas City. And it was four Saturdays. And then the boot camp version that we do in the Middle East is three days. And I’m like, okay, we have a brand problem that won’t work. So trajectory kind of sets the idea of like, if you think about your trajectory, and your direction will determine where the company ends up. And if you don’t deliberately set the trajectory, the analogy I use in the book is Apollo 13, right.

And when the engineers come in the room and the double A stuff on the table are like, we have to get them back with only the crap we have on this table. And that’s a little bit like running a startup, right? You’re under resourced you’re understaffed, right; you’re under pressure, right? And you only have the shit; it’s on the table in front of you. So you got to figure out how to make it work.

Shauna:            And what’s the goal with the book? Like, what’s the feedback been so far? And do you feel like it’s, I guess, how would you measure success?

Dave:                So I think it’s good. I mean, we’ve got 28, or 35 star reviews. The first one was super fun shot that came from Saudi I didn’t know, right, where I had a bunch of what they called galley copies, which is the pre proofread soft cover versus the hardcover. And I was like, well, the book release date is officially this day. But Amazon doesn’t take reviews until after that date. And then a review popped up. And it was from somebody I’d never met. And I actually reached out to her on LinkedIn. I’m like, Are you the person who wrote this review? And she’s like, yeah, yeah. And I’m like, thank you. This was like, so awesome. So I’ve got a way to thank everybody who’s written a review. So yeah, so that’s the goal is to I think, on the negative side, the goal is to help founders not waste years of their life on a dumbest idea, right? And then on the positive side, time matters so much, right? Because it’s the thing you can never get back. Like, I’ve lost money, I’ve made money, I can make money again. But I can’t get time back. Right. So if I can help you compress this cycle, and do it in six months, instead of 18 months, or 24 months, it’s a win, right? So that’s kind of my gauge of success for the founders. Because as you know, there’s no money selling to founders, as a consultant or a coach or pure like, you want to use this to drive your consulting business. I’m like, yeah, no actually.

Shauna:            What advice do you give to founders as they’re thinking about raising or not raising?

Dave:                Yeah, I mean, I think one of the big things to keep in mind is Steve Blank said it best was when you take on venture capital, you take on their business model, right. So as a venture capitalist, I have a fund that has a term and it’s 10 one and one is 10 years plus two, one year extensions. And if I invest in your company, you’re five, that means I’m going to need you to exit and kind of your five, seven. So which may put me at odds with what you want to do as a founder. So make sure your goals and alignment are aligned with who your investor is. And then recognize that raising capital isn’t a sign of success.

Shauna:            So what is the question that an entrepreneur should ask, if they’re trying to see if they’re aligned?

Dave:                Well, I would ask where they are in their fund lifecycle? Right? Are they at the end of the fund lifecycle at the beginning, because the funds, you know, the definition of a successful fund is you raise another fund based on your returns. So where they are in the fund lifecycle, I’d asked him for referrals to other CEOs who they’ve invested in. Are they really a value added investor? Or is their cash just the same color as everybody else’s cash, which varies from region to region? I used to say green, but because you’re gonna find out quickly that  their cash is just like everybody else’s, but not everybody’s cash is good.

Shauna:            Not all money is good money. And so you research these 2500 companies, how did you choose which one? Like, what was the criterion for the companies that you chose?

Dave:                Oh, well, that’s it. So this ended up this quest, which it wasn’t intended to be. So somebody came to me and said very simply, hey, can I have your financial model? I’m like, well, sure. But my model, I’m a b2b subscription company, and you’re a marketplace that sells to consumers. And those are different. So I reached out to the CEO of Crunchbase. Everybody, most people know Crunchbase, and they’re in venture and Crowdsource data. And I said, Hey, can you give me a list of every seed funded company over the last 18 months? So it ends up being 20654 companies. And our original intent was to go back and look at all 20654 and figure out what their revenue model was. So kind of find out, there’s 14, that’s it for the new models.

Shauna:            It sounded more than I would have thought like; I don’t think I have 14.

Dave:                Well, you’d be surprised when you look at I mean, we just did the public company comparisons and what the multiple revenues were but so much to my surprise, we went through and looked at them, and it turned into a five plus year longitudinal study of the success and failure rates of those companies. And now I can look at a founder and say, your product, I hope your product is unique. It may be it may not be, but you could be doing a copycat of Rover’s product and Mina, right? And the answer is that’s it’s still a viable company. How you make money is never unique. So you know, for example, are you a subscription business? Do you do metered service like AWS or Twilio, right? Do you do a combination revenue model like Smartsheet does where you do services revenue, for professional services, because it shortens your sales cycle. So you can sell more subscriptions.

So all of the revenue models are basically like, just pick, right. So again, hopefully, your idea is brilliant and amazing and can be a unicorn. But even all the unicorns, we looked at all the CB insights data of the 500, unicorn companies, there’s nothing new there. They’re all in the 14. If there is a 15, I’m totally happy to write about it, because I’d be geeked out about it. But my experience with founders is like you’re not going to invent a new product and a new revenue model at the same time because it compounds the complexity.

Shauna:            Yeah. Interesting. And so I mean, there’s so many key takeaways, based on this research, we’ve got the 14 revenue models, we’ve got the Venn diagram, which I thought was really interesting. You know, I’m curious more just like reality check when you said, Hey, let me just make sure that you’re not wasting time and that you actually have a product that that’s at the end of the day, the net, if you don’t have a good product, doesn’t matter if you raise a billion dollars, if you’ve got the most kick ass team, like nobody wants what you’re selling. How do you know like, how much time should you give yourself to know the product market fit?

Dave:                Well, I think there’s a couple phases. One is first the ideation stage, one of the things I walk people through is there’s 11 frameworks in the book for what makes a good idea like rich Barton, who started Expedia within Microsoft, and then started Zillow outside of Microsoft, his approach to the idea was Power to the People, right? So you take a dataset that is opaque, and make it visible to the customer. So that’s one example of a framework to think about your idea. Is it truly transformational? Or is it incremental. So in the case of Airbnb, they went after a completely new and nascent market. And if you look at the biggest valuation companies over the last five to 10 years, they’re all about new and nascent markets. So Uber was a new nascent market. You know, stripe was a nascent market, because they were taking transaction fees down from the expensive card readers down into your phone. Right, so all of the multibillion dollar unicorn companies have to do with new sub markets with timing matters. So if, for example, you have a great product into a new nascent market, but the market is not ready for you. It’s not gonna work.

Shauna:           So the timing is an important thing like how do you know if it’s the wrong timing?

Dave:              Yeah. And the answer is, you’ll only really know in retrospect, or if you’re a VC, if you’re a VC, you always know because you’re, you’re clairvoyant. No, I always chuckle because they’re like our timing, and that investment was great. And the answer was, you actually didn’t do anything other than invest in founders who did the work.

Now, there are some Meta factors you can look at. So do we have tailwinds or headwinds? Right. So if you’re like, we’re going to do a new, you know, you’re not going to build a new car company. Now that’s focused on internal combustion engines. I’d be like, that’s a total headwind. Right now investors are interested in internal combustion cars. So you know, so you have headwinds or tailwinds and COVID has been this really wacky thing, right where it created a massive tailwinds for some companies, and it created massive headwinds for others that failed. And those who pivoted right really understood and acted quickly. Some of them took advantage of that that tailwind.

Shauna:            Are there some that come to mind for the ones that had just like massive talons?

Dave:                Well, I think that one of the categories actually super crazy right? So A year and a half ago, if you’re like, I think EdTech is going to be sexy. I would have been like you’re, you’re crazy. No way. Right? And then sure enough the migration to everybody to online for students and taking care of students in grades and reporting and right. The fact that Edtech is now like, a sexy category is amazing. So at the same time travel got change, but the pent up demand for travel, that’s going to come back. And the pent up demand broadly for experiences that are going to come back is going to be super exciting. So you know where there be another new great hot travel app? Traveling dating are kind of similar, right? There’s always something that comes out that’s new. So those are some fun, you know, some fun trends for sure to look at.

Shauna:            Yeah. And so when you wrote the book, and you work so much with entrepreneurs, what are your biggest indicators of like, success? The people, the idea, the timing?

Dave:                In the market? Right. I think, ultimately, it starts for me with…

Shauna:            Like the size of the addressable market. Is that what you’re talking about?

Dave:                Yeah. So I think it was sliders versus independent things, right? Because I think that’s an easier way to go. Like, what kind of depends? I wrote a blog post that I kept up intentionally rather than rewrite it and have revisionist history. And originally, I would have told you early in both my own entrepreneur career and then being an investor, it’s like, it’s about the team. But my observation after looking at all this data is that even a fantastic team in a marginal market are going to just do man. Yeah, where marginal team in a fantastic market can be blockbuster. So I think that one is kind of 1A and a 1B channel. Where’s like, 1A is market and 1B is team then timing and then product. But timing Is tough because you have to look at and go like generally isn’t the you know, Airbnb was great timing. Because coming out of the recession, people are like, well, I guess we can loan out a room for, you know, to a stranger for $85 a night seems kind of creepy. But I need to make my mortgage. So maybe I will.

So timing matters a lot. But I think you only know that in retrospect, I don’t think you know it looking forward.

Shauna:            Yeah. What are some other key nuggets that you want anyone listening to know, from your book if they haven’t had a chance to read it? And by the way, everybody should read it?

Dave:                Thanks. So I think the, you know, one of the first people who wrote a review on it said, Dave is like that friend who will tell you, you have spinach on your teeth.

Shauna:            Oh, I love that. I totally feel like that. That’s so funny.

Dave:                And I’m like, that’s an awesome way because I’m not intentionally blunt, I try to be direct. So I think one of the big things. If you’re like, this is a stupid idea, then I’d like somebody to tell me like, do I want to know, in six weeks, six months or six years.

Shauna:            Yeah, it saved me some time and money.

Dave:                So my goal is to help you look at it you’re like, rather than me being pedantic about it. I used to be much more so. But now I’m like, like, well, here’s the questions I would ask right. So I was on a call the other night with somebody who, like, we’re doing this and every time I’d say something, he said, Yeah but, I’m like, Can I just stop you right there? Like, I don’t mind if you say yes and, but when you say yes but, what it tells me is you don’t give a shit about what I’m telling you right? In which case, you’re just gonna run headlong into a wall. Not that I have the answers to all things, not the point. The point is, I’m telling you what questions I would ask if I were you. And I think what the book is really trying to do is to say like, so think of it this way, Shauna there’s 1000 ways your startup can fail. And I can’t tell you all 1000 of them. But what I’m trying to help you do is figure out like, Listen, there’s probably one question, this is the most critical question you need to answer today. Does the customer care about my product? Can I charge for it? Yeah, right.

Shauna:            It’s divided by repeatable. Yeah.

Dave:                It’s not should I go buy red or blue file folders right? That’s not that’s not the question. That’s busy work you can do, right? And coders will be like, I’m just gonna write more code. And the fact is, you just need to get out of the building, like Steve Blank used to be on my board. So you know, Steve’s comment was, you got to get out of the building and go talk to the customers. And, you know, I will have people say not jokingly, well, you know, Henry Ford said, and I’m like, Listen, my grandfather owned a Ford garage. So let me tell you something different today versus then. In 1911, there was no internet. And Henry was right. Today, however, people have options. So you asking them if they wanted a faster horse? Isn’t that really, you know, I think Steve Jobs was the weird anomaly and all that. But I’d say try to build something transformational, it changes the world or go make a shit ton of money and then give it all the way. Yeah, but it’s hard to do both of those things. I think you can either go make a ton of dough and give it away or I think they’re hybrids that can allow you to do a little bit of both and make a difference in the world. But those are hard, right? Because they all go back to the 14 revenue models, like you’re not going to create, you’re not gonna say we’re a four purpose company that has a completely new model. I’m gonna be like, cool, what? What’s the model? They’re gonna like, we’re going to discover it and I’m like, then you’ll fail, you’re nonprofit. At least you’ll fail as a four purpose entity, you can succeed as a nonprofit, but you’ll never stop raising money.

Shauna:            Yeah. So you’ve got all this going on? How do you set yourself up for a good week, and stay organized, you said it’s not it’s not make sense. But like, you’re doing something right, as far as keeping yourself organized and balanced.

Dave:                So tactically speaking, I do time blocking, I read it, I read a lot less since we’ve been in a pandemic, because so much of what I consumed historically was on Audible. Ganaraska, and I created a thing of like, hey, let’s read 100 books a year, which was great for about three years, and I was like, Oh my god, it’s just grueling because you have no other hobbies. But to do that in travel and audible and that, so still a super active reader, but I tend to like my calendar, there’s calendar access to my calendar, but it’s limited time availability, for sure. There are exceptions that I’ll make for that. But for the most part, you know, my mornings are my most productive time whether I’m writing or working on projects, so you don’t get on my calendar before noon unless you’re special.

Shauna:            I feel special, we started at 11.

Dave:                Yes, you know, I don’t have a team I’m managing these days and that’s kind of a disappointment for me because there was one like I miss investing in people and building a team that’s such a great satisfaction driver. So you know there is some like would you do it again and go you know, be the CEO of a company? Maybe it was the right opportunity. I probably want started the founder stage because the five years you spend getting to where you make a reasonable income is super hard. And at this point in my career you know, this is all about how do I save for retirement such a way that I can enjoy the same lifestyle I have right now. So it’s all about you that part still works, but if it’s a big idea, I would definitely consider it, but yeah those are my tactical things like if any workout, that’s good.

Yeah Peloton wise, and outside writings, I’m a cyclist, Aiden put in about five years ago, if success is choosing your parents well, I totally failed. So that became my exercise routine.

Shauna:            Yeah, I love it. Okay, so my final question for you is what fuels you?

Dave:                You know, I think at the end of the day, it’s about making a difference, right. So the way I finished the book was, hey, if you need to train anybody, let me know. So I have a good friend who we trained for the ramrod. So, about three years ago, it will be three years ago this summer. So I train like a madman. And you know, because I’ve seen you in what used to be the spin cycle classes when you went to somewhere in person. And that January, February, March that year, I trained 24 times a month on average. So in that year, I went 5600 miles, because this one ride was 154 miles and 10,402 vertical. So what I would encourage people with is like, how you train when nobody’s watching? That’s what it’s all about. And if you need a training anybody, let me know.

Shauna:            Thank you for listening to the “what fuels you podcast?” Be sure to subscribe, rate and review on iTunes, Google podcasts, or Spotify and follow us on social media to keep up with the latest news and episodes. You can also contact us at podcast@fuel talent.com to provide feedback, ask questions and share topics or guests you would like us to cover in the future. We hope you feel inspired by our guests and that we have helped fuel your day. Join us next time for another episode of what fuels you.

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